Ethanol Industry Pleased With Tax Extensions

Joanna Schroeder

Very early this morning the American Taxpayer Relief Act of 2012 was passed that included several one-year biofuel tax extensions including the Cellulosic Producer Tax Credit. While the ethanol industry was pleased with the bill, they remain outspoken that the biofuel industry needs a long-term federal commitment – not just one year.

aeclogoBrooke Coleman, Executive Director of Advanced Ethanol Council responded to the passage of the bill. “The advanced ethanol industry commends President Obama and the 112th Congress for extending the cellulosic producer tax credit and accelerated depreciation allowance as part of the American Taxpayer Relief Act of 2012. Just five years after the passage of the amended Renewable Fuel Standard (RFS), the cellulosic biofuels industry is breaking through at commercial scale.”

Coleman continued, “The one year extension will allow those projects coming online to continue development while Congress acts more broadly to reform the U.S. tax code to allow new players in the energy space to compete on a level playing field with oil and gas. We look forward to working with the Obama Administration and the next Congress to ensure that we continue to grow the next generation of biofuels right here in the United States.”

Growth_Energy_logo-1In addition to the Cellulosic Producer Tax Credit, the package included the Alternative Fuel Infrastructure Tax Credit. Tom Buis CEO of Growth Energy noted that by extending the Alternative Fuel Infrastructure Tax Credit to retailers through 2013, “Congress has also taken a critical step to bring E15 to the marketplace, “providing a choice and savings to the consumer. Furthermore, this provision will help decrease our addiction to foreign oil and help the renewable fuels industry break through the blend wall.”

“However,” added Buis, ” by only extending them for one year, Congress failed to provide the necessary certainty for investors and businesses to plan for the long term, which is imperative for continued stability and growth.”

Despite extension of one-year only, there were still some achievements with the second generation biofuel producer tax credit and the special allowance for second generation biofuel plant property. The Act, says the Biotechnology Industry Organization (BIO), will incentivize both cellulosic and algae biofuel production with the renewal of the $1.01 per gallon tax credit for producers, accelerated depreciation for newly constructed facilities during 2013 and modifying these credits to include algae.

BIOlogo“Private investment is critical to ensuring that advanced biofuels reach commercial scale and become cost-competitive. Already, private companies have made significant investments to develop advanced cellulosic and algae biofuels and build new production capacity,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section.

Erickson continued, “This investment is part of a wave of innovation in biobased production of fuels and renewable chemicals that is driving employment and economic growth, helping to reduce our reliance on foreign oil, and leading to a cleaner environment. Tax policies should help to support investment in these innovations.”

The 112th Congress did not come to consensus, nor pass, a new Farm Bill. As a result, the current bill was extended for nine months. However, there were several programs in the current Farm Bill that benefited the renewable fuels industry and these were removed. This action killed the funding for ethanol infrastructure development under the REAP program as well as second-generation production under BCAP and the Biorefinery Assistance Program.

Buis concluded, “As the 113th Congress convenes this Thursday, I urge them to revisit these provisions and act to provide the stability and funding necessary to ensure robust growth and continued success for the renewable fuels industry moving forward.”

advanced biofuels, AEC, algae, BIO, Growth Energy, Renewable Energy