The $1.01/gal federal tax credit for cellulosic fuel production, as well as the $1/gal biodiesel tax credit, would each be extended under a proposal released Wednesday by the Senate Finance Committee.
The cellulosic credit would also be expanded to include fuel derived from algae. Both credits would be extended for one year, to expire on December 31, 2013. The biodiesel tax credit would be effective retroactively to December 31, 2011.
"We're pleased to see the committee coming together in a bipartisan way around these extensions," Anne Steckel, vice president of federal affairs for the National Biodiesel Board, said. "The biodiesel tax incentive will continue growing US manufacturing and creating jobs while adding critical diversity to our energy supplies."
The proposal to extend the cellulosic credit comes at a time when cellulosic fuels, those derived from non-food feedstocks such as grasses, fats and municipal waste, are under attack. The US Renewable Fuels Standard requires the blending of cellulosic fuels into the nation's transportation fuel supply. Refiners and blenders either have to use cellulosic fuels or purchase credits, called RINs, to satisfy the RFS requirement.
Groups such as the American Petroleum Institute have challenged that requirement, saying that no commercial quantities of cellulosic biofuels exist. The Environmental Protection Agency opted to reduce the cellulosic mandate for 2013, but did not eliminate it, saying that the fledgling industry needed a base market to justify investment in factories and research.
"Growth energy has been a strong advocate of the cellulosic tax credit, as it is driving innovation and providing the certainty necessary to help bring the second generation of advanced biofuels to commercial scale production,: Michael Frohlich, a spokesman for Growth Energy, an ethanol trade group, said.
The tax extender package, which will be voted on in committee on Thursday, would extend the $1.01/gal credit to fuels made from cultivated algae, cyanobacteria or lemna, a variety of duckweed
Unlike the current cellulosic credit, which only goes to producers who sell it for end use as a fuel, the algae credit would apply to producers who sell their fuel to refineries for further processing.
