By Lauren M. Graham, Ph.D.
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).
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.
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."
On November 10, 2015, Senator Stabenow (D-MI), along with Senators Coons (D-DE) and Franken (D-MN), introduced S. 2271, the Renewable Chemicals Act of 2015 to the Senate. If passed, the bill would amend the Internal Revenue Code of 1986 to create short-term tax credits for the production of renewable chemicals and for investments in renewable chemical production facilities. Producing eligible renewable chemicals from biomass feedstock would result in a tax credit of 15 cents per pound of renewable chemicals produced, or producers could take a 30 percent investment tax credit for qualified investments on new renewable chemical production facilities. S. 2271 has been referred to the Committee on Finance. The companion bill in the House of Representatives is H.R. 3390, Qualifying Renewable Chemical Production or Investment Tax Credit Act of 2015.
On April 9, 2014, Montana-based renewable chemicals producer Rivertop Renewables (Rivertop) announced that it has raised $26 million from Cargill, First Green Partners, and existing investors. The Company explains in its press release that it "will leverage these funds and an existing manufacturing relationship to produce market development quantities of salts of glucaric acid for select customers. In addition, it will complete construction and begin operations at a semi-works facility at its headquarters in Missoula, where it will optimize its process for world-scale deployment. Rivertop plans to hire more than 20 employees in the next 12 months to support commercial development, effectively doubling the size of its workforce." A copy of the Company's press release is available online.
President Obama is expected to sign H.R. 2642, the Agriculture Act of 2014 (the new five-year Farm Bill), into law on Friday at Michigan State University in East Lansing, Michigan. He is scheduled to speak there about the importance of the legislation.
The Farm Bill is critically significant to the biofuels and renewable chemicals and products industries because the new Farm Bill continues and expands on the majority of the energy programs covered under the 2008 Farm Bill and provides $881 million in mandatory funding to carry them out. For instance, the new Farm Bill continues the Biobased Markets and Biorefinery Assistance programs, as well as the Biomass Crop Assistance Program, which helps encourage and facilitate the growth of purpose grown energy crops to be used for energy production. It modifies the existing Biorefinery Assistance Program to create the Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance Program and extend funding eligibility to producers of renewable chemicals and biobased products. The mandatory funding under this program and expanded eligibility marks a big victory for the biofuels and renewable chemicals and products industries.
The U.S. House of Representatives approved H.R. 2642 by a bi-partisan vote of 251-166 on January 29, 2014. The Senate followed suit on February 4, 2014, by a bi-partisan vote of 68-32.
On January 22, 2014, the largest U.S. biodiesel producer, the Renewable Energy Group, Inc.® (REG), headquartered in Ames, Iowa, announced that it has acquired renewable chemical producer LS9, Inc. for over $61 million. LS9 will be renamed REG Life Sciences LLC and will produce renewable chemicals and products. A copy of REG's press release is available online.
On October 30, 2013, the Conference Committee selected to merge the House and Senate versions of the next five-year Farm Bill met to begin formal negotiations. This Farm Bill Conference Committee is comprised of 41 bi-partisan Members of the U.S. House and Senate.
Though Farm Bill Conference Committee negotiations are expected to be difficult, pressure is on Members of Congress to pass a final version of the next five-year bill by the end of this year. If it fails to do so, farm policy will be governed by an outdated supply-side permanent law from 1949. In that situation, milk prices would be expected to increase sharply, among other things. In addition, the old law includes nothing to cover or help promote renewable energy, including biofuels and renewable chemicals.
Earlier this year, the U.S. Senate passed its version of the next five-year Farm Bill, S. 954, including funding for farm, nutrition, and energy programs. Importantly, the Senate bill continues and provides mandatory funding for existing Farm Bill energy programs and extends eligibility to renewable chemicals. It includes $4 billion in cuts to nutrition programs. After failing to pass a combined bill, the U.S. House of Representatives passed a "farm-only" bill this summer and then a separate "nutrition-only" bill cutting $40 billion in food stamps. The House farm-only Farm Bill contains an energy title without mandatory funding that will instead be subject to annual appropriations, and it does not extend the energy programs to renewable chemicals.
The biofuels and renewable chemicals industries continue efforts to gain support for an energy title that would support their development and include mandatory funding in the final version of the next Farm Bill.
On October 29, 2013, hundreds of parents and children participated in a "stroller brigade" on Capitol Hill during which they lobbied Senate offices to provide greater protections against harmful chemicals during reform of the Toxic Substances Control Act (TSCA). The stroller brigade also joined actress Jennifer Beals at a press conference on TSCA reform sponsored by the Safer Chemicals, Healthy Families Coalition.
Following the July 31, 2013, Senate Environment and Public Works hearing on TSCA reform, Committee Members reportedly continue negotiations on S. 1009, the bi-partisan TSCA reform bill sponsored by Senator David Vitter (R-LA) and the late Senator Frank Lautenberg (D-NJ). The Biobased and Renewable Products Advocacy Group's (BRAG™) previous report on the bill and hearing is available online.
Also on October 29, 2013, the Center for Progressive Reform released a report critical of TSCA and the two current Senate bills designed to reform it, S. 1009 and S. 696, which is sponsored by the late Senator Frank Lautenberg (D-NJ). The report, "TSCA Reform: Preserving Tort and Regulatory Approaches," makes several specific recommendations for reform, including making it easier for EPA to obtain toxicity data from chemical manufacturers. A copy of the report is available online.
On September 12, 2013, Representative Bill Pascrell (D-NJ) introduced H.R. 3084, the "Qualifying Renewable Chemical Production Tax Credit Act," to provide tax parity for the renewable chemical industry in the United States. Along with Representative Pascrell, the original co-sponsors of the bi-partisan bill are Representatives Steve Stockman (R-TX), Allyson Schwartz (D-PA), Linda Sanchez (D-CA), and Richard Neal (D-MA).
Essentially, the bill would extend the current production tax credit (PTC) for cellulosic biofuels to producers of renewable chemicals. It would provide a PTC of 15 cents per pound of eligible renewable content, but it caps the benefit at $500 million and a single producer may not receive more than $25 million in a tax year. A copy of the legislation is available online. Representative Pascrell has stated publicly that he hopes the legislation will help incentivize the U.S. production of renewable chemicals and help develop the industry here in the United States.