Renewable energy gets needed break

Renewable energy gets needed break

THE fiscal cliff deal was an amended bill originally worked up in the House over the summer.

However, one major change in the final deal was the inclusion of many tax credits that the Senate had approved earlier this summer.

The Family & Business Tax Cut Certainty Act of 2012, which passed through the Senate Finance Committee in August, was copied and pasted into the fiscal cliff legislation. The White House insisted on the addition, which covers a whopping 50 tax credit extensions, including some that had faced stiff opposition from House Republicans, especially those for "green" energy.

The result was a victory for biotechnology companies, wind turbine makers, biodiesel producers and others.

Specifically, the bill extends the $1/gal. biodiesel tax incentive retroactively to 2012 and through 2013. It had expired on Dec. 31, 2011.

A recent study found that the industry would have produced an additional 300 million gal. in 2012 had the tax incentive been in place, the National Biodiesel Board reported.

The biodiesel tax incentive was first implemented in 2005. Congress allowed it to lapse in 2010 and again in 2012.

The act will incentivize investment in both cellulosic and algae biofuel production by renewing a $1.01/gal. tax credit for producers and accelerated depreciation for newly constructed facilities during 2013 and modifying these credits to include algae, the Biotechnology Industry Organization reported. It is estimated that the extension will cost $59 million.

Along with reviving the biodiesel credit, Congress extended the $1/gal. credit for diesel fuel created from biomass and a 10 cents/gal. credit available to small agri-processors who make biodiesel. These were estimated to cost $2.2 billion over 10 years.

Congress also agreed to extend the alternative fuel infrastructure tax credit to retailers through 2013, which Growth Energy said is "a critical step to bring E15 (15% ethanol fuel blend) to the marketplace."

Bob Dinneen, president of the Renewable Fuels Assn., said for investors, the one-year extension wasn't ideal, but in the "battleground known as the U.S. Congress," nothing more was going to be feasible.

However, Dinneen said it tees up a longer conversation about what to do with the tax code, and not just energy. The extensions in the fiscal cliff deal "set us up for that conversation from a better position, having been extended, and I think that will be helpful," he said.

The bill also extends the production tax credit and investment tax credit for wind energy for one year. The 2.2 cents/kWh credit for wind power production had already expired last Tuesday.

The wind energy industry has talked about needing a phase-out plan for the credit, and the short-term extension should provide time to move forward on that approach.

The American Wind Energy Assn. said last year's uncertainty in federal policy caused a "boom/bust" cycle in the U.S. wind energy industry, and companies idled factories and had to lay off workers.

The version included in the deal would cover all wind projects that start construction in 2013. Companies that manufacture and install wind turbines sought that definition in order to cover the 18-24 months it takes to develop a new wind farm.

Volume:85 Issue:01

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish