Senate passes tax credit extension

Posted March 10, 2010, at 2:14 p.m. CST

A one-year extension of the production tax credit for biomass power facilities is included in the American Workers, State and Business Relief Act, which was approved by the Senate March 10. The five-year credit was originally included in the 2004 Jumpstart Our Business Strength Act and is crucial to the biomass power industry.

Under the new bill's provisions, the credit period, which expired at the end of 2009, would be extended through 2010 for open-loop electricity-producing facilities placed in service before Oct. 22, 2004, according to the U.S. Senate. It would also be retroactive to Jan. 1, 2010. The proposal carries an estimated cost of $105 million over 10 years.

The same extender was cut from the original jobs bill in February, along with biodiesel credit extenders. Biomass Power Association President and CEO Bob Cleaves said the industry is glad to be included in the bill, but has been pushing for a full five-year extension of the credits. "Clearly, this is a short-term extension," he said. It doesn't solve the longer-term challenges of the industry and we will be seeking in 2010 a longer extension than one year, but we are very pleased to be in the bill. It's a reflection of the support we've received in the Congress and we look forward to a swift passage of the legislation and extension of our benefits."

More than 100 operating plants in the country count on the production tax credit, according to Cleaves. He has previously said that if an extension is not passed, it will have catastrophic consequences for the biomass power industry, which is responsible for about half of the renewable energy produced in the U.S.

The $150 billion piece of legislation also includes an extension through 2010 of $1-per-gallon tax credits for biodiesel, renewable diesel and diesel from biomass, as well as an extension of the 10-cents-per-gallon credit for small agri-diesel producers. The proposal comes at an estimated cost of $1 billion over 10 years, according to the U.S. Senate.

The House of Representatives passed the Tax Extenders Act of 2009 in December, without provisions for biomass power. "There has to be a meeting of the minds between two pieces of legislation that are different in scope," Cleaves said. "The bottom line is there has to be a meeting between the House and Senate so that there is one bill sent to the President and hopefully signed into law."

Both the House and Senate versions of the bill need to be reconciled and both chambers have to approve it before it can be signed into law by President Obama.