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.
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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, 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 and 2018."
On August 24, 2016, Brazil's government announced that it would not be extending a tax break on ethanol sales that is due to expire in December 2016. During the 2015 Paris Climate Accord, Brazil pledged to increase cane-based ethanol and biodiesel to nearly 18 percent of its total energy mix by 2030, requiring an increase in annual ethanol production from 30 billion liters in 2015/2016 to 50 billion liters in 2030. The loss of the ethanol tax break prevents biofuel from being cost competitive with gasoline, and will severely impede the ability of ethanol and biodiesel to make up a larger percentage of Brazil's energy mix. Elizabeth Farina, head of the cane industry association Unica, stated that this change will push cane mills to switch from biofuel to sugar production. Two days after the announcement that Brazil would not be renewing the ethanol tax break, Brokers INTL FCStone predicted that the top cane growing region of Brazil would produce 4.7 percent less ethanol in the 2016/2017 crop than it did in 2015/2016. On July 6, 2016, Hawaii Governor David Ige signed SB 2652 Related to Taxation -- Locally Produced Renewable Energy. This bill establishes a five-year renewable fuels production tax credit. The tax credit will take effect in 2017 and will provide 20 cents per gallon of ethanol (or 76,000 British thermal units (Btu) of renewable fuel) with a cap of $3 million. The tax credit is open to companies producing at least 15 billion Btu of fuel from renewable feedstocks per year. Acceptable fuels include, but are not limited to, ethanol, hydrogen, biodiesel, biogas, renewable jet fuel, and other biofuels. On June 15, 2016, H.R. 5489, Agriculture Environmental Stewardship Act of 2016, was introduced to the House Ways and Means Committee on Science, Space, and Technology. The bill would add additional biogas applications to the list of technologies that qualify for the federal Section 45 energy investment tax credit, increasing acceptable biogas technologies from only biogas-based electricity projects to "qualified biogas property" defined as: property comprising a system which-- Qualified biogas properties, as well as qualified manure resource recovery properties, will be eligible for a 30 percent tax credit under this bill. H.R. 5489 was introduced with bipartisan support by Representatives Tom Reed (R-NY) and Ron Kind (D-WI), and signed by 12 other House members. A similar bill is expected to be introduced in the Senate, On May 24, 2016, Iowan Governor Terry Branstad signed Senate File 2309, an Act providing for tax credits and refunds relating to renewable fuels including their component biofuels and including effective date provisions. The bill extends a state biodiesel production tax credit providing 2 cents per gallon (cpg) on the first 25 million gallons of production per biodiesel plant. The bill also extends a credit for petroleum retailers of 4.5 cpg on blends of 5 percent biodiesel or more through the end of 2017, with the incentive changing to 3.5 cpg for 5-11 percent biodiesel blends and 5.5 cpg for biodiesel blends above 11 percent from 2018 to 2024. Without the extension, the bill was scheduled to sunset on December 31, 2017, but will now continue through December 31, 2024. On April 5, 2016, the biofuel trade associations Advanced Biofuels Business Council, Algae Biomass Organization, Biotechnology Innovation Organization (BIO), Growth Energy, National Biodiesel Board, and Renewable Fuels Association sent a letter to House and Senate Leaders asking for a multiyear extension of advanced biofuel tax credits. The six organizations are specifically asking that the Second Generation Biofuel Producer Tax Credit, the Special Depreciation Allowance for Second Generation Biofuel Plant Property, the Biodiesel and Renewable Diesel Fuels Credit, the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit, and the Alternative Fuel Vehicle Refueling Property through the Protecting Americans From Tax Hikes Act of 2015 are extended before they expire at the end of 2016. Other energy production tax credits have been extended, and the biofuel trade associations argue that extending certain energy tax provisions and not others creates investment uncertainty across the energy sector, and puts biofuel producers at a disadvantage. 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. |
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