Cellulosic ethanol group asks for tax breaks

Source: DAN PILLER • Des Moines Register  • Posted: Thursday, February 16, 2012

Corncobs are dumped at a demonstration for Poet’s planned cellulosic ethanol plant at Emmetsburg

In a letter to the ranking members of the U.S. Senate committee overseeing agriculture, the Advanced Ethanol Coalition has asked that producer tax credits and the special advanced depreciation allowance for cellulosic ethanol be continued in the next Farm Bill.

“Several billion dollars have been invested in advanced biofuels development with the expectation that Congress will stay the course with regard to its commitment to the industry,” Coalition executive director R. Brooke Coleman wrote in the letter addressed to U.S. Sens. Debbie Stabenow of Michigan and Pat Roberts of Kansas.

Coleman continued; “A tax increase on advanced biofuels at this time would curtail investment and undercut an industry just starting to close deals and break ground on first commercial plants., be included in the new Farm Bill.”

Coleman also asked for extension of the U.S. Department of Agriculture’s loan guarantee programs; support for USDA support for biofuels construction and, in Coleman’s words, “increase the cost-effectiveness” of the Biomass Crop Assistance Program.

U.S. Secretary of Agriculture Tom Vilsack warned an Iowa audience last week in Ankeny that oil industry interests have been working against the Renewable Fuel Standard, which mandates certain levels of use for ethanol and biodiesel.

Traditional fossil fuel producers and refiners have become more aggressive in their efforts against the Renewable Fuel Standard with the sudden surge in domestic crude oil and natural gas production.

Corn-fed ethanol and biodiesel lost their blenders tax credits, amounting to 45-cents per gallon for ethanol and $1 per gallon for biodiesel, at the end of last year as well as loss of the 54-cents per gallon tariff on imported ethanol.

Cellulosic ethanol, made with crop residue, grasses or wood chips, has advanced more slowly than envision in the 2007 Renewable Fuels Standard enacted congress. In the last two years the U.S. Environmental Protection Agency has had to back down from targets set for 2011 and this year because of insufficient domestic production.

In Iowa, ethanol plants that would use crop residue are scheduled to be built at Nevada, by Pioneer Hi-Bred parent DuPont, and at Emmetsburg by ethanol producer Poet. Both plan to open sometime in 2013.