Critics point out the economic and environmental benefits of subsidizing biodiesel are doubtful, making the tax credits a huge waste of American taxpayer funds.

"This would be an irresponsible move at the best of times, but is scandalous when Americans are preoccupied with a ballooning budget deficit," said Mark Halle, vice-president, international, of the International Institute for Sustainable Development, a public policy think-tank.

Applying the tax credit retroactively will create no additional biodiesel production in the U.S., it will merely reward existing producers, many of whom are already subsidized by individual U.S. states.

International Institute for Sustainable Development (IISD), a Winnipeg based environmentally focused global think-tank, produced a series of studies entitled Biofuels - At What Cost?. The series showed biofuel subsidies to be an extremely expensive way to address climate change. Reducing greenhouse gas (GHG) emissions by subsidizing biofuels was found to be 33 times more expensive than purchasing the equivalent amount of carbon offsets on the Chicago Climate Exchange.

"Concern over biofuel subsidies is one of the few issues that unite a wide range of interested parties, from fiscal conservatives to environmentalists," said Peter Wooders, senior economist at the IISD's Global Subsidies Initiative.