Bill with biochemical production tax credit introduced in House

By Erin Voegele | May 16, 2012

The Biotechnology Industry Organization recently hosted a teleconference to discuss how a newly introduced production tax credit for biochemicals could impact the U.S. biorefining industry. The legislation, titled the “Qualifying Renewable Chemical Production Tax Credit Act of 2012,” or H.R. 4953, would establish a production tax credit of 15 cents per pound of eligible content of renewable chemicals produced during the taxable year. The measure was introduced by Rep. Bill Pascrell, D-N.J., on April 26 and referred to the House Ways and Means committee.

Under the bill, the term “eligible content” is defined to include the biobased percentage of the total mass of organic carbon within a renewable chemical. According to the legislation, a renewable chemical is a chemical produced using biomass that is sold or used in the production of polymers, plastics, or formulated products not sold or used in the production of food, feed or fuel. The production tax credit would not apply to chemicals that contain less than 25 percent biobased content, or for biobased chemicals that were produced at rates of 10 million pounds or more during 2000. The bill also specifies that applicable chemicals must be either the product of or reliant upon a biological conversion, thermal conversion or a combination of the two conversion processes.

The legislation establishes that the total amount of the credit that can be allocated under the initiative is $500 million, and the maximum amount of credit that can be allocated to any taxpayer for any taxable year under the program is $25 million.

During the teleconference, BIO Senior Director for Policy Rina Singh noted that this type of incentive is needed to level the playing field for U.S. companies, to help insure that home-grown biotechnology innovations are deployed within the U.S. She said this brings benefits of job creation and helps our nation maintain its competitive leadership in the industrial biotechnology sector. “That is what tax policy incentives should do—drive innovation to reduce our dependence on foreign oil and create high-quality U.S…jobs and career opportunities,” she said. “It will be much more difficult for our own companies to develop projects in the United States if other nations offer more attractive investment incentives. It is absolutely critical to provide incentives that can avoid driving private capital to other countries.”