Last week California Senator Dianne Feinstein (along with Oklahoma Senator Tom Coburn) introduced a bill in the Senate that would eliminate the corn ethanol mandate contained in the Renewable Fuel Standard, while leaving the requirements for next-generation biofuels intact.
Now a new bill introduced in the House of Representatives by California congressman Scott Peters would support the advanced biofuels industry by extending several key tax benefits.
The Renewable Fuels Association was quick to applaud the Second Generation Biofuels Extension Act of 2013, which more specifically extends the Second Generation Biofuel Producer Credit and the Second Generation Biofuel Plant Depreciation Deduction Allowance.
The Second Generation Biofuel Producer Tax Credit applies against a producer’s income tax liability, and can range between $0.41-$1.01 per gallon of biofuel sold or used in the course of business.
If a plant produces only second-generation biofuels, the Second Generation Biofuel Plant Depreciation Deduction Allowance could make it eligible for an additional tax deduction of up to 50 percent of the plant’s adjusted value, but only in the first year of operation.
Both credits are set to expire on December 31, 2013 in the absence of Congressional intervention.
According to RFA President and CEO Bob Dinneen, Representative Peters understands the need for Americans to have access to a gasoline alternative, adding that investors need certainty, and extending the tax credits for second generation biofuels will boost investment and innovation in cellulosic and advanced biofuels.
The state of California specifically represents 18 advance biofuels companies, according to a study by the California-based Environmental Entrepreneurs. That’s more than the 10 advanced biofuels companies it counts in Iowa, and sheds some light on recent legislation.
Iowa Renewable Fuels Association Executive Director Monte Shaw says of California’s two senators, Dianne Feinstein would see the RFS dismantled. But he says it’s Senator Barbara Boxer, Chair of the Senate Committee on Environment and Public Works. who understands the role the RFS plays in supporting the fledgling industry of advanced biofuels.
“‘As long as I have this gavel,'” Shaw says, paraphrasing Boxer’s comments at the end of a hearing last week, “‘we’re not going to rip the RFS apart.’ Because she understands that while she may not be a huge fan of corn ethanol, corn ethanol is the foundation that everything else builds off of.”
Without corn ethanol in the market as well, Shaw says higher-cost blends are a tough sell.
“On their own, they’re not going to be cheap enough to leverage themselves into the infrastructure for distribution,” Shaw says. “So corn ethanol kind of blazes the path. And then over time, research and development and different things like that will bring the cost of the other fuels down, and they’ll be able to slide into the pre-existing pipeline.”