Biofuels chalk up a victory in fiscal cliff deal

The wind power industry wasn’t the only renewable energy winner in the fiscal cliff deal that cleared Congress earlier this week – the legislation also showered taxpayer largess on the producers of various categories of biofuels.

The bill [PDF] included tax credits and depreciation rules that support cellulosic ethanol and revived, retroactively, a biodiesel tax credit that had expired at the end of 2011. Algae also won a spot as a favored biofuel.

Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement that the ethanol provision demonstrated “the Obama Administration’s stalwart support of biofuels and Congress’s belief in the promise of energy independence and job creation through domestic renewable energy resources,” while the National Biodiesel Board pointed to a study that said its subsidy could help create more than 30,000 jobs in the next year.

“This is not an abstract issue,” Anne Steckel, vice president of federal affairs at the National Biodiesel Board, said in a statement posted on the organization’s Facebook page. “In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees.”

The biodiesel incentive provides a $1 tax credit per gallon of biodiesel sold. The tax credit had expired at the end of 2011, but the fiscal cliff deal – which the president was expected to sign ASAP – reinstates it to the beginning of last year and extends it through the end of this year.

The ethanol industry pointed to three tax provisions it liked.

“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,” the RFA’s Dinneen said. “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.”

Cellulosic biofuels producers will be able to continue to claim a $1.01 tax credit per gallon until 2014. Algae was also added to the list of qualified feedstocks of what the bill called “second generation biofuel.” The fuels, also often more generally called “advanced biofuels,” are being counted on to provide an ever-increasing proportion of alternative fuels under the U.S. renewable fuel standard.

According to a digest of the bill provided by Republican sponsors in the House, the cellulosic biofuels provision will cost taxpayers $59 million over 10 years and the biodiesel incentives will cost $2.181 billion over that period.

Pete Danko, EarthTechling