Overlooked Renewable Tax Extenders Revived in FAA Reauthorization Bill

Source: By Jessie Stolark, EESI • Posted: Monday, April 11, 2016

On April 6, the Senate voted to move to consider the Federal Aviation Administration (FAA) reauthorization bill. The piece of must-pass legislation is viewed by Senate Democrats as the vehicle to carry a raft of renewable tax credits that were left out of the December omnibus, with Senate Commerce Committee Chair Thune (R-SD) commenting that it was expected that the Sec. 48C investment tax credits for biomass, geothermal and fuel cells are likely to be included in the FAA reauthorization bill.  Biofuels industry groups have also called on leadership to extend production tax credits for biofuels producers that were reinstated in 2015, but expire at the end of this year.

48C Investment Tax Credits

Most likely to be included in the FAA reauthorization is Section 48C of the Investment Tax Credit which pertains to biomass, geothermal, and fuel cells.  It provides a tax credit for investments in advanced energy manufacturing projects and facilities. It was originally part of the American Recovery and Reinvestment Act.

In December’s omnibus package, the Investment Tax Credits (ITC) and Production Tax Credit (PTC) for wind and solar were reauthorized, with a phase-down in the wind PTC by 2022. Senate leadership has repeatedly stated that exclusion of some of the technologies covered by Section 48C in last year’s omnibus was simply an oversight during last minute negotiations.

Other sectors of the energy industry have taken the opening to inject their relevant tax credits into the discussion.

Biofuels Production Tax Credits

On April 5, the Advanced Biofuels Business Council, the Algae Biomass Organization, the Biotechnology Innovation Organization, Growth Energy, the National Biodiesel Board and the Renewable Fuels Association wrote to House and Senate leadership requesting an extension of biofuels tax credits.  Reauthorized in the 2015 omnibus, the credits expire at the end of this year.

The industry groups request both an extension of the PTC for biofuels, and request that Congress reject the idea of a phase-out for these credits.  In the letter, they state that without an extension of expiration dates for a variety of renewable fuels tax credits, an uncertain market is created for investors.

Fossil Tax Credits

Senators Cassidy (R-LA) and Bennet (D-CO) are also seeking language that would treat liquefied natural gas (LNG) on an energy-equivalency with diesel.  Since 1.7 gallons of LNG is equivalent to one gallon of diesel, those using LNG for marine purposes are paying nearly double the amount of fuel taxes, according to Sen. Cassidy. This amendment was previously offered as a stand-alone bill in December (S.2378).

Senators Bennet (D-CO), Portman (R-OH), Thune (R-SD) and Nelson (D-FL), have also floated an amendment seeking tax-exempt bonds for carbon capture and sequestration (CCS), which was previously offered as S.2305 in 2015.

Several conservative groups have opposed including tax credits in FAA legislation.  If the renewable tax credits are included, it is unclear if the bill will pass the House.

For more information see:

Business Investment Tax Credit, DSIRE

FAA Bill Creates Opening for Clean Energy Tax Credits, Morning Consult

Industry Letter to House, Senate Leadership on Biofuels Tax Credits, Renewable Fuels Association