In 2005, Congress established a $1.00-per-gallon tax credit for U.S. fuel blenders who include biodiesel and renewable diesel in their fuel mix.

The tax incentive plays a key role in supporting growth of the U.S. biodiesel and renewable diesel industry, helping producers create jobs, diversify fuel markets, and strengthen U.S. energy security.

The U.S. biodiesel market grew from about 100 million gallons in 2005, when the tax incentive was first implemented, to more than 2.6 billion gallons annually today. A 2019 ABF Economics report demonstrates why the tax incentive is essential to continued growth of the U.S. biodiesel industry. The tax credit offsets the difference between the cost of introducing biodiesel and renewable diesel to the market, and the price blenders are willing to pay, given the relative prices of petroleum diesel and Renewable Fuel Standard compliance credits.

A 2019 LMC International study shows that the U.S. biodiesel and renewable diesel industry supports more than 65,000 jobs across the United States, paying annual wages of $2.5 billion. The industry generates more than $17 billion in economic activity each year. Every 100 million gallons of biodiesel production supports approximately 3,200 jobs throughout the economy.