Ricketts signs bill establishing renewable chemical tax credit

By Erin Voegele | August 20, 2020

Nebraska Gov. Pete Ricketts on Aug. 20 signed LB 1107, a legislative package that includes a production tax credit for renewable chemicals and provides property tax reform that will benefit various types of property owners, including biofuel plants.

For the renewable chemical production tax credit, the bill states that renewable chemicals include biobased chemicals that can be a food, feed or fuel additive. This includes supplements, vitamins, nutraceuticals, and pharmaceuticals. Eligible renewable chemicals, however, do not include chemicals sold or used as a fuel.  

According to the legislation, eligible producers of eligible renewable chemicals can claim a tax credit of 7.5 cents per pound, up to $1.5 million per year, starting in 2022.

“As we continuously seek other uses and opportunities for ethanol, the renewable chemical components of LB 1107 will add incentives for companies involved in renewable chemical processes to co-locate at a Nebraska ethanol facility,” said Roger Berry, administrator of the Nebraska Ethanol Board. “This has the potential to lead to alternative and additional options for our state’s robust ethanol industry, which already impacts our economy by $5 billion each year.”

LB 1107 also allows for tax credits based on future investments and job creation. In addition, it could potentially offer substantial property tax relief for ethanol plants, according to the Nebraska Ethanol Board and Renewable Fuels Nebraska.

“Ethanol producers have been through some challenging times lately,” said Troy Bredenkamp, executive director for Renewable Fuels Nebraska. “As ethanol producers look to retool and reinvest in their plants, business incentives and property tax relief will influence future investments and upgrades in the Nebraska plant fleet.”

“We thank those in the Nebraska Legislature who persevered to make LB 1107 a reality,” Bredenkamp said. “While LB 1107 is not perfect legislation, it demonstrates collaboration by the Nebraska Legislature to act in the best interest of Nebraskans.”

Additional information, including a full copy of LB 1107, is available on the Nebraska Legislature website.