House Tax Proposal Would Alter Biofuel, Bioenergy Tax Credits

by Erin Voegele (Ethanol Producer Magazine) On Feb. 26, House Ways and Means Committee Chairman David Camp, R-Mich., released draft legislation to reform federal tax code. The draft, titled the “Tax Reform Act of 2014,” would alter, and in some cases repeal, tax incentives for biofuels and bioenergy.
Documentation released by the committee specifies that Section 3201 under Subtitle C would repeal tax credits for alcohol used as fuel. The bill summary explains that tax credit for first-generation ethanol and other alcohol fuels, which expired in 2011, would be repealed. The $1.01 per gallon cellulosic biofuel producer credit that expired at the end of 2013 would also be repealed.
Section 3202 of the bill would repeal credits associated with biodiesel and renewable diesel. The biodiesel fuel-mixture credit, the biodiesel credit and the small agri-biodiesel producer credit, all of which expired at the end of 2013, would be repealed.
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The nearly 1,000-page draft includes numerous other tax provisions, including the establishment of a permanent research and development tax credit. It also repeals the enhanced oil recovery credit and the credit for producing oil and gas from marginal wells.
Brooke Coleman, executive director of the Advanced Ethanol Council, released a statement responding to the measure. “While the draft plan falls well short of the goal of ensuring that the multi-trillion dollar global clean energy sector sets up shop in the United States, Chairman Camp should be commended for taking tough positions on many of the most distortive oil and gas subsidies in the federal tax code,” he said. “Inequitable provisions like percentage depletion, last-in/first-out (LIFO) and various incentives for the production of marginal oil and gas distort investment decision-making and drive capital away from renewable fuels. Chairman Camp is right to point out that only extractive industries are allowed to recover more than their investment under current percentage depletion and depreciation rules. Doing away with these provisions will do little to dissuade oil and gas investment given the magnitude of the opportunity, but will help level the playing field when it comes to investments in next generation fuels of all types.”
“While we are not supportive of this proposal’s treatment of the emerging cellulosic and advanced ethanol industry, we look forward to working with the Committee going forward to ensure that the United States puts itself in the best position possible to develop new technologies and commercialize clean energy on American soil,” Coleman continued. READ MORE and MORE (US House of Representatives Ways and Means Committee) and MORE (Advanced Ethanol Council/Renewable Fuels Association)