Senate extends two biofuels tax credits

The Senate Finance Committee on Thursday voted to extend two biofuels tax credits for “next generation” technology that some Republicans say have not lived up to promises.

The biofuels credits, which are due to expire Dec. 31, passed in the tax extenders package approved Thursday by the Senate.

They grabbed less attention than the wind production tax credit, but biofuels supporters said the incentives are equally important to their industry.

“It is critical to maintain stability in the marketplace for emerging industries,” Advanced Ethanol Congress Executive Director Brooke Coleman said Thursday in a statement. “This strong, bipartisan vote sends a strong signal to the marketplace that Congress understands the urgent need to address these expiring credits.”

The cellulosic producer tax credit pays biofuels producers up to $1.01 per gallon sold or used as a fuel input for another business process. Another credit approved in the extension lets biofuel plant owners take a depreciation deduction in their tax returns for new cellulosic biofuel plants.

But many conservatives lament that research for cellulosic biofuels — those made from materials such as switchgrass and animal fats — already has squandered too much taxpayer money.

When Congress approved a large energy law in 2007, lawmakers were promised commercial-scale cellulosic bifouel production within five years. Yet no refineries produced such biofuels at commercial scale in 2012.

The American Petroleum Institute last month filed a lawsuit against the Environmental Protection Agency (EPA) over cellulosic biofuels. The group says EPA required gas and diesel importers to buy or use credits for 6.6 million gallons of cellulosic biofuels, even though none are produced at commercial scale.

Conservatives in the Senate also have decried a Navy biofuels testing program that uses cellulosic biofuels as too expensive. Amendments to that committee’s defense spending bill effectively blocked the program by barring the Navy from buying biofuels when they cost more than conventional fuel. Another provision in that bill prohibits the Navy from funding bio-refineries for boosting production of experimental fuels.

Sen. James Inhofe (R-Okla.), one of the leading opponents of the Navy program, sent a second letter to Navy Secretary Ray Mabus on Thursday asking him to disclose the full cost of the biofuels testing program. Inhofe has said the lack of commercially available biofuels makes it too costly for the Navy to continue its program, harping on a $26 per gallon cellulosic biofuel used in a demonstration last month.

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