BIOMASS INTEL

A lingering theme heading into 2010 is the gross underutilization of biomass resources for power and transportation fuels.  While many obstacles still exist — from the sourcing, collection, and transportation of feedstocks to the financing and permitting of facilities – biomass nevertheless represents an abundant and proven renewable source of energy.

To date, biomass has not received the same level of subsidies as the solar and wind sectors.  As Biomass Intel reported in 2009, the Renewable Biomass Fairness Act (H.R. 4374) was introduced in the House to give biomass a much needed boost and it could very well do the trick.

The bill is part of a package of legislation introduced by Rep. Stephanie Herseth Sandlin to promote healthy forests, renewable energy, and rural jobs:

This legislation recognizes the great potential for woody biomass to contribute to our energy independence and to job creation in rural states.  Despite this great potential, electricity produced from renewable biomass does not enjoy the same tax incentives as other sources of renewable energy.  The Renewable Biomass Fairness Act remedies this discrepancy, by ensuring that the production of electricity from renewable biomass receives the same tax credit as wind and solar energy.

Biomass Power Association President Bob Cleaves says the act includes numerous important features for existing and new biomass facilities, citing the closing of the cellulosic biofuel loophole and rate parity:

The association is obviously supportive of it…we think this legislation is going to get large bipartisan support. I don’t see a lot of opposition.

As Cleaves also notes, several elements of the bill have been included in other renewable energy legislation in the past 12 months, but this is an act that brings it all together.

The bill would amend the Internal Revenue Code of 1986 to extend the credit for electricity produced from biomass, to provide credit rate parity under such credit, and to exclude certain unprocessed fuels from the cellulosic biofuel producer credit.  Below is an overview of some of the key provisions.

Extension of Renewable Energy Credit

The act would extend each provision of section 45(d) of the Internal Revenue Code of 1986 (Code) relating to qualified facilities from 2014 to 2019.  The extension applies to both closed-loop and open-loop biomass facilities.

Rate Parity for Biomass Facilities Under the Renewable Resources Tax Credit

The act would increase the credit for renewable biomass electricity from 0.9 cents per kilowatt hour (kWh) to 1.8 cents per kWh.

Extended Credit Period for Certain Open-Loop Biomass Facilities

The act would provide a five-year extension of the credit period for open-loop biomass power plants placed in service on or before August 8, 2005, which expired at the end of 2009.  It is ucnlear whether the credit would be applied retroactively.

Exclusion of Unprocessed Fuels From the Cellulosic Biofuel Producer Credit

The act would eliminate a loophole in the 2008 Farm Bill that allows paper manufacturers to claim a $1.01-per-gallon cellulosic biofuel tax credit based on their use of black liquor — a byproduct of paper manufacturing—to produce energy.

Sandin’s office asserts that paper manufacturers can already claim an alternative fuels tax credit established by the 2005 Highway Bill.

Over in the Senate, Senator Grassley (R-IA) introduced the Clean Renewable Energy Advancement Tax Extension Jobs Act of 2009 or the CREATE Jobs Act, which would amend the Internal Revenue Code to extend the tax credit for open-loop biomass facilities through 2016.

Image: Flickr/aspheric.lens