Biofuel, bioenergy groups applaud release of GREEN Act

By Erin Voegele | November 19, 2019

The House Ways and Means Committee released a discussion draft of the Growing Renewable Energy and Efficiency Now (GREEN) Act on Nov. 19. The draft includes several tax incentives to support biofuels and bioenergy. This includes provisions of the Biomass Thermal Utilization Act and extensions of renewable energy tax credit, the biodiesel tax credit and second-generation biofuel incentives.

The bill extends the credit for residential energy efficient property expenditures, including solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pumps, and expands the definition of eligible property to include battery storage technology and energy efficient biomass fuel property. The full 30 percent credit is extended for eligible expenditures through the end of 2024. The credit then phases down to 26 percent in 20025 and 22 percent in 2026, after which it expires. A provision in the bill removes biomass stoves from Section 25C of the Internal Revenue Code in order to prevent a double benefit.

For renewable electricity, the Section 45 production tax credits for closed loop biomass, open loop biomass, landfill gas, trash, qualified hydropower and marine and hydrokinetic renewable energy facilities are extended through the end of 2024. The Section 48 investment tax credit (ITC) is expanded to include energy storage technology, waste energy recovery property, qualified biogas property and linear generators. These technologies are eligible for the 30 percent ITC through the end of 2024. The ITC then phases down to 26 percent in 2025 and 22 percent in 2026. For biogas property, the bill notes electricity produced from property receiving an ITC is not also eligible for benefit under the PTC.

For biofuels, the income and excise tax credits for biodiesel and biodiesel mixtures at $1 per gallon are extended through 2021 and then phased down to 75 cents per gallon in 2022, 50 cents per gallon in 2023 and 33 cents per gallon in 2024, after which the credit expires. The bill also extends the 10 cent per gallon small agri-biodiesel producer credit through the end of 2024.

The second generation biofuel income tax credit is expected through 2024. The bill also extends the 50 percent special allowance for depreciation of second generation biofuel plant property placed into service by the end of 2024.

The excise tax credit for alternative fuels and alternative fuel mixtures is set at 50 cents per gallon and extended through 2021. The credit phases down to 38 cents per gallon in 2022, 25 cents per gallon in 2023 and 17 cents per gallon in 2024. The credit expires at the end of 2024.

In addition, the legislation extends the alternative fuel vehicle refueling property credit through 2024.

The Biomass Thermal Energy Council released a statement Nov. 19 applauding the GREEN Act for its inclusion of the Section 25D(a) credit for residential biomass heating property, but noted the draft bill does not expand the investment tax credit to larger commercial system as outlined in the BTU Act.

“We are pleased with the House Ways and Means Committee inclusion of incentives for residential biomass heating systems, which will incentivize the deployment of highly efficient, state-of-the-art renewable wood heating systems,” said Jeff Serfass, executive director of the BTEC. “However, the exclusion of incentives for business and commercial wood heating systems misses a major opportunity to help businesses lower high heating costs through the use of renewable wood and biomass fuels.”

The Pellet Fuels Institute has spoken out in support of the draft bill. “We’re delighted to learn that provisions of the BTU Act have been included in the discussion draft of the Renewable Energy and Efficiency Now Act,” said Tim Portz, executive director of the PFI. “We’ve been advocating for tax parity for wood pellet appliances for nearly a decade so this is encouraging. This was our number one policy talking point during our fly-in effort in October and seeing some progress helps to validate the time our members spent there.”

The American Biogas Council also praised the GREEN Act, noting the bill includes three initiatives that the ABC has sought. This includes the creation of an ITC for RNG- and heat-based biogas systems, the extension of the Section 45 production tax credit and related ITC for electricity-biogas systems, and the extension of the alternative fuel excise tax credit for biogas and renewable natural gas used as a vehicle fuel.

“The biogas industry greatly appreciates the Ways and Means Committee’s response to our requests to create parity in our tax code. The lack of equity has slowed growth of our industry and the GREEN Act is a clear signal that its authors agree it’s time to get more biogas systems built,” said Patrick Serfass, executive director of the ABC. “Our economy will be stronger and our climate better protected when we use these incentives to build more biogas systems to recycle organic material into renewable energy and soil products.” 

The National Biodiesel Board welcomed introduction of the GREEN Act. "The biodiesel industry has long advocated for a long-term tax extension to provide certainty and predictably for producers and feedstock providers,” said Kurt Kovarik, vice president of federal affairs at the NBB. Too often, the credit has been allowed to lapse and then be reinstated retroactively, which does not provide the certainty businesses need to plan, invest, and create jobs.

"Since the start of the year, 10 biodiesel plants have been forced to cut production or close and lay off workers due to policy uncertainty,” he continued. “The biodiesel industry needs an immediate multiyear extension of the tax incentive—at a minimum for 2018, 2019 and 2020—to stem the losses.

"We appreciate the recognition—through this proposed long-term extension—that the biodiesel industry is integral to our domestic energy needs,” Kovarik said. “We look forward to working with our supporters on Capitol Hill to ensure that consumers, producers and marketers benefit from a long-term, forward-looking pro-growth tax policy."

Copies of the discussion draft and a bill summary can be downloaded from the website of Rep. Mike Thompson, D-Calif.