Supporters of advanced biofuels testified Wednesday in support of several key tax incentives that have been critical to the growth and development of the nation’s biofuel industry during a hearing before the House Ways & Means Committee.
The hearing, “Post Tax Reform of Recently Expired Tax Provisions,” offered a platform for a discussion of the future of tax extenders in a post-comprehensive tax reform world. The committee heard from more than 20 witnesses over the course of four panels.
Ag Processing Inc. (AGP), a member company of the National Biodiesel Board (NBB), testified about the need to renew the biodiesel blenders tax incentive.
“We urge Congress to renew the biodiesel blenders tax incentive through 2018, at a minimum, while considering a multiyear approach. Doing so would drive new investment and establish market certainty for U.S. farmers, ranchers, petroleum marketers, blenders and fuel retailers,” AGP chief operating officer Cal Meyer said.
NBB’s witness pointed out that the biodiesel blenders tax credit has helped achieved the desired goals of expanding domestic production of America's energy resources and jobs here at home. The biodiesel industry supports roughly 64,000 jobs, with $2.54 billion in wages paid, and has $11.42 billion in economic impact.
Biodiesel also adds value to other sectors of the economy, like agriculture. For example, biodiesel allows farmers to be more competitive in the global protein market, as demand for biodiesel supports U.S. soybean processing and export opportunities. Furthermore, America benefits from fewer toxic pollutants and improved air quality thanks to increased use of biodiesel, which reduces particulate matter by 47%, hydrocarbon emissions by 67% and life-cycle greenhouse gases by 86%.
“The public policy benefits of the tax incentive are clear,” Meyer said. “These benefits, however, will be jeopardized without reinstatement of the biodiesel tax incentive.”
Renewable Fuels Assn. (RFA) general counsel Ed Hubbard also testified as part of the hearing. RFA conveyed how important steady, long-term tax support is for the second-generation biofuel industry. The industry group urged the committee to extend the Second-Generation Production Tax Credit and Accelerated Depreciation rules at least until the end of 2018 to help encourage industry investment and drive the next wave of commercial scale production.
Due to the expiration of these two incentives at the end of 2013, the industry has been forced to cope with short-term extensions with only the hope that a long-term extension would be addressed in time. While the one-year retroactive extension Congress approved in February is helpful, RFA said it is their hope that Congress will consider an extension further into the future.
“While the U.S. grain-based ethanol industry has matured into an efficient and highly competitive fuel supplier, the second-generation sector is much younger and has struggled to overcome immense financial and commercial obstacles. However, in recent years, with the help of federal tax incentives, the U.S. second-generation sector has finally been able to actually produce second-generation biofuels at a commercial scale level,” Hubbard told the subcommittee.
During the past few years, there has been significant success in the use of “bolt-on” technologies that allow existing grain biorefineries to produce ethanol from cellulosic fiber waste, Hubbard explained. Given this success, other biorefineries will look to invest in this new technology, as long as steady and reliable tax policy is in place.
RFA further urged Congress to modify and extend the Alternative Vehicle Refueling Property Credit. In his testimony, Hubbard also requested that Congress provide a multiyear extension and expansion of this credit, which provides a tax credit equal to 30% (up to $30,000) of the cost of any qualified alternative fuel vehicle refueling device. The tax credit currently is limited to single-use, dedicated pumps but should be expanded to take into account the increased use of blender-style pumps, he noted.