Democrats Plan to Reverse Tax Break

As someone said to me just now by e-mail, “It ain’t about the fuel… it’s about a piece of the pie.”

Democrats Plan to Reverse Tax Break for ConocoPhillips, Tyson

April 20 (Bloomberg) — Democrats in Congress plan to reverse an Internal Revenue Service ruling that allowed ConocoPhillips and Tyson Foods Inc. to benefit from a tax break for producing alternative energy.

If adopted, the legislation would threaten a joint venture announced this week by ConocoPhillips and Tyson to produce diesel fuel from animal fat.

ConocoPhillips Chief Executive Jim Mulva said the companies wouldn’t proceed if they didn’t qualify for the tax credit, worth $1 per gallon of renewable diesel produced.

“It’s not profitable without the $1 tax credit,” Mulva said April 16 at a news conference in Houston. “It’s very important and significant in going forward at this point in time.”

It also angered the American Soybean Association, which fears refiners may begin shipping in less-expensive foreign palm oil to replace U.S. soy oil at the government’s expense.

Yeah, don’t try to tell me it’s about supporting alternative energy. It is about special interests. This tax credit will increase the renewable fuel in the U.S. It would decrease our reliance on foreign oil. And it wouldn’t take one dime away from current biodiesel producers. They just don’t want any competition.

8 thoughts on “Democrats Plan to Reverse Tax Break”

  1. Well you are probably right about the special interests aspect.

    However technically if it’s not a methyl ester, then it doesn’t have the same air quality benefits as biodiesel.

    It’s also not neccisarily supporting a new fuel, since it’s straight conventional diesel. (Just from an unconventional production method)

  2. However technically if it’s not a methyl ester, then it doesn’t have the same air quality benefits as biodiesel.

    Actually that is not true. The air quality benefits are not identical, but green diesel has the same net carbon emissions profile as biodiesel because both are derived from a renewable source. Petroleum diesel contains a lot of aromatic hydrocarbons and various nasties that green diesel will not contain. Biodiesel will have higher NOx emissions. Also, don’t forget that it takes fossil fuel to make the methanol that is used in making biodiesel.

    It’s also not neccisarily supporting a new fuel, since it’s straight conventional diesel.

    Again, that is not accurate. It may have the same fuel characteristics, but it does not contain the same compounds as conventional diesel.

    I will have a much longer entry on this for Monday. I have already written it up, but I will wait until Monday to post.

    Cheers, Robert

  3. Thanks for the quick reply.
    However I have a few nasty things to say about liquid fuels in general.

    re: Robert
    –It would decrease our reliance on foreign oil–

    And we all know thats a political white lie.
    (Like you said, it’s all about the special interests, from both sides)

    “Getting off foreign oil” is a comical.

    Brazil still uses Oil for over 85% of their fuel.

    All things equal, liquid fuel demand would easily grow 20% in 10 years.
    From that what good would a 20% increase of our liquid fuels in 10 years do to reduce our imports compared to todays levels?

    Rather than trying to keep the Titanic afloat by bailed it out with a bucket, we should allow for a market scarcity of liquid fuels to happen.

    And invest that taxmoney in better mileage vehicles. (i.e. Performance based Purchase Subsidies, let the market handle the R&D costs)
    The primary way to get those benefits are better drivetrains. (i.e. Clean Diesel, Mild Hybrids, Hybrids, PHEV, and Electric)
    With fully electric being the end goal.

    _

    Not to mention, fuel that doesn’t get burned in the first place would do a far better job on the GreenHouse issue than a fuel which increases N2O, O3, and CH4 emmisions. (And even worse with the current bait and switch to “alternative” fuels like Coal-to-Liquids, and Gas-to-Liquids)

    Ramping up the demand for animal products wouldn’t neccisarily be in our best interest.
    Since farm animals already contribute a massive ammount of greenhouse impacts.
    Not to mention the energy contained in animal products is at most, only 10% of the original energy of the biomass the animal ate.

    _

    Best way to use less foreign fuel?
    Use less fuel.

    Best way to use less fuel?
    Use it more effeciently.

    Not improving our cars, and having them “eat” higher on the foodchain isn’t going to achieve that.

  4. I would think in the big picture that the subsidies for biofuels will cause a false market and actually increase petroleum usage, so the oil companies get an indirect benefit from the subsidies even if they get structured towards special interest groups. The corn lobby pushing ethanol has done wonders for NH3/NG sales and the rest of the biofuel schemes are going to have the same effect.

    I would think that the fairest way for the U.S. government to screw with the energy market wouldn’t be in renewable subsidies but in prohibitive import tariffs on oil. This would force real solutions, not just ones based on cheap oil and subsidies. It would also spin the economy into a recession, but that would fix a lot of things conservation wise, too.

    Or better yet, Canada should rip up NAFTA and slap a big export duty on oil,NG and NH3 going to the US.

    (and lower my income tax)

    Fairness problem solved. 🙂

  5. Well, the way I see it.

    It’s gonna take a decade or so of transition when we start moving off of liquid fuels, and towards electric transportation.

    Biofuels prolong the liquid fuels infrastructure, and push out that transition period farther and farther into the future.

    i.e. It keeps the Oil Companies in business, longer.

    _

    The real solution to all this is to develop better batteries, and scale up their production.

    And the best way to do that is to subsidize the purchase price of hybrids and electric cars based on the performance of the vehicle/battery.

    In short, it’s not good enough to build good technology. You also have to sell it, and get it into peoples hands.

    _

    Mix that in with a carbon tax, and the price signals are clear to consumers.

    “Save money by buying a more fuel effecient car”

  6. Rather than trying to keep the Titanic afloat by bailed it out with a bucket, we should allow for a market scarcity of liquid fuels to happen.

    Well, I don’t disagree with any of that. I am a big advocate of moving toward electric transportation.

    Cheers, RR

  7. It’s gonna take a decade or so of transition when we start moving off of liquid fuels, and towards electric transportation.
    You know the future with that much certainty? Quick, what stocks should I buy?

    Nobody knows if electric vehicles are 10, 50, 100 or 1,000 years from widespread use. For a simple reason: the required battery technology has not yet been invented. So, let’s not pretend we know which technology may yet save the day.

    In the interim, it makes a lot of sense to subsidize a technology that takes a waste product (or prevents animal fat from being fed to farm animals) and convert it to a liquid fuel superior to biodiesel (i.e. completely miscible with existing diesel fuel; no cold weather gelling issues; no higher NOx) as well as fossil diesel (no sulfur; no aromatics).

    It’s a win-win-win proposal. What would be the point of preventing oil companies from producing renewable fuel? Preserving their status as the SATAN within?

Comments are closed.