Maine enacts tax credit for renewable chemicals

By Erin Voegele | March 24, 2020

Maine Gov. Janet Mills on March 18 signed a bill establishing a tax credit for renewable chemical production that provides an 8 cent per pound tax credit for eligible products beginning on Jan. 1, 2021.

According to the bill, the credit applies to chemicals produced from renewable biomass via a biological conversion, thermal conversion or combination of the two technologies. The resulting renewable chemical must be sold or used for the production of chemical products, polymers, plastics, or formulated products. Eligible products must have at least 95 percent biobased content and cannot be sold or used for the production of food, feed or fuel. Exceptions are allowed for cellulosic sugars used to produce aquaculture feed and food additives, supplements, vitamins, nutraceuticals or pharmaceuticals that do not provide caloric value and are not considered food or feed.

Taxpayers who produce eligible renewable chemicals can claim a credit of 8 cents per pound of renewable chemicals produced. The taxpayers must demonstrate to the Department of Economic and Community Development that at least 75 percent of the employees of the contractors hired or retained to harvest renewable biomass used in the production of the products meet eligibility conditions specified in the Employment Security Law.

Taxpayers who are allowed to claim the credit must report to the Department of Economic and Community Development, for each credit awarded, the dollar amount of the credit, the number of direct manufacturing jobs created, the number of indirect jobs created, and the dollar amount of the capital investment in manufacturing.

The Biotechnology Innovation Organization has spoken out in support of the credit and noted it worked closely with the legislature and governor’s office to demonstrate the benefits of biobased manufacturing.

“In order to address the climate challenge, we must shed our reliance on fossil fuels across all sectors—from fuels to manufacturing,” said Stephanie Batchelor, vice president of BIO’s Industrial and Environmental Section. “Not only will this tax credit reduce the carbon footprint from manufacturing in the state, it will create hundreds of jobs and ignite the state’s biobased economy.”

A full copy of the bill, LD 1698, titled “An Act to Create Jobs and Slow Climate Change by Promoting the Production of Natural Resources Bioproducts,” is available on the Maine Legislature website.