Biogas investment tax credit introduced

By Anna Simet | March 07, 2013

Reps. Ron Kind, D-Wis., and John Lewis, D-Ga., have introduced a bill that would provide qualifying biogas technologies with a 30 percent investment tax credit (ITC), adding to the list of renewables that already receive a 30 percent federal investment tax credit.

While biogas projects that generate power are currently eligible for the Internal Revenue Service Section 45 renewable electricity production tax credit, there are no comparable tax incentives for production of biogas when used for purposes other than electricity generation, according to the American Biogas Council.

The bill, HR 860, defines qualifying biogas property as a system that uses anaerobic digesters or other biological, chemical, thermal or mechanical processes (alone or in combination) to convert biomass into a gas that consists of not less than 52 percent methane, and captures that gas for use as a fuel.

According to ABC Executive Director Patrick Serfass, projects that inject renewable natural gas into the gas pipeline or use the biogas to power vehicle fleets would benefit from the credit. "This tax credit will help a dairy farmer who makes biogas from cow manure and then uses it to heat the buildings and power the trucks that deliver the milk," said Serfass. "Without it, the farmer may not be able to make that investment…the ITC would also facilitate the conversion of food waste to biogas that can be injected into natural gas pipelines." 

The bill also calls for the U.S. Secretary of the Treasury to enter into an agreement with the National Renewable Energy Laboratory to undertake a study of biogas in order to provide a written report to be submitted to Congress within two years after enactment of the bill. The report would address the quality of biogas, including a comparison of biogas to natural gas and the identification of any components of biogas which make it unsuitable for injection into existing natural gas pipelines; methods for obtaining the highest energy content in biogas, including the use of co-digestion and identifying the optimal feed mixture; and recommendations for the expansion of biogas production, including an analysis of the extent to which increasing the methane content of biogas would result in its greater use, and an analysis of how the expanded use of biogas could help meet the growing energy needs of the U.S.