GREEN Act includes biofuel, bioenergy tax extenders

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Thursday, February 11, 2021

Mike Thompson, D-Calif., chairman of the House Ways and Means Subcommittee on Select Revenue Measures, on Feb. 5 announced the introduction of the Growing Renewable Energy and Efficiency Now (GREEN) Act, which includes several tax extenders that would benefit the biofuel and bioenergy industries.

The bill would extend the Section 45 production tax credit (PTC) for electricity produced from certain renewable resources. For facilities that produce electricity from landfill gas, trash, qualified hydropower, or marine and hydrokinetic, the credit would be extended through 2026.

It would also extend and modify the Section 48 investment tax credit (ITC), which allows taxpayers to claim a credit for up to 30 percent of the cost of qualified energy property. In most cases, the provision would extend the credit at full value for property for which construction begins by the end of 2026, and then phases down over two years. For biogas property, the bill would extend the ITC at 30 percent through the end of the 2026. It would then phase down to 26 percent in 2027 and 22 percent in 2028.

The GREEN Act would also extend the 45Q credit for carbon oxide sequestration to facilities that begin construction before the end of 2026.

In addition the bill contains a provision that would allow taxpayers to elect to be treated as having made a payment of tax equal to 85 percent of the value of the credit they would otherwise be eligible for under the ITC, PTC, or Section 45Q credit for carbon capture and sequestration. Rather than opting to carry forward credits to years when their credits exceed their tax liability, taxpayers can take a reduced credit and request a refund of any resulting overpayment of tax. A fact sheet released by the subcommittee indicates the provision would allow entities with little or no tax liability to accelerate utilization of those credits.

For renewable fuels, the bill would extend the income and excise tax credits for biodiesel and biodiesel mixtures at $1.00 per gallon through 2022, with the credit phased down to 75 cents per gallon in 2023, 50 cents per gallon in 2024 and 33 cents per gallon in 2025. The credit would expire at the end of 2025. The legislation would also extend the 10 cent per gallon small agri-biodiesel producer credit through the end of 2025.

Other provisions of the bill aims to extend the second generation biofuel income tax credit and the alternative fuel refueling property credit through 2026.

A statement released by Thompson states that the American Biogas Council and Biomass Power Association are among the groups who support the GREEN Act.

The Carbon Capture Coalition has also spoken out in support of the bill. Brad Crabtree, director of the CCC, said the direct pay option and extension of the 45Q credit included in the GREEN Act reaffirms the critical role carbon capture, removal, transport, use and storage must play in meeting U.S. climate obligations. “Direct pay is an important tool that allows project developers the opportunity to receive the 45Q tax credit as an estimated payment on their tax return, allowing them to finance carbon capture, direct air capture and carbon utilization projects without being subjected to the onerous financial terms and burdensome transaction costs of tax equity financing, thus incentivizing more technology innovation, jobs and emissions reductions at no extra cost to the federal government,” he added.

Additional information, including a full copy of the bill, is available on Thompson’s website.