Producers urge Congress to extend tax credits

Source: Amanda Peterka, E&E reporter • Posted: Tuesday, December 10, 2013

More than 60 biofuel companies today urged congressional tax leaders to extend a suite of credits benefiting advanced biofuels that are slated to expire at the end of the year.

The credits are vital to stable investment in second-generation biofuels, the companies wrote in a letter seeking a multiyear extension for each of the provisions. The credits include those available to biodiesel and cellulosic ethanol producers to help offset some of the high capital costs involved in producing gallons of next-generation fuels.

“To ensure stability in the marketplace, Congress should extend these provisions, currently set to expire at year-end, for multiple years,” the companies wrote to House Ways and Means Chairman Dave Camp (R-Mich.) and ranking member Sander Levin (D-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) and ranking member Orrin Hatch (R-Utah).

Second-generation biofuel producers, including algae companies, registered with the Internal Revenue Service are eligible for a $1.01-a-gallon tax incentive, while biodiesel producers are eligible for a $1-a-gallon benefit. The suite of biofuels tax credits also includes alternative fuels incentives and a depreciation allowance for second-generation biofuel plant property.

An extension of the tax credits last year was bundled into the congressional deal to avert the “fiscal cliff,” but it flew relatively under the radar because of the larger battle over the extension of the production tax credit for wind producers. The credits are likely to expire again this year as lawmakers set their sights on broader tax reform.

The Advanced Ethanol Council, Biotechnology Industry Organization, Advanced Biofuels Association and Algae Biomass Organization spearheaded the effort today by the companies, many of which are at the forefront of the push to build up the domestic biofuels industry.

The groups and companies also said they would reject any proposal that would allow the tax credits to expire at the end of the year with the promise of dealing with them in broader tax reform in 2014. They warned that even a short-term freeze in the credits, as has happened in previous years in the biodiesel industry, would dampen investment and project development.

“From a global competitiveness standpoint, it will be much more difficult for our companies to develop projects in the United States if current incentives expire and taxes on our industry increase,” the companies wrote.