Iowa bill would create renewable chemical production tax credit

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Tuesday, March 29, 2016

Legislation pending in Iowa aims to create a five-year, 5-cent-per-pound, renewable chemical production tax credit program. The Biotechnology Innovation Organization has spoken out in support of the measure, noting it would help drive innovation in the sector.

The Senate version of the bill, S.F. 2300, was introduced in early March and passed by a vote of 46 to three on March 16. The House version of the bill, H.F. 2288, was introduced in February and passed by a House subcommittee on March 16.

According to the text of the legislation, the tax credit would take effect July 1 and run through June 30, 2021. The credit would be capped at $105 million. Eligible renewable chemicals would be required to have at least 50 percent biobased content and not be sold or used for the production of food, feed or fuel. Cellulosic ethanol, starch ethanol or other biomass-derived ethanol, fatty acid methyl esters and butanol would be eligible to claim the credit, but only to the extent that such molecules are produced and sold for uses other than food, feed or fuel. The definition of renewable chemical also includes building-block chemicals, which can be a food additive as long as it is not primarily consumed as food and is sold for uses other than food. In addition, the definition includes supplements, vitamins, nutraceuticals, and pharmaceuticals, but only to the extent that such molecules do not provide caloric value.

“Renewable chemicals help protect the environment and create new jobs. Iowa’s new tax credit will encourage biotechnology and renewable chemical companies to make investments and deploy innovative homegrown technology in Iowa,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section. “BIO will continue to work with the Iowa legislature, other states and the federal government to level the playing field in economic development incentives for renewable chemical and biobased manufacturing technologies.”

“Iowa is securing a leadership position in building a biobased economy, creating new economic opportunities for farmers and manufacturers, and generating well-paying jobs,” added Joe Hrdlicka, executive director of the Iowa Biotechnology Association (IowaBio). “We thank Gov. Terry Branstad and Director of the Iowa Economic Development Authority Debi Durham for championing this policy.”