Congress Authorizes USDA to Provide Relief to Biofuels Producers

Source: By Todd Neeley, DTN Staff Reporter • Posted: Wednesday, December 23, 2020

After a long 2020 for the ethanol industry, including massive industry shutdown from caved demand for transportation fuels during the COVID-19 economic shutdown, ethanol industry groups celebrated the inclusion of relief outlined in the new stimulus relief package.

Last week representatives of the Renewable Fuels Association estimated the industry lost $4 billion in revenue in 2020 and would continue to lose money.

To this day, a number of ethanol plants remain closed and transportation fuel demand is falling as additional economic shutdowns occur in many states.

Still, industry groups breathed a sigh of relief.

The bill includes $13 billion for the USDA to support agriculture, and specifically allows for payments to producers of advanced biofuel, biomass-based diesel, cellulosic biofuel, conventional biofuel, or renewable fuel.

The legislation also provides $284 billion for the Paycheck Protection Program which allows many small businesses to access a second round of forgivable loans.

In addition, the bill extended a number of biofuels tax credits including a one-year extension of the Section 40 second-generation biofuel producer tax credit, a $1.01 credit per gallon of second-generation biofuel produced; and two-year extension of the Section 45Q tax credit, a credit on a per-ton basis of carbon dioxide sequestered.

Growth Energy Chief Executive Officer Emily Skor said in a statement the biofuels relief is “critical” to plants’ survival.”We’re grateful to Congress for stepping up and preventing needless uncertainty from holding back the rural recovery,” she said. “In 2020, ethanol production is down about 13% compared to the previous year, and 2021 is also projecting to be lower than 2019 levels. Ensuring stability is imperative as we head into the new year.”Skor said U.S. Secretary of Agriculture Sonny Perdue needs to “move quickly” on providing relief to the biofuels industry.

“We are also glad to see long-term investment in innovation that helps protect our climate, our health, and our economy through the extension of several key biofuels tax credits,” Skor said.

“Getting these updates signed into law will jumpstart growth in these innovative technologies at a time when revitalizing rural communities has never been more important.”

Renewable Fuels Association President and Chief Executive Officer Geoff Cooper said the legislation provides a “ray of hope” to a struggling industry.

“More than half of the ethanol industry shut down during the extraordinary demand collapse in the spring, and producers across the country still have not fully recovered from that market shock,” he said.

“The pandemic has cost the industry nearly $4 billion in lost revenue to date, with losses expected to continue well into 2021.”

Brian Jennings, chief executive officer of the American Coalition for Ethanol, said his group is ready to turn the page on the current administration.

“Congress gave USDA flexibility to provide relief for biofuel producers in the last stimulus package, but USDA declined to exercise it,” he said.

“That is why job one in 2021 will be to work with incoming USDA Secretary (Tom) Vilsack, upon his confirmation in the U.S. Senate, to get assistance to the industry in rapid fashion. We long sought to create momentum in Congress for the fuel and fuel feedstock reimbursement programs proposed earlier this year, but we anticipate Secretary Vilsack will be receptive to working with us on relief payments. Given the fact oil companies received relief from the Trump administration outside of Congress, we expect the Biden administration to step up and help biofuel producers.”

Todd Neeley can be reached at todd.neeley@dtn.com

 

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