Look here for more discussion on the topic:
http://forums.biodieselnow.com/topic.asp?TOPIC_ID=3772
Here is my understanding of the effect of this law:
The bill is basically a federal excise tax credit (tax break) for commercial producers and distributers of biodiesel. If you sell road-taxed biodiesel your fuel taxes are lowered by one cent per percentage point of biodiesel per gallon. Hence, B20 (20% biodiesel, 80% petro-diesel) has its road taxes lowered by 20 cents per gallon. B100 is a full 1.00$ per gallon cheaper. The more commonly used B2 and B5 blends are two and five cents cheaper per gallon, respectively. That is a small amount to you and me, but it equates to thousands of dollars in savings.
Does this mean that biodiesel at the pump will go down by that amount?
NO. Part of the reasoning behind the tax incentive is to lower prices, so we will see biodiesel prices going down a bit, but the other reason is to give companies more profit margin to increase their infrastructure. With a 20 cent tax break on B20, a company may choose to lower pump prices by 10 cents, and take the other 10 cents to build new pumps and new processing facilities. Improved infrastructure can then help lower future costs by increasing the economy of scale. However, pump prices will probably go down simply through the effect of competition, though they may not decrease by the entire amount of the credit.
Pre-bill studies showed that the increased demand for biodiesel through lowered prices, combined with the increased demand for feedstock due to companies expanding their infrastructure, will create up to 50,000 jobs in the next ten years, and send 1 billion $ of windfall profit to American agriculture.
This bill is a BIG STEP for biodiesel, and will help 'tip' biodiesel into mainstream communities. Like usual, expect the biggest users to be fleets and farms, but eventually we'll start seeing it in local pumps more as well. One of biodiesel's benefits, besides environmental concerns, is the fact that it is an American made product, made with American labor. With a poor economy, the last thing we need to be doing is giving all our money to other countries. Providing our own fuel source can lower costs, create jobs and support our economy.
Unfortunately, this bill does not mean much to home brewers, because it only affects people who have to charge a road-tax. If you are one of the 3 biodiesel homebrewers in the country who voluntarily reports and pays road tax on their homemade fuel, there may be a way for you to lower the amount of tax you pay, or receive a year end credit if you itemize your deductions.
This is not like the hybrid tax credits that some states have where you receive a year-end credit simply for owning a hybrid, rather, it affects the road tax on the fuel.
The first people affected will be fleet managers taking advantage of lower fuel costs, biodiesel producers who can take advantage of higher profit margins, and the farming community who can take advantage of higher demand for their feedstock. Joe 300D driver may notice the effect of the bill in the form of slightly cheaper biodiesel, and increased availability of pump biodiesel, however, as usual, Joe 300D driver will be the last to notice the effects, because we are in the minority when it comes to diesel use.
Whew. I hope that helps!
Peace,
Sam