Schumer introduces bill to make biogas eligible for ITC

By Erin Voegele | August 13, 2014

Sen. Chuck Schumer, D-N.Y., recently introduced legislation that aims to encourage the construction of anaerobic digestion (AD) facilities by adding biogas to the list of renewable energy sources that receive a 30 percent investment tax credit (ITC) for the construction of new facilities. The bill, S. 2739, was introduced July 31 and referred the Committee on Finance.

A statement on the bill recently issued by Schumer’s office highlights the potential impact of the tax credit on the dairy industry, noting that whey and manure byproducts could be converted to renewable energy in AD systems. In addition to renewable energy, the projects would also give dairy operations a new source of revenue and allow for the creation of jobs.

“As the Silicon Valley of Greek yogurt and the nation’s capital of cottage cheese, Upstate New York produces a lot of whey that could very easily be turned into renewable energy. But more biogas facilities are needed around Upstate New York to turn this vision into a reality,” said Schumer. “That is why I am proposing a new biogas tax credit, which would make the costs of opening up a new biogas plant more affordable and lead to more facilities sprouting up across the state. Pairing biogas with our upstate yogurt and dairy industry is a no-brainer – it is environmentally-friendly and economically-friendly. Expanding this tax credit for biogas is the right thing to do if we want to create jobs, and simultaneously grow two hugely important industries in Upstate New York: dairy and renewable energy.”

"Farms are an underutilized resource for energy production and biogas offers a clean and renewable option for energy generation and economic development right in our backyard. I appreciate Sen. Schumer sponsoring the Biogas Investment Tax Credit Act, which will help address the cost barriers associated with installing these systems on more farms in New York. This will also help to spur more investment in local clean energy production," said Dean Norton, president of New York Farm Bureau.                                                         

“This tax credit will help ignite interest among farmers who are considering investing in digesters to help develop a new revenue stream for their farms, while also benefitting the environment at the same time by reducing methane emissions. We commend Senator Schumer for his continued leadership on behalf of dairy farmers in New York and across the nation,” said National Milk Producers Federation CEO Jim Mulhern.

The American Biogas Council has spoken out to applaud the introduction of the legislation. According to the ABO, while biogas projects that generate electricity are eligible for a production tax credit under section 45 of the federal tax code, currently no comparable tax incentive exists for the production of renewable biogas when used for purposes other than electricity generation.

"To be able to recycle organic materials that today are mostly disposed of in a manner that contributes to global warming, we must build more biogas systems,” said Patrick Serfass, executive director of the ABC. “We thank Senator Schumer for sponsoring of the Biogas Investment Tax Credit Act which recognizes the full value that biogas systems can contribute as renewable energy generators—not just their role in producing renewable electricity."

According to Schumer’s office, a bill to establish a biogas tax credit has already been introduced in the U.S. House of Representatives. That bill, H.R. 860, was introduced in February 2013 by Reps. Ron Kind, D-Wisc., and John Lewis, D-Ga.