Legislation aims to extend biofuel, bioenergy tax credits

By Erin Voegele | December 16, 2015

Federal lawmakers have released the text of a $1.1 trillion spending bill that will fund the U.S. government through October 2016. An accompanying legislative package of tax extenders aims to extend certain bioenergy tax incentives for two years.

The tax package extends the second generation biofuel production credit through Jan. 1, 2017. The credit is currently scheduled to expire at the end of the year. The biodiesel and renewable diesel tax credit is also extended for two years, through Dec. 31, 2016. In addition, the bill aims to extend the special allowance for second generation biofuel plant property through Jan. 1, 2017. The alternative fuels excise tax credit is also extended through the end of 2016, along with the credit for alternative fuel vehicle refueling property.

The tax extenders package also benefits biomass power with a two year extension of the Section 45 production tax credit (PTC). While the bill preserves biomass eligibility for the credit indefinitely, the PTC for wind will be phased out through 2019.

The 2009-page omnibus spending bill includes fiscal year 2016 funding for a wide range of government departments and programs, including the Biomass Crop Assistance Program, the Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance program, and Rural Energy for America Program.

The Renewable Fuels Association has spoken out in support of the biofuel tax credit extensions. “By including these important tax incentives in the spending bill, congressional lawmakers sent a strong signal that they are interested in ensuring and encouraging the continued growth and innovation of our nation’s biofuels industry,” said Bob Dinneen, president and CEO of the RFA. “These incentives are crucial for leveling the playing field in a tax code that is, unfortunately, overwhelmingly tilted toward the oil and gas industry. Oil companies have long benefited from billions in accelerated depreciation, intangible drilling expenses, and countless other tax breaks that are permanently imbedded in the tax code. Fundamental tax reform is critical to correct this imbalance.”

The Biotechnology Industry Organization has also commended lawmakers on the extension package. “The advanced biofuel sector is creating thousands of new jobs and generating economic growth opportunities, while producing cleaner renewable fuels,” said Jim Greenwood, president and CEO of BIO. “We will continue to work with Congress members and Senators to encourage recognition of renewable chemicals in the tax code. Parity in tax policy for all applications of industrial biotechnology would help the biorefining sector grow and generate new jobs.”

In addition, the Biomass Power Association weighed in on the PTC extension. “The two-year extension of the production tax credit for biomass is a significant achievement, particularly when considering the phase out of other technologies,” said Bob Cleaves, president and CEO of the BPA. “By not phasing out the credit for biomass, Congress is acknowledging the many benefits of our industry. Beyond reliable baseload energy generation, biomass helps protect forest health and provides thousands of rural jobs. We look forward to continuing to work with Congress to identify additional support that will sustain existing facilities and allow the industry to grow.”

Full copies of the spending bill and tax extenders legislation can be downloaded from the U.S. House of Representatives’ website.