DANVILLE – Employees at Danville's biodiesel production facility are more encouraged after the U.S. Senate passed a bill last week that includes a biodiesel tax credit that had expired Jan. 1, dampening sales in the entire industry.

But the tax incentive still has legislative hurdles to clear before the credit is actually restored to those who purchase biodiesel, an alternative fuel that's made from soybean and other oils, such as vegetable oil.

The U.S. Senate approved the American Workers, State and Business Relief Act, or jobs bill, that includes the extension of the $1-per-gallon biodiesel tax credit. The bill calls for the tax credit to be retroactive to Jan. 1 and expire again at the end of this calendar year.

Alicia Clancy, spokesperson for Renewable Energy Group, which owns the biodiesel production facility at 300 Anderson St. in Danville, said the movement in the Senate is a very positive step.

She said it gives the biodiesel industry confidence that the tax credit will be available this year, but it still has several steps to go.

The U.S. House already passed legislation Dec. 9 that included the biodiesel tax credit, but in a different piece of legislation.

The differences between the versions will need to be reconciled before the bill can be sent to the president.

So now, Clancy said, the jobs bill goes back to the House, and if the House makes changes, it must go back to the Senate for approval again before going to the president.

If the House passes the jobs bill as is, which Clancy said doesn't look likely, it could go directly to the president. Or, members of the Senate and the House could get together and work out a bill.

At this point, Clancy said, it's unknown which of those routes will be pursued.

So the industry must continue to wait.

Gary Haer, Renewable Energy Group's Vice President of Sales and Marketing, said that, since Jan. 1, the industry has seen reductions in biodiesel demand, production slowdown and job losses, including staff at REG network plants in Iowa.

"The incentive is structured so that the value of the incentive is reflected in the market price of the fuel," Haer said. "Biodiesel producers and in turn, our customers, are all anxiously awaiting the restoration of the biodiesel tax credit."

Clancy said the Danville facility is still in a slowdown, but does continue to produce biodiesel and has not laid off any workers as have other REG facilities in the Midwest.

In the meantime, the Danville facility, which employs more than 20 workers, has gone through a recent name change, from Blackhawk Biofuels to REG Danville.

In a process that was started in 2009 and separate from recent events surrounding the industry tax credit, REG completed an asset purchase and consolidation agreement of biodiesel plants in Danville and Newton, Iowa.

Shareholders of the Danville facility and the Iowa plant voted in February for an all-stock transaction making their facilities wholly owned by REG.

REG President Daniel Oh said in a news release that the consolidation brings greater economies of scale and streamlined management of logistics and decision-making processes.

REG Chairman and CEO Jeff Stroburg said demand by major petroleum distributors and oil refiners was a key factor in the consolidation, which increases REG's production capacity to 122 million gallons a year.

With the Renewable Fuels Standard now in effect, the market is demanding technical expertise, dependable supply, more efficient distribution and creative pricing options from major biodiesel partners, Stroburg said.