By Lauren M. Graham, Ph.D.
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.
By Kathleen M. Roberts
On June 20, 2017, the National Biodiesel Board (NBB) announced that nearly 100 biodiesel advocates from across the country visited Capitol Hill to urge Congress to bring back the biodiesel tax incentive as proposed in both chambers of Congress. Industry participants consisted of biodiesel producers, distributors, and feedstock suppliers from over 24 states. According to Anne Steckel, the Vice President of Federal Affairs at NBB, the bipartisan biodiesel tax incentive should be reinstated since it helps support tens of thousands of jobs nationwide and the proposed reforms address the unintended consequences of the credit. The legislative proposals in Congress restructure the incentive so that U.S. producers qualify for the credit, which cuts off subsidies for foreign manufacturing and reduces the potential for tax fraud.
By Lauren M. Graham, Ph.D.
On May 5, 2017, Senator Ron Wyden (D-OR) introduced to the Senate Finance Committee legislation focused on reducing carbon pollution over the next decade by incentivizing clean energy and promoting new technologies in the private sector. The Clean Energy for America Act, which was co-sponsored by 21 Democratic Senators, provides a simplified set of long-term, performance-based energy tax incentives to promote clean energy production and storage. The legislation would create a technology-neutral incentive for the domestic production of renewable transportation fuels based on the lifecycle carbon emissions of the fuel. The lifecycle emissions would need to be 25 percent less than the U.S. nationwide average for the fuel to be eligible for a tax credit. Zero and net-negative emission fuels would be eligible for the maximum incentive of $1 per gallon. To assist in the transition, the proposed legislation would extend the current expiring clean energy provisions through December 31, 2018.
By Lauren M. Graham, Ph.D.
On April 26, 2017, a bipartisan bill was introduced in the U.S. Senate to reform the biodiesel tax credit and extend the new policy for three years. The American Renewable Fuel and Job Creation Act of 2017, which was sponsored by Senator Chuck Grassley (R-IA), Senator Maria Cantwell (D-WA), and 14 other senators, transfers the $1 gallon tax credit from the blenders to the producers of biofuels to ensure that it incentivizes domestic production. The bill also provides an additional $0.10 gallon credit for small biodiesel producers in the United States. According to a statement released by Grassely, the bill would incentivize domestic production, remove a system that allows foreign biodiesel producers to benefit from the tax credit, and would have little to no impact on the consumer.
By Kathleen M. Roberts
On April 13, 2017, the Iowa Renewable Fuels Association (IRFA) released a statement regarding the passage of a bill, HSB 187, by the Iowa House Appropriations Committee that would cut the value of the Iowa biofuels tax credits and complicate the mechanism for receiving the credit. According to the bill, the value of the tax credits would be determined based on annual sales, and the amount of the credits would be capped on an annual, statewide basis. The purpose of the biofuels tax credits was to incentivize consumers to purchase higher blends of ethanol and biodiesel, such as E15, E85, and B11, by offering a tax credit to fuel retailers. IRFA states, however, that the amendments to HSB 187 undercut the entire purpose of the tax credits since fuel retailers cannot pass the price reduction to the consumer if they do not know what the credit is at the time the fuel is sold.
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.
The New York State Clean Heating Fuel Tax Credit has been extended through 2020. The personal income tax credit, which was initially authorized in 2006, is provided to eligible taxpayers for biodiesel purchases used for residential space and water heating. For each percent of biodiesel blended with conventional home heating oil, a tax credit of $0.01/gallon is available up to a maximum of $0.20/gallon. A partial credit will be calculated for buildings with a shared oil storage tank for residential and non-residential space that is based on the percentage of residential square footage. A refund will be provided to taxpayers whose allowable credit exceeds their liability for that year.
On October 18, 2016, the Biotechnology Innovation Organization (BIO) sent a letter to Congressional Leadership, the Senate Finance Committee Chairs, and the House Ways and Means Committee Chairs calling for the extension of expiring renewable energy tax credits. The Second Generation Biofuel Producer Tax Credit, the Special Depreciation Allowance for Second Generation Biofuel Plant Property, the Biodiesel and Renewable Diesel Fuels Credit, and the Alternative Fuel Vehicle Refueling Property are set to expire at the end of 2016, with BIO urging congress for multi-year extensions. Brent Erickson, Executive Vice President of the Industrial and Environmental section at BIO, stated “[a]dvanced biofuel tax credits drive innovation while leveling the playing field for U.S. companies in the international marketplace. These tax credits foster American-born technology innovations and help keep them here at home.” BIO continued to defend the biofuels incentives by outlining the $184.5 billion in economic output and 852,056 jobs that are created annually by the biofuels industry. A long term extension of biofuel tax credits will increase the ability to raise capital, allowing advanced biofuel production to continue expanding.
On September 12, 2016, the Biodiesel and Renewable Diesel Incentive Extension Act of 2016
(H.R. 5994) was introduced to the House of Representatives and referred to the House Committee on Ways and Means. The bill was introduced by Representative Diane Black (R-TN), and would extend the $1 per gallon biodiesel and renewable diesel blenders credit, originally set to expire December 31, 2016
, through December 31, 2018
. The blenders tax credit of $1 was created in 2005 for biodiesel or renewable diesel used in qualified mixtures. The Advanced Biofuels Association (ABFA) has spoken out in favor of extending the tax credit
, with ABFA President Michael McAdams stating, "it is clear that the best chance for our industry to continue to have tax credit support at the federal level is for all of us to unite behind the existing blenders credit. Given the shortness of the year and the importance of certainty for the overall biodiesel industry, we simply owe it to all our members to give them the best opportunity to continue to have a tax credit in 2017