On December 29, 2021, the Kentucky Commissioner of Agriculture, Dr. Ryan Quarles, announced that eligible Kentucky companies can now apply to the state’s Renewable Chemical Production Program. This program provides tax credits for capital investment, job creation, and the production of more than 30 chemicals derived from biomass feedstocks. These chemicals are limited to building block chemicals with a biobased content percentage of at least 50 percent, except for chemicals sold or used for the production of food, feed, or fuel. A complete list of chemicals and company eligibility requirements can be found at https://apps.legislature.ky.gov/law/kar/302/004/010.pdf. To learn more about Kentucky’s Renewable Chemical Production Program or to request an application, contact Tim Hughes at .(JavaScript must be enabled to view this email address). Completed applications, along with a $500 compliance fee, are due by January 15, 2022.
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Bergeson & Campbell, P.C. (B&C®) is a Washington, D.C., law firm providing biobased and renewable chemical product stakeholders unparalleled experience, judgment, and excellence in bringing innovative products to market.
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On October 18, 2017, Senator Debbie Stabenow (D-MI) introduced to the Senate the Renewable Chemicals Act of 2017 (S. 1980), which aims to establish a short-term tax credit for the production of renewable chemicals and for investment in renewable chemical production facilities. If enacted, the legislation would allow taxpayers to claim a production credit equal to $0.15 per pound of biobased content of each renewable chemical produced. In lieu of the production credit, taxpayers would be able to claim an investment credit equal to 30 percent of the basis of any eligible property that is part of a renewable chemical production facility. The bipartisan bill was co-sponsored by Senators Susan Collins (R-ME), Chris Coons (D-DE), Al Franken (D-MN), and Tammy Baldwin (D-WI), and is companion legislation to H.R. 3149, which was introduced in the House in June 2017 by Representative Bill Pascrell (D-NJ). On June 29, 2017, Representatives Bill Pascrell (D-NJ), Ryan Costello (R-PA), Brian Fitzpatrick (R-PA), and Linda Sánchez (D-CA) introduced the Renewable Chemicals Act of 2017 to the House. If enacted, the legislation would create a targeted, short-term tax credit for the production of qualifying renewable chemicals from biomass and for investments in renewable chemical production facilities. The tax credit would be provided based on job creation, innovation, environmental benefits, commercial viability, and contribution to U.S. energy independence. Numerous industry stakeholders, including the Biotechnology Innovation Organization (BIO), Renmatix, and DSM, praised the proposed legislation. On February 9, 2017, Illinois State Senators Andy Manar and Chapin Rose introduced legislation aimed at growing Illinois’ biobased economy by providing incentives under the Renewable Chemical Production Tax Credit Program Act. The program would provide credit against taxes for eligible Illinois businesses that produce renewable chemicals within the state using biomass feedstock and other renewable sources. The legislation defines a renewable chemical as a building block with a biobased content of at least 50 percent. According to the legislation, eligible businesses will be required to submit to the Department of Commerce and Economic Opportunity an application for the tax credit that includes the amount of renewable chemical produced during the calendar year and any other information needed to verify eligibility as identified by the Department. The proposed tax credit will not exceed $1 million for businesses that have been in operation in Illinois for five years or less, and $500,000 for businesses that have been in operation longer than five years. On July 25, 2016, the U.S. Department of Energy (DOE) published a notice in the Federal Register soliciting applications for Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (the Program) funding. The Program provides guaranteed loans for projects developing, constructing, or retrofitting commercial scale biorefineries and biobased product manufacturing facilities. The developments must use eligible technology, including new commercial scale processing and manufacturing equipment. There are two application cycles for this notice, with the first application cycle closing on October 3, 2016, at 4:30 pm (EDT), and the second cycle closing on April 3, 2017, at 4:30 pm (EDT). On April 28, 2016, Neste Renewable, a Biobased and Renewable Products Advocacy Group (BRAG®) member, announced that its renewable isoalkane would be used in Avantherm's renewable Heat Transfer Media products. Avantherm will be using the isoalkane to produce new sustainable and high-performance renewable products, including a coolant that can replace glycol. Neste Renewable Isoalkane is chemically comparable to traditional isoalkane, but preforms better and has a lower environmental impact than the traditional product. Neste is able to produce Neste Renewable Isoalkane utilizing the company's proprietary NEXBTL technology at its refineries in Singapore, The Netherlands, and Finland. On April 6, 2016, Iowa Governor Terry Branstad signed Senate File 2300, creating a five cent tax credit, per pound of renewable chemicals produced from biomass feedstock between 2017 and 2026. Spokesman for Governor, Ben Hammes, stated, "Gov. Branstad believes this biochemical tax program will go even further to continue spurring economic growth all over Iowa, creating more high-quality jobs and attracting investments in renewable chemical manufacturing and advanced bio-refining." The bill passed the Iowa Senate on March 16, 2016, with a vote of 46-3, and the Iowa House on March 28, 2016, with a vote of 95-1. The tax credit will take effect July 1, 2016, and will be capped at $105 million for each fiscal year through June 30, 2021. After 2021, the general assembly will determine if the tax credit limitation will be continued. The law does not apply to renewable chemicals that are sold to be used as food, feed, or fuel, but does include building-block chemicals, supplements, vitamins, nutraceuticals, and pharmaceuticals as long as there is no caloric value. Biomass-derived ethanol, fatty acid methyl esters, and butanol are eligible for the credit as long as they are produced and sold for uses other than food or fuel. On March 17, 2016, the Iowa State Senate voted 46-3 to approve Senate File 2300, a bill creating a production tax credit for renewable chemicals. The legislation was created to attract investment in renewable chemical manufacturing and biorefining to Iowa, and covers the production of higher value biochemicals from plant materials left over from biofuel production. The House Ways and Means Committee approved House File 2288, a companion bill, and sent the measure to the House floor. Senate File 2300 allows eligible businesses to claim a five cent tax credit per pound of renewable chemicals produced from biomass feedstock between 2017 and 2026. Tax credits resulting from the bill will be capped at $105 million per year, with a limit of $10 million per company. The Biotechnology Innovation Organization (BIO) released an announcement in favor of the renewable chemical tax credit. Brent Erickson, Executive Vice President of BIO's Industrial & Environmental Section, stated: "Renewable chemicals help protect the environment and create new jobs. Iowa's new tax credit will encourage biotechnology and renewable chemical companies to make investments and deploy innovative homegrown technology in Iowa. BIO will continue to work with the Iowa legislature, other states and the federal government to level the playing field in economic development incentives for renewable chemical and biobased manufacturing technologies." |
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