Legislation reinstates biodiesel credit, extends cellulosic credit

News
Jan 4, 2013
by DTN

Congress reinstated the biodiesel blenders credit and extended the cellulosic biofuels producer tax credit as part of the package to avoid falling off the fiscal cliff.

The House of Representatives last Tuesday passed by a vote of 257-167 a bill to avert a set of automatic tax increases that would have gone into effect Jan. 1. The bill passed the Senate 89-8 Monday and is expected to be signed by President Barack Obama.

Under the legislation, the $1-per-gallon blenders credit for biodiesel and renewable diesel which expired Dec. 31, 2011, will go back into effect retroactively for 2012 and extend to the end of this year.

“It’s been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board, in a statement released late Tuesday. “In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees.”

The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012, and through the end of 2013.

American Soybean Association President Danny Murphy applauded the decision to reinstate the biodiesel tax incentive, calling it a boon for soybean farmers.

“...The extension of the dollar-per-gallon credit retroactive to 2012 and through 2013 is also a significant win for the burgeoning biodiesel industry, an important market for soybean growers,” Murphy said in a statement issued Wednesday. “More than half of all biodiesel produced in the U.S. uses the oil from American-grown soybeans as a feedstock, which helps to grow our domestic fuel supply and creates soy meal as a byproduct, providing protein-rich animal feed for livestock, poultry and aquaculture.”

In addition to reinstating the biodiesel tax credit, the legislation also extended two cellulosic biofuels provisions.

Under current law, facilities producing cellulosic biofuel can claim a $1.01-pergallon production tax credit on fuel produced before the end of 2012. This provision was created in the 2008 Farm Bill. The bill passed last week extends this production tax credit for one additional year, for cellulosic biofuel produced through 2013. In addition, the definition has been expanded to include cellulosic biofuel production from algae-based feedstocks.

The bill also included an extension of the 2008 Farm Bill’s 50 percent capital costs expense bonus depreciation for cellulosic biofuels facilities. The provision extends the depreciation for one additional year for facilities that begin operations before the end of this year. This also expands the definition of qualified cellulosic biofuel production to include algaebased fuel.

“This one-year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement Wednesday morning.

He added the cellulosic fuel producer’s credit “will accelerate E15’s entry into the marketplace this coming year.” — DTN

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