Energy, ag, business groups push for tax credit extensions

By Anna Simet | September 21, 2016

More than 50 groups in the energy, agriculture, transportation and other business sectors have banded together to pressure Congress for a multiyear extension of tax provisions set to expire at the end of the year.

In a signed letter sent to Capitol Hill, the organizations emphasize the need for an extension of these for multiple years, rather than just through the following year, in order to provide more certainty to businesses and investors.

During a Sept. 20 press conference to discuss the significance of the effort, Todd Foley of the American Council of Renewable Energy briefly characterized the U.S. energy markets, which he said today are driven by significant coal plant replacements due to an aging and uneconomic fleet. “Much of the replacement has been renewables and natural gas…the tax credits for solar and wind have been an important incentive driving this deployment,” he said, adding that all energy sources, whether renewable or conventional, benefit from tax incentives. “These incentives have existed for oil and gas, nuclear, solar wind and others for many, many years, and I would note that Incentives for renewables have been temporary and required renewal periodically, while incentives for conventional resources are permanent and in the tax code. Last year, Congress extended wind and solar on a multiyear basis, but they didn’t address the other important technologies contributing to our power mix—biomass, geothermal, hydro, etc. It’s these tax incentives that expire at the end of this year, so it’s very important congress extends these tax incentives so they can compete on a level playing field…”

Marcus Gillette or the Renewable Natural Gas Coalition discussed tax provisions that affect stakeholders and its members, who currently produce 90 percent of the renewable natural gas transportation fuel in North America. “Our coalition members represent the full value chain of cellulosic waste feed stock conversion to electricity, heat and transportation fuel,” he said. “There are several tax provisions set to expire at the end of this year, that impact [RNG] deployment. One provision is the Alternative Fuel Vehicle Refueling Property Tax Credit, which is intended to expand the availability of alternative fueling stations, like natural gas refueling stations to increase the use of natural gas as a motor vehicle fuel, and reduce demand for petroleum motor fuel.”

The second provision, Gillette said, is the Second-Generation Biofuel Tax Credit. The credit provides  second-generation biofuel producers registered with IRS for a tax incentive in the amount of up to $1.01 per gallon of second generation biofuel that is sold and used by the purchaser in the purchaser's trade or business to produce a second generation biofuel mixture; sold and used by the purchaser as a fuel in a trade or business; sold at retail for use as a motor vehicle fuel; used by the producer in a trade or business to produce a second generation biofuel mixture; or used by the producer as a fuel in a trade or business.

“Not renewing these provisions contributes to short- and long-term uncertainty that effectively slows investment and slows production and distribution of cleaner fuel in the U.S., and would increase our long-term reliance on dirtier burning fuels,” Gillette added. “We’ve made huge strides nationally in the past decade…history shows that the cycle of low fuel prices will eventually subside, so we need to do all we can now to maintain and grow the gains in clean fuels that we’ve collectively achieved.”

Bob Cleaves, president of the Biomass Power Association, said biomass has been in the Internal Revenue Code since 2005, for both the Renewable Electricity Production Tax Credit and Business Energy Investment Tax Credit. “Extending the credit is important for our industry—we’re a billion dollar industry employing almost 20,000 a year in 22 states, and we’re an important part of the renewable energy mix.” Cleaves reiterated the significance of a level playing field, and an all-of-the-above strategy, which he said is a “bipartisan message. It’s important that we provide long-term certainty to our industry. The on-again, off-again nature of tax extenders does nothing for our industry, and it’s really important that Congress use the time between now and the end the year to give us some of that certainty and long-term extension.”