House passes biomass production tax credit

By Lisa Gibson
Posted June 1, 2010, at 12:49 p.m. CST

The biomass production tax credit is one step closer to reinstatement, after the one-year extension passed in the U.S. House of Representatives the afternoon of May 28.

The American Jobs and Closing Tax Loopholes Act (HR 4213) extends the credit period from five years to six years for electricity produced at open-loop biomass facilities placed in service prior to Jan. 1, 2005. In the sixth year, however, the credit provided to the facilities is reduced by 20 percent.

The act also includes a one-year extension of the $1-per-gallon biodiesel and renewable diesel credits, along with the 10-cents-per-gallon credit for small agri-biodiesel producers.

The biomass and biodiesel credits expired in December, leaving the industries without a crucial revenue stream, according to some. More than 100 operating plants in the country count on the biomass production tax credit, according to Biomass Power Association President and CEO Bob Cleaves. He has previously said that if an extension is not passed, it will have catastrophic consequences for the biomass power industry, which is responsible for about half of the renewable energy produced in the U.S.

Shelby Neal, director of government affairs for the National Biodiesel Board, has said the biodiesel tax credit has been extremely successful and its retroactive reinstatement accounts for NBB priorities one, two and three. Since its expiration, plants have idled, production has lessened, workers have been laid off and some plants are teetering on the edge of solvency, he said.

A Senate vote is expected after the Memorial Day recess.