Higher biodiesel blend exemption in effect

SPRINGFIELD, Ill. — The first of three phases that move toward higher biodiesel blend sales tax exemptions was effective April 1.

Legislation passed by the Illinois General Assembly and signed by Gov. J.B. Pritzker that extended the previous B11 sales tax exemption compliance through last year also increased the eligible fuel mixture to at least B14 on April 1.

In subsequent years, the minimum biodiesel blend levels eligible for a tax exemption jump to B17 in 2025 and B20 in 2026, according to the legislation.

A seasonal blend of B11 would continue in December, January, February and March.

The law grants exemption on the state’s 6.25% excise tax for retailers selling biodiesel blends at levels set by the legislation.

Under the previous law, diesel blends over 10%, B11, were exempt from all sales taxes until Dec. 31, 2023.

The legislation was spearheaded and guided through the legislative process by the Illinois Soybean Association with support from Clean Fuels Alliance America and several of its member companies, including Renewable Energy Group and ADM.

Primary sponsors of the bill were state Sen. Patrick Joyce, D-Essex, and state Rep. Eva-Dina Delgado, D-Chicago. State Rep. Charlie Meier, R-Okawville, was the bill’s lead Republican sponsor.

“This is a significant milestone law for Illinois soybean farmers, but it also shows how the whole state can come together around an issue with multiple benefits for all our citizens and the environment,” said Ron Kindred of Atlanta, ISA chairman.

“Our estimates indicate this bill creates new demand for an average of 90 to 100 million gallons of soybean oil or the equivalent of about 65 to 70 million bushels of soybeans annually once B20 is fully implemented.

“This momentous achievement elevates Illinois to the pinnacle of renewable fuels leadership, and it represents a giant leap toward a more sustainable future that starts on Illinois farms. This was a total team effort involving numerous partners across political parties, agriculture, biofuels production, transportation and clean air advocacy.”

Joyce explained that a sales tax exemption is the mechanism in the B20 law that drives greater biodiesel demand.

“This sales tax exemption substantially reduces the price of more environmentally friendly biodiesel blends, which attracts business to our state benefiting Illinois farmers and residents alike — especially near the industrial I-80 and I-57 corridors,” he said.

“This bipartisan law will make the diesel pool the most environmentally friendly in the Midwest using soybeans grown right here in Illinois.”

“I am proud to have sponsored this new law that will simultaneously help the local economy and improve our environment,” Delgado said.

“Each semi-truck that transitions to B20 will reduce particulate matter and lower CO2 emissions in neighborhoods that are disproportionally impacted by pollutants. Transitioning a semi to B20 is the equivalent of taking 5.5 passenger vehicles off the road.”

“This new law will help Illinois soybean farmers continue to be leaders in the biofuel market, creating jobs and revenue for Illinois. Encouraging the use of a higher percentage of biodiesel blends will help reduce emissions up to 74% compared to normal diesel fuel,” Meier said.

Clean Fuel

“This law continues to build on the biodiesel leadership that Illinois, through ISA, has demonstrated in the past,” said Donnell Rehagen, Clean Fuels CEO.

“This innovative tax exemption program in Illinois, which has been in place since 2003, has drawn hundreds of millions of gallons of biodiesel into the state. This modification expands that demand and solidifies Illinois as a leading source and user of better, cleaner biodiesel.”

Illinois is currently fourth among all states in biodiesel production and third in consumption with 160 million gallons consumed annually.

Efforts to pass this legislation were aided by the Trinity Health Benefits Study that included the city of Chicago.

In Chicago, the study found that switching to B100 would decrease diesel particular matter-related cancer risks by up to nearly 1,600 cases and result in over 31,000 fewer or lessened asthma attacks per year and save over $677 million per year in avoided healthcare costs.

“Increasing the biodiesel blend available in Illinois from 11% to 20% over the next few years marks a significant step in the right direction for our state,” said Bailey Arnold, American Lung Association’s director of Clean Air Initiatives.

“The shift to higher blends will lower tailpipe pollutants and drastically reduce carbon emissions across the transportation sector, leading to better air quality and a healthier environment for all Illinoisans.”