Proposed U.S. federal legislation would eliminate black liquor tax credit from Farm Bill, while promoting biomass use by providing same tax incentives as wind and solar

Jan 8, 2010 — Forestweb

LOS ANGELES, January 8, 2010 (Forestweb) — The proposed federal Renewable Biomass Fairness Act would provide producers of energy from biomass with the same tax incentives as wind and solar, while eliminating the 2008 Farm Bill loophole that potentially allows papermakers to claim a black liquor tax credit, the Biomass Magazine reported Jan. 7.

The bill would extend the Renewable Energy Production Tax Credit (PTC) for five years for open and closed-loop biomass systems. The PTC is set to expire in 2014 and the act would extend that to 2019.

The Renewable Biomass Fairness Act would eliminate the loophole that would allow papermakers to claim a US$1.01-per-gal cellulosic biofuel tax credit based on their use of black liquor, according to the office of Rep. Stephanie Herseth Sandlin, D-S.D. Rep. Wally Herger, R-Calif., and Sandlin introduced the Act, Biomass Magazine reported.

The income tax credit in the Farm Bill is non-refundable and can only be applied against cash taxes, whereas the alternative fuel mixture (“black liquor”) tax credit that expired Dec. 31 provided cash directly to producers, Forestweb reported Oct. 16. On Nov. 14, Forestweb reported that Rep. Chris Van Hollen (D-Md.), introduced the tax credit act (HR 3985) as a stand-alone bill that would formally restrict the paper industry from eligibility for the credit in the farm bill.

Biomass Power Association President Bob Cleaves said the act includes numerous important features for existing and new biomass facilities, and named the closing of the cellulosic biofuel loophole and rate parity. His association supports the bill and he believes it will get large bipartisan support, Cleaves said.

The Renewable Biomass Fairness Act would also extend by five years the credit period for open-loop biomass power plants that began service on or before Aug. 8, 2005, presently due to expire at the end of 2010, reported Biomass Magazine.

The act would increase the credit for renewable biomass electricity from 0.9 cents per kWh to 1.8 cents per kWh.

Cleaves said other renewable energy legislation in the last 12 months has included several elements of the bill, but added the new legislation brings it all together, reported Biomass Magazine.

The primary source of this article is Biomass Magazine, Grand Forks, North Dakota, on Jan. 7, 2010.

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