Tax extenders package benefiting biofuels passes Senate committee

Source: By Erin Vogel, Biomass Magazine • Posted: Wednesday, July 22, 2015

The Senate Finance Committee has passed a tax extenders package that includes two-year extensions of tax credits for cellulosic biofuels and biodiesel. The next step for the legislation is consideration by the full U.S. Senate, which has not yet been scheduled.

The bill contains a provision extending the $1.01 per gallon production tax credit for cellulosic biofuels, which expired at the end of last year. Under the legislation, the cellulosic biofuels producer tax credit would be extended for two years, through 2016.

The bill would also extend incentives for biodiesel and renewable diesel for two years, through 2016. The extension would apply to the $1.00 per gallons credit for biodiesel, the 10-cent-per-gallon small agri-biodiesel producers credit, and the $1.00 per gallon tax credit for diesel fuel created from biomass.

During the hearing to address the extenders package, the committee accepted an amendment offered by Sen. Chuck Grassley, R-Iowa, to change the biodiesel fuels tax credit from a mixture credit to a production credit. During the hearing, Grassley explained that the amendment would help ensure the credit benefits only domestic biodiesel production and doesn’t subsidize imported biofuels. “It’s projected that imports from Argentina, Singapore, the European Union and South Korea could exceed 1 billion gallons in the years 2016 and 2017,” Grassley said, noting the tax incentive should not apply to these imported fuels. “By restricting the credit to domestic production, we’ll save tax payers money and reduce the cost of the extension by $90 million,” he continued.

The extenders package also includes a wide variety of other tax credit extensions, including a two-year extension of the renewable production tax credit. The credit can be claimed as a 2.3 cent per kWh tax credit for renewable electricity, or an alternative 30 percent investment tax credit. The credits, which expired at the end of last year, would be extended through the close of 2016.

In addition, the package includes two-year extension of the special depreciation allowance for second generation biofuel plant property and the alternative fuel mixture excise tax credit.

Bob Dinneen, president and CEO of the Renewable Fuels Association, has spoken out to commend the committee’s leadership for recognizing how important these tax credits are for the continued growth and innovation of the U.S. biofuels industry. “Stability in the marketplace is crucial to encouraging development in second-generation biofuels, like cellulosic ethanol,” he said. “By extending these incentives, the committee has helped to provide that needed stability. We look forward to working with the Senate Finance Committee specifically and Congress generally on comprehensive tax reform.”

The BlueGreen Alliance has also applauded the committee for its actions. “While these clean energy incentives never should have even been allowed to expire in the first place, lawmakers should use this opportunity to bring back the vitally important Production Tax Credit and other incentives,” said Kim Glas, executive director of the BlueGreen Alliance. “These are the proven and effective programs that create and maintain good, family-sustaining jobs.”