By MATTHEW D. ERNST
ST. LOUIS, Mo. — Biodiesel, ethanol and many wind energy interests are welcoming one-year extensions for some energy tax credits included in the American Tax Credit Relief Act (ATCRA).
The ATCRA reinstated a $1 per-gallon biodiesel tax incentive, a move welcomed by the Ohio Soybean Assoc. (OSA), for one.
“Biodiesel is the only advanced biofuel commercially available on the market today, and Ohio has the capacity to produce nearly 60 million gallons of biodiesel per year,” said Jerry Bambauer, OSA president and soybean farmer from Auglaize County.
“This decision will help Ohio biodiesel producers be more competitive and create jobs and economic growth that will benefit the entire state of Ohio now and in the future.”
The $1 incentive expired Dec. 31, 2011. The ATCRA reinstates the biodiesel incentive retroactively to Jan. 1, 2012, and through the end of 2013.
Guy Herrell, plant manager for Integrity Biofuels, LLC in Morristown, Ind., said the retroactive tax credit means his plant will now show a positive margin for 2012 and be able to ramp up production in 2013.
“The $1 tax credit allows us to keep researching feedstocks to make fuel and (researching) for process improvements,” he added.
The larger biodiesel industry acknowledged the importance of the tax credit for long-term production. “In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board (NBB).
A study funded by the NBB indicates the biodiesel industry would support some 112,078 jobs nationally in 2013 with the tax credit in place, versus 81,977 without it. Herrell said he will be hiring.
“I will be adding two new jobs to our small facility,” he said. “We will employ a total of 12 people here in 2013.” He said the plant only employed three people in 2010, when it did not expect the tax credit.
Cellulosic ethanol, wind
Ethanol interests also applauded some tax credit extensions in the ATCRA. “The one-year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry,” said Bob Dinneen, president and CEO of the Renewable Fuels Assoc.
The cellulosic producer tax credit allows up to $1.01 per gallon of second-generation biofuel production, including fuels generated from cellulosic sources and algae. The accelerated depreciation provision allows an additional depreciation tax deduction allowance equal to 50 percent of the adjusted basis of the property for second generation biofuel production plants placed into service between Dec. 20, 2006-Dec. 31, 2013.
“In addition, and equally significant, is the extension of the alternative fuel infrastructure tax credit which will accelerate E15’s entry into the marketplace this coming year,” said Dinneen.
The alternative fuel infrastructure tax credit allows a tax credit up to $30,000 for 30 percent of the cost of installing fueling equipment for some alternative fuels. Eligible fueling equipment includes that for natural gas, propane, electricity, E85 or diesel fuel blends containing a minimum of 20 percent biodiesel installed between Jan. 1, 2006-Dec. 31, 2013.
An extension of tax credits for the wind industry, estimated at a cost of $12 billion over 10 years, is also included in the ATCRA. Congressional debate over the wind tax credit proved contentious, with some House Republicans specifying wind energy production tax credits as an example of unnecessary government spending.
The wind issue also created division among energy interests. Exelon, one of the largest utility companies in the United States and a wind farm operator, opposed the extension of the production tax credit (PTC).
“The wind energy industry has matured and is thriving today; the PTC is simply no longer needed,” said Joseph Dominguez, Exelon senior vice president for Government & Regulatory Affairs and Public Policy, in a December statement. “Further, because of the pricing advantage that the PTC provides to wind energy projects in today’s competitive energy markets, the credit actually puts at risk the operation of other, more reliable clean energy sources.”
In the end, some Republicans from states where wind energy has become more important, including Sen. Mark Udall (R-Colo.), supported the wind energy PTC, and a version of the ATCRA including the wind energy tax credit passed in both the House and Senate.