Georgia, Louisiana adopt renewable energy income tax credits

By Susanne Retka Schill
Two states adopted different uses of income tax credits through legislation enacted this summer that aims to encourage renewable energy projects.

In Georgia, the state now offers an income tax credit to offset the costs of installing biomass power and other renewable technologies. The credit, which covers up to 35 percent of the cost of the project, is available to individuals and businesses installing renewable energy projects including solar, wind, geothermal and biomass power. There is a ceiling of $500,000 for businesses, and the credit won't exceed the tax liability owed to the state. The legislation lists biomass equipment converting wood waste into electricity through gasification and pyrolysis as qualifying "clean energy property." There is a ceiling of $2.5 million per year on the total tax credits that will be issued on a first come, first served basis during the legislation's five-year life.

The legislation also calls for biomass applications that use wood from land clearing, urban waste and pellets, and excludes wood from national forests. Taxpayers are eligible for credits resulting from the transporting or diverting of wood waste to biomass facilities on a per-ton basis with the value to be determined by the Georgia Forestry Commission.

Louisiana's income tax credit targets advanced biofuels. The state's initiative calls for a comprehensive "field-to-pump" strategy to develop an advanced biofuels industry. The initiative is targeted toward feedstocks other than corn that:
Are derived solely from Louisiana harvested crops
Are capable of an annual yield of at least 600 gallons of ethanol per acre
Require no more than one-half of the water required to grow corn
Are tolerant of high temperatures and waterlogging
Are resistant to drought and saline-alkaline soils
Are capable of being grown in marginal soils, ranging from heavy clay to light sand
Require no more than one-third of the nitrogen required to grow corn
Require no more than one-half of the energy necessary to convert corn into ethanol

The strategy also calls for a decentralized network of small advanced biofuel manufacturing facilities to reduce feedstock supply risk, avoid burdening local water supplies and provide a broader base for economic development. The act defines a "small advanced biofuel manufacturing facility" as producing between 5 MMgy and 15 MMgy from feedstocks other than corn. An income tax credit of 10 cents per gallon applies to the first 10 million gallons of advanced biofuels produced in a tax year, expiring Dec. 31, 2012. The legislation also establishes pilot programs for hydrous ethanol and variable blending pumps.