Clean fuels proponents are using the threat of international competition to push the importance of Congress passing legislation on clean energy subsidies before the end of the year.
A Tuesday letter from the biotechnology industry to Republican and Democratic leaders on Capitol Hill makes clear that the threat from foreign competitors is real and could harm U.S. competitiveness if the subsidies aren’t kept, while noting that their industry provides nearly 1 million new jobs in the U.S.
The letter was sent by the Biotechnology Industry Organization, or BIO, the advanced fuel industry’s lead trade group, laying out its argument for why Congress should take up the subsidies and not allow them to expire. The industry is “well aware of the financial constraints facing this country,” but at the same time “global competitors are offering tax incentives for advanced biofuels and are attracting construction of new facilities” in other countries, the letter says.
The trend will place U.S. renewable fuel firms at a clear disadvantage if key subsidies are left to expire after being forgotten in December’s omnibus spending bill, which passed multi-year extensions for wind and solar, but left other clean energy subsidies to expire.
A senior White House official said the president wants to see a bipartisan bill passed before the end of December that extends the tax credits. The White House is working with Congress’ Democratic leadership to move a bill this year, said Brian Deese, an adviser to President Obama on energy issues.
BIO is part of a coalition aligned to protect programs that support biofuels, including the corn ethanol industry. But it primarily represents companies developing next-generation biofuels derived from cellulosic plant waste, algae and other renewable resources that aren’t directly associated with feed or food crops.
The bill includes a multi-year extension of four major federal subsidies for the industry: the Second Generation Biofuel Producer Tax Credit, the Special Depreciation Allowance for Second Generation Biofuel Plant Property, the Biodiesel and Renewable Diesel Fuels Credit, and the Alternative Fuel Vehicle Refueling Property.
“Sustained financial incentives from the U.S. government are very important to emerging technologies that have not yet achieved commercial scale,” said Brent Erickson, executive vice president for BIO’s environmental section. “The extension of these tax credits will continue to support the scale-up of second-generation biofuels by supplying companies with the necessary capital and assurance needed to move into the next stage of commercial development — construction of cutting edge biorefineries.”
The federal biofuel tax credits “drive innovation while leveling the playing field for U.S. companies in the international marketplace” and fostering “American-born technology innovations and help keep them here at home,” he said.
BIO points out in the letter that the advanced biofuels industry has invested billions of dollars “to build first-of-a-kind demonstration and commercial-scale biorefineries across the country” over the last seven years. That has resulted in the construction of five commercial-scale cellulosic fuel biorefineries, which can produce as much as 50 million gallons of fuel annually, while providing more than 850,000 jobs, $46.2 billion in wages, and $14.5 billion in annual tax revenue.
“With the extension of the suite of advanced biofuel tax incentives, the industry will be able to access the long-term investment necessary for advanced biofuels to grow,” the letter added. “However, without the certainty of a long-term extension of these incentives, the ability to raise capital to expand advanced biofuel production will be difficult.”
