US Senate passes tax extenders through 2014 only; biodiesel tax credit renewed, but will expire again in two weeks.

December 17, 2014 |

US-capitolIn Washington, the US Senate passed the tax extenders bill, including the $1 per gallon biodiesel tax credit, 76-16.

The tax extender legislation including a one-year retroactive extension of four key advanced biofuels tax provisions as part of a larger package of tax credit extensions. These four advanced biofuels incentives include: (1) the Second Generation Biofuel Production Tax Credit;  (2) the Second Generation Biofuel Special Depreciation Allowance; (3) Incentives for Biodiesel and Renewable Diesel, and (4) Incentives for Alternative Fuels and Alternative Fuel Mixtures.

Senate Finance Committee chairman Ron Wyden voted against the bill in the end, stating that “this tax bill doesn’t have the shelf life of a carton of eggs. The only new effects of this legislation apply to the next two weeks.”

Two weeks? Yes, indeedy. The bill retroactively renews, for 2014 only, a list of 55 popular tax breaks. So, they all expire on December 31, 2014 — and if you’ve concluded that this gives almost no planning certainty to the US business that would result in a material increase in manufacturing or job creation, just a retroactive windfall, you’re not alone.

The hope all year had been for, at least, a two-year tax break deal with some tax breaks being made permanent, but a deal brokered by Senate Majority Leader Harry Reid and House Ways and Means Committee chair Dave Camp failed to gain traction when President Barack Obama issued a veto threat over the lack of a provision for making a working families tax break permanent.

So, the Senate and House, as in the past, voted a one-year extension that will already have expired when Congress reconvenes in January.

One of the problems of the tax extenders is their very popularity in Congress. They are often “held hostage” by the Senate or House leadership and included n less popular bills as an incentive for votes.

Industry reaction

Advanced Biofuels Association President Michael McAdams

“We are encouraged by Congress’ decision to continue supporting the advanced biofuels tax incentives included in the tax extension legislation for another year, and simultaneously disappointed at how quickly these extenders will expire. These extenders send a significant signal to the advanced and cellulosic industry and to the markets regarding the sustained support at the federal level. Because these credits are vital to the ongoing development of the advanced biofuels industry, we urge members of Congress to consider extending these tax provisions for multiple years, to ensure stability in the marketplace and allow the advanced biofuels industry to reduce the cost of production and continue developing first-of-kind technologies on a level playing field with established competitors.”

Tom Buis, CEO of Growth Energy

“I commend the Senate for passing this legislation and sending it to the President’s desk to be signed into law. This retroactive tax package will help producers of next generation biofuels and cellulosic ethanol continue to grow and invest in the production of a cleaner burning fuel that is not only sustainable, but also helps significantly reduce greenhouse gas emissions, improves our environment and reduces our dangerous dependence on foreign oil and fossil fuels.

“These extenders are a critical step in creating competition against the entrenched fossil fuel industry that has been enjoying over a century of excessive subsidies, even though that industry is one of the most profitable across the globe.

“While I encourage the President to sign this into law as soon as possible, I am hopeful that the new Congress will reevaluate how these tax provisions are administered. Moving forward, I encourage Congress to provide certainty for producers in the form of proactive tax extenders to incentivize further growth in the industry.

Novozymes Americas President Adam Monroe

“When Congress creates stable and supportive tax policy, the biotech industry responds by investing in research and development, creating new jobs and building facilities that fuel innovation.

“The great thing about these tax credits is that they allow companies like ours to speed up our investments. That means we can put local people to work faster in our labs and our production plants. It means we can bring economic development more quickly to the community.

“Our research and development creates biotechnology that makes businesses more efficient. Second generation biofuel credits have allowed us to build an industry around cellulosic ethanol. Predictable long-term tax policy is crucial for this investment and innovation. In passing today’s legislation, Congress recognized the need to continue successful tax policy. We are disappointed, however, that they have chosen such a makeshift solution. Temporary fixes such as this create an uncertain investment outlook. Next year, Congress has a chance to provide the biotech industry with a long-term framework and we look forward to working with them.”

Iowa Renewable Fuels Association Executive Director Monte Shaw

“While we greatly appreciate the retroactive extension of these tax credits that are vital to the production of cleaner-burning advanced biofuels for 2014, in only a matter of days they will lapse once again. We urge the next Congress to act swiftly to extend these important provisions for 2015 to provide the policy certainty necessary for advanced biofuel producers to continue building upon the air quality and energy security progress achieved to date.   The cloud of uncertainty for 2015 only grows darker when you factor in EPA inaction on the Renewable Fuel Standard and the upcoming 102nd birthday for permanent federal tax subsidies for petroleum products.”

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