Hawaii's lone commercial producer of biodiesel says it won't have to raise its prices for the alternative fuel thanks to the decision by Congress to extend a tax credit for the industry.
The $1-a-gallon biodiesel blenders credit was one of several renewable-energy tax incentives extended by Congress on Tuesday as part of a last-minute deal to avoid the automatic spending cuts and tax increases that would have otherwise taken effect that day.
The biodiesel credit was implemented in 2005 but Congress has let it lapse twice. The latest extension, pushed by the American Soybean Association, will run through the end of 2013.
Maui-based Pacific Biodiesel, which produces biodiesel from waste cooking oil, held meetings last year to discuss the impact of losing the tax credit and how to prepare customers statewide for a potential price increase, said Kelly King, the company's vice president and director of communications.
"This means the price doesn't have to go up at our pumps," she said. "Our customers expect a lot of stability in biodiesel prices, which haven't changed in seven months."
The company's biofuel is sold on Oahu predominantly at Union 76 stations. Prices ranged Wednesday from $4.59 a gallon at the Koko Marina 76 station to $4.89 a gallon at the Union 76 station at King and Piikoi streets.
While King welcomed the one-year extension, she said a longer-term horizon would give biofuel companies more certainty in their planning.
"It makes it hard for businesses to bring in investors when the credit could disappear in one or two years," she said. "We're hoping that, at some point, Congress will extend it out for five years. That will help businesses grow."
Pacific Biodiesel, founded in 1996, has been able to weather ups and downs in the industry because it is an "established company," King said. Younger firms have not been as fortunate, she said. The first time the biofuel tax credit expired, in 2009, about half of the biofuel companies filed for bankruptcy, according to King.
Congressional action to avert the so-called fiscal cliff also included a one-year extension of tax credits for wind energy projects. Although there are no new wind projects scheduled to break ground in Hawaii this year, the tax credit has been instrumental in the development of existing wind farms in the state, including Sempra's Auwahi Wind farm on Maui that went online in December.
"The tax credit played an important role in making the project economically viable," said Lisa Briggs, a Sempra spokeswoman. "We support the extension of the credits and expect that this action will lead to new wind power projects in Hawaii and across the nation."
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