Industry hopes for tax credit extensions, broader reform during lame duck

Source: Amanda Peterka, E&E reporter • Posted: Tuesday, November 13, 2012

Biofuels groups are hoping to see work done during the lame-duck session on extending several tax credits set to expire this year, including a production tax credit for cellulosic biofuel producers.

They’re also hoping to use the lame duck to work with other renewable energy sectors, including solar, wind and geothermal, to position energy in the larger tax reform debate that will happen next Congress, said Brooke Coleman, executive director of the Advanced Ethanol Council.

“We have to start to make more clearly and loudly the case that any tax reform that is enacted in Congress has energy in the center of it and explain why it needs to be in the center,” Coleman said.

Congress is back in session today for less than two months, and its first priority will be addressing the fiscal cliff, House Speaker John Boehner (R-Ohio) said last week.

The biofuels industry is optimistic that lawmakers will get to a suite of tax credit extensions, which include not only the cellulosic biofuel production tax credit but also an alternative fueling infrastructure credit, both of which expire at the end of this year. The biodiesel production tax credit that expired at the end of last year may also be on the agenda.

It is unclear yet just how much Congress will accomplish. There are several other issues to address, including the wind production tax credit, the farm bill, a cybersecurity measure and bills authorizing defense programs.

“Lame ducks are kind of funny ducks sometimes. You don’t know what you’re going to get,” said Tom Buis, president of Growth Energy, an ethanol trade group. “If these folks come back to town and are in the mood — clearly what the voters wanted was [for Congress to] do things that are positive for the country. Don’t just have partisan squabbles. With the election over, maybe that dynamic is changed. I certainly hope so.”

Like the wind industry, biofuel producers remain optimistic about their tax credits, said Bob Dinneen, president and CEO of the Renewable Fuels Association.

The status-quo election “I think suggests that the opportunity for a productive lame-duck session in which tax extenders, including specifically the cellulosic tax incentives, are done,” Dinneen said last week. “I think it looks better today than they might have had there been a real disruption in Washington as a consequence of the election.”

Beyond the short-term debate on tax incentives, Coleman said that a priority was also ensuring that renewable sources of energy, including biofuels, wind, solar and geothermal, are at the table during the debate on comprehensive tax reform that will likely occur next year.

He said that uncertainty in the tax code over renewables was driving potential projects to Brazil, China and India and that reform should not just happen by reducing the corporate tax rate, as House GOP leaders are pushing, but by eliminating unique tax credits for extractive industries like oil and gas.

The biofuels industry has had informal discussions with wind and solar, Coleman said.

“We need to diversify the types of fuel we use. It’s not about oil industry profit,” Coleman said. “It’s just about getting the companies that I represent opportunities to succeed in an environment where the cards aren’t stacked against them. The tax code should not be an impediment to the development of alternative fuels.”

Last week, American Petroleum Institute CEO Jack Gerard said he also thought discussions about comprehensive tax reform would begin next year and continue into 2014.

“We’re prepared to have that conversation. We think it’s a good conversation. It’s the time to have it because the high corporate rate in the United States makes us not competitive on a global basis,” he said.

Gerard added that the institute, the oil industry’s main mouthpiece on Capitol Hill, is looking for a “balanced, fair tax policy across the board for all industries” that does not penalize oil and gas.

“Any efforts to single out and penalize our industry is inconsistent with the president’s commitment to produce the nation’s oil and natural gas,” he said. “You can’t increase the costs on someone and expect them to invest more.”