Legislative initiatives benefit biomass industry

President Barack Obama signed the $787 billion American Recovery and Reinvestment Act into law Feb. 17. Approximately $43 billion of that will be used to support energy projects that will save and create jobs, while laying the groundwork for long-term economic growth.

Many of the energy components contained within the stimulus package are expected to benefit the biomass industry. Perhaps most importantly, the legislation extends the production tax credit (PTC) for qualified biomass and municipal solid waste facilities through 2013. The bill permits taxpayers to claim an investment tax credit (ITC) in place of the PTC for certain projects that come on line between 2009 and 2013. It also eliminates the reduction of the ITC for property financed by subsidized energy financing or tax-exempt private activity bonds. In addition, taxpayers are permitted to receive a grant from the U.S. Department of the Treasury in place of claiming tax credits for certain properties placed in service between 2009 and 2010.

The package also provides funding for certain hazardous fuels reduction projects on federal lands, and allows the U.S. Forest Service to award up to $50 million in competitive grants as incentives to increase the use of biomass from federal and nonfederal forested lands. In addition, the legislation provides $6 billion for the Innovation Technology Loan Guarantee program, which was authorized by the Energy Policy Act of 2005. This program will provide loan guarantees for renewable technologies and transmission technologies.

The $6 billion is ultimately expected to support more than $60 billion in loans for these types of projects.

Members of Congress are also considering legislation that would create a federal renewable portfolio standard (RPS). The majority staff of the U.S. Senate Committee on Energy and Natural Resources recently released an outline for a proposed federal RPS that would ultimately require 20 percent of energy sold to retail customers by 2020 to be sourced from renewable resources. A similar proposal was recently introduced in the U.S. House of Representatives. House Resolution 890 would require 25 percent of energy to be sourced from renewable resources by 2025.

In addition, a bipartisan group of senators has introduced legislation that aims to promote the development of biogas through tax incentives. The Biogas Production Incentive Act of 2009 would encourage greater production by providing manufacturers with a tax credit of $4.27 for every 1 million British thermal units of biogas produced. The legislation, S. 306, was introduced Jan. 22 and referred to the Committee on Finance.