Group requests SOTU call for extending credits, cutting oil subsidies

Source: Jason Plautz • Posted: Monday, January 23, 2012

A biofuels group asked President Obama today to call for the extension of tax credits for advanced biofuels and a reduction in oil-industry tax breaks in his State of the Union address next week.

In a letter to the White House, the Renewable Fuels Association urges Obama to “recommit the tools at [his] disposal to ensure America remains on the cutting edge of renewable fuel production and continues to lead the world toward more sustainable energy options.” The group asks for an extension of the production tax credit for cellulosic ethanol and the Accelerated Depreciation Allowance for cellulosic biorefineries, which are both set to expire at the end of the year.

RFA President Bob Dinneen also says Obama should also work to solidify the renewable fuel standard. The RFS — which requires that 36 billion gallons of fuel come from alternative sources by 2022 — is the “policy foundation for investment and commercialization of advanced and cellulosic ethanol technologies,” Dinneen wrote.

However, the RFS has been attacked from many sides, especially after a National Academy of Sciences study found that it may have little environmental and economic impact. There have been several calls to weaken or amend the RFS to avoid negative impact on agriculture and fuel prices. The White House has maintained support for the biofuels industry, and U.S. EPA has continued its work on the RFS, although it has lowered targets in recent years.

The group says Obama should also reiterate a call to end “duplicative and gratuitous” tax breaks for oil and gas companies, saying it is necessary to level the playing field. Citing the ethanol industry’s own willingness to let a production tax credit expire last year, Dinneen writes that subsidies should be ended across the sector.

In his 2011 State of the Union address, Obama asked Congress to “eliminate the billions in taxpayer dollars we currently give to oil companies” in order to pay for research and development of biofuels and electric cars.

“Instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s,” Obama said.

That pledge maintains Democratic support but has had little traction in Congress. However, the Obama administration has sustained support for biofuels as an alternative to oil, with the Agriculture Department investing hundreds of millions of dollars in biofuel plants and production schemes. In August, the administration also announced a $510 million initiative across USDA, the Department of Energy and the Navy to boost advance biofuel production and use (Greenwire, Aug. 16, 2011).

Click here to read the letter.