Biotech industry goes to bat for tax incentive bill

Source: Amanda Peterka, E&E reporter • Posted: Friday, May 11, 2012

The biotechnology industry is on Capitol Hill today to push for tax legislation that it says would level the playing field between traditional and renewable chemicals.

At a briefing hosted by the Biotechnology Industry Organization, CEOs from several green chemical companies will pledge their support for the bipartisan bill co-sponsored by Reps. Bill Pascrell (D-N.J.) and Brian Bilbray (R-Calif.). The bill would create a tax credit for producers of plant-based chemicals used in the production of plastic polymers or formulated products.

The supporters are calling it a “tax parity” measure that would revitalize the U.S. chemicals manufacturing sector by opening it up to new technologies. An overarching worry of the bill’s supporters is that the United States, by disincentivizing renewable chemicals, is pushing that industry overseas.

“As of now, there are no incentives in the tax code for renewable chemicals,” Keith Castaldo, an economic policy adviser in Pascrell’s office, said yesterday, “and that’s of great concern because while we’re using the R&D credits to create this [intellectual property], we’re then shipping it abroad and losing our ability to get job growth.”

The bill would provide a 15-cent-per-pound tax credit for production of eligible renewable chemicals and would be in effect for five years or until a cap of $500 million is reached.

It would not apply to bio-based materials used in the production of food, feed or fuel, nor to renewable chemicals if the percentage of bio-based content is less than 25 percent.

There currently are no tax incentives for producing tradition chemicals, but there are production credits and deductions for producing the gas and oil that are used for chemicals, a BIO spokesman said.

Yesterday, BIO kicked off its advocacy with a conference call featuring Castaldo and other renewable chemical company officials.

“As a small, venture-backed biotech company that is now moving from pilot plant to begin considering manufacturing options, certainly this tax credit would be a huge advantage, not just to companies like ours but to the whole industry,” said William Radany, president and CEO of Verdezyne Inc., a company that makes bio-based components of nylon and other products.

BIO is actively seeking more co-sponsors for the bill, which was introduced April 26. Rina Singh, policy director of BIO’s industrial technology division, called it a “historic opportunity.”


“Domestic production incentives are needed to level the playing field for U.S. companies and ensure that the U.S. homegrown biotechnology innovations are deployed here at home,” she said.