Advanced Biofuels Industry Gaining Momentum

By Michael McAdams | August 29, 2012

On Aug. 2, the advanced biofuels industry had its best day in a long time. Both the Senate Appropriations Committee and the Senate Finance Committee passed bills containing provisions that move the ball forward for the industry.

In what has been a difficult battle, the discussion surrounding the memorandum of understanding between the U.S. Department of Defense, the USDA and the U.S. DOE has spurned great controversy between key Republicans, Secretary of the Navy Ray Maybus and his supporters on Capitol Hill. To give credit where it’s due, Mabus, Sen. Inouye, D-Hawaii, Sen. Cochran, R-Miss., and Sen. Murray, D-Wash., led the effort to provide the funding to advance the program. In the end, the committee provided the full $170 million in funding, $70 million more than the DOD's own request.

This essentially ignores an effort by Sen. McCain, R-Ariz., and Sen. Inhofe, R-Okla., to place provisions in the defense authorization bill that would render  the program virtually inoperable. When Congress returns, it is expected that the defense authorization bill will be brought to the full Senate floor for consideration. Given the less-than-stellar provisions supporting the authorization in the House version of the bill, it is essential that the Senate provisions are stricken or significantly modified in order to provide a strong base for the program moving forward. The bipartisan Senate Appropriations Committee vote was a good start, however. 

This effort drew many supporters, including a group of more than 50 organizations that came to the defense of these provisions. Virtually all of the organizations that support biofuels, along with the airline industry and a number of defense-related organizations, actively supported the effort to fully fund the MOU. This is a model that will have to be replicated to defend the renewable fuel standard (RFS)moving forward. 

In the finance committee, a bipartisan group vote of 19 to 5 approved a number of key provisions sought by the advanced biofuels industry. The committee extended the cellulosic production tax credit through the end of 2013 and added algae-based fuels to the credit. Additionally, the committee extended the biodiesel, renewable diesel and the alternative fuels tax credits until the end of 2013, and the Section 168 first-year depreciation allowance for cellulosic property was expanded to include algae, and extended until the end of 2013. 

The House has not taken action on any of the above provisions and has no schedule to do so as of this writing. Expect this to be an issue that, if it gets addressed, will take place following the election in a lame duck session. For those of you already producing gallons, with the exception of the alternative fuels mixture credit, all of the other provisions are retroactive back to Jan. 1. 

As I have written before, elections have consequences, and those of you in the biofuels space need to be actively engaged and remind all politicians that advanced biofuels should be part of a portfolio approach to our nation's energy policy. It should not be a partisan issue. Make your voice heard, and in every conversation remind them that the RFS is the bedrock of our nation's renewable fuels policy.

It must and should be supported for our nation moving forward. 

Get ready for an active fall.

Author: Michael McAdams
President, Advanced Biofuels Association