Legislation would alter biodiesel tax credit

By Erin Voegele | March 14, 2011

U.S. Senators Amy Klobuchar, D-Minn., and Tim Johnson, D-S.D., introduced the Securing America’s Future with Energy and Sustainable Technologies Act March 10. According to information released by Klobuchar’s office, the bill, known as the SAFEST Act, aims to develop and deploy safe, reliable domestically grown and produced energy by establishing strong, renewable energy and energy-efficiency standards, incentives for developing biofuels and biofuel infrastructure, and targets for the availability of advanced vehicle technologies.

The 117-page bill calls for several changes to current U.S. energy policy. A copy of the bill provided by Klobuchar’s office includes a provision that would alter the definition of ‘advanced biofuel’ contained in Sec. 211(o)(1)(B) of the Clean Air Act by removing the phrases “other than ethanol derived from corn starch” and “other than corn starch.”

It would also amend Sec. 102 of the of the CAA, which pertains to biomass-based diesel, to include a provision that would exempt biomass-based diesel produced at facilities that began construction before Dec. 19, 2007, from the lifecycle greenhouse gas requirements. This exemption would be for either 1 billion gallons of production, or the volume mandated for a particular year by the U.S. EPA under RFS2, whichever is greater. In addition, the SAFEST Act would also negate the EPA from including emissions from indirect land use changes outside the country of origin of the feedstock used to make renewable fuel.

The bill also addresses renewable fuel pipelines, amending a loan guarantee program to provide 80 percent of project costs for renewable fuel pipeline projects. Furthermore, the legislation would alter the metric used to determine whether there is reasonable prospect for repayment by removing the program requirement that an applicant demonstrate existing contractual obligations for a specific minimum capacity of pipeline usage.

The SAFEST Act also addresses several tax issues for biofuels, including the creation of an incentive for the establishment of blender pumps. Regarding biodiesel, it would create a $1 per gallon production tax credit. Eligible small producers could also get a 10 cent tax credit premium for the first 15 million gallons of biodiesel produced each year. The bill defines eligible small producers as those who have less than 60 million gallons of capacity.

In addition, the legislation would require the National Academies of Science to review and report on several issues, including indirect greenhouse gas emissions relating to transportation fuels and sources of renewable biomass. The bill also addresses “fuel choice-enabling” automobiles, renewable electricity production, and energy efficiency.

“The strength of our nation is tied to the strength of our energy economy,” Klobuchar said. “The United States has the ability to be the global leader in energy because of the ingenuity of our farmers and manufacturers. At a time of rising gas prices, this bill will provide incentives that can help us utilize more homegrown biofuels, strengthen our homegrown energy economy in Minnesota, and secure our energy future.”

According to information released by Johnson, the SAFEST bill has been endorsed by the National Farmers Union, Growth Energy, National Association of Energy Service Companies, American Wind Energy Association, Solar Energy Industries Association, National Wheat Growers Association, American Soybean Association, Minnesota Soybean Growers Association, National Association of Corn Growers, the Minnesota Corn Growers Association, National Biodiesel Board, and the Biomass Power Association.      

The SAFEST Act has been referred to the Senate Committee on Finance. A full text copy of the bill should be available on the Library of Congress website soon. In the meantime, members of the public can access a copy of the bill by contacting Klobuchar’s office

 

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