The Big, Big Package: What’s under the Christmas Tree for the Bioeconomy, in the $1.4T new spending bill?

December 23, 2020 |

In Washington, a huge year-end spending package passed Congress yesterday. The $1.4 trillion spending package includes appropriation for Fiscal Year 2021, the COVID stimulus package, extensions of popular tax credits that otherwise expired on December 31st, and the Energy Act of 2020, a $35B version of a larger energy bill that has been drifting around in Congress since 2016. 

At the White House, the President criticized the bill for wasteful provisions and for insufficient COVID stimulus and called on Congress to amend the legislation, but stopped short of a veto threat. Without the President’s signature, the government shuts down at midnight tonight.

As Fuels America noted, “the new omnibus appropriations and COVID-19 relief package extends key tax provisions for low-carbon biofuels and explicitly authorizes the USDA to deliver on long-awaited aid for biofuel producers.” One Hill observer added, “The bill is a classic end-of-year compromise: everybody got something, and nobody got everything.”

Key Tax provisions

The Renewable Fuels Association noted that the bill “extends key tax provisions that support innovation and expansion in the renewable fuels industry, including the Second Generation Biofuel Producer Tax Credit, Alternative Fuel Refueling Property Credit, and the Section 45Q tax credit for carbon sequestration, allowing the 45Q credit to be claimed by facilities that begin construction by the end of 2025.

The bill extended the $1.01 per gallon nonrefundable income tax credit for second-generation biofuel sales through 2021, and the tax credit for the installation of alternative fuel vehicle refueling property, including property that dispenses ethanol, biodiesel, natural gas, hydrogen, and electricity, capped at $30,000 per location.

And the legislation appropriates $13B to address COVID-related impacts on agriculture, $13 billion to support nutrition programs and $7 billion for broadband funding. The $13B in agricultural funding can  be used for “payments to producers of advanced biofuel, biomass-based diesel, cellulosic biofuel, conventional biofuel, or renewable fuel…produced in the United States, for unexpected market losses as a result of COVID–19.”

COVID Relief

Makes biofuel producers eligible for direct payments from USDA to recoup losses due to COVID; top-line funding for the direct aid account is $11.1875 billion. There is no specific spend required for biofuel producers, USDA has wide discretion on how to use these funds.

EPA actions

  • Directs EPA to finalize a rule permitting the production, transfer, and use of biointermediates within 90 days. EPA is also required to brief Congress on its plans for action within 60 days.
  • Directs EPA to report to Congress within 180 days on agency and stakeholder engagement to create markets for low-grade and low-value wood (i.e. slash and precommercial thinnings) as a feedstock for alternative fuels.
  • Directs EPA to process applications for eRINs within 90 days. Notes the backlog of pathway applications at EPA.
  • Reminds EPA that it is able to grant additional SRE relief regardless of the recommendations from the Department of Energy (holdover language from last year championed by Senate EPW Chairman Barrasso)

US Department of Energy actions

  • Overall, flat funding for the Bioenergy Technologies Office; there are specific carveouts for feedstock technologies, algal systems, and RNG. The DOE Bioenergy Technologies Office was reauthorized through 2023
  • Encourages DOE to focus on sustainable aviation fuel cost reduction, considering relevant global supply chains and coordinating with Federal agencies, national labs, universities, and the aviation industry.
  • Directs DOE to conduct a study evaluating pathways to reducing emissions from home heating using advanced biofuels and biofuel blends within 1 year.
  • Provides $5 million for research on direct injection, engine technology, and the use of dimethyl ether as a fuel. Encourages R&D in advanced combustion and vehicle engine technology efficiency in propane engines for light and medium-duty applications.
  • Reforms the DOE’s Loan Program Office.

US Department of Transportation Actions

  • Supports sustainable aviation fuels through $31 million for the NextGen Environmental Research Aircraft Technologies and Fuels program, of which $3 million is designated for the CLEEN program and $15 million is for the center of excellence.
  • Directs FAA to certify fuels for safe use in commercial aviation and for inclusion under CORSIA, encourages utilization of the aviation sustainability center (ASCENT) researchers to address the entire sustainable aviation fuels supply chain to identify and enable industry to overcome key barriers to entry such as fuel costs.

Reaction from stakeholders

Geoff Cooper, CEO, Renewable Fuels Association. “While the industry would prefer multi-year certainty for key tax provisions, we are pleased to see these important credits extended for another year,” Cooper said. “These measures are critical to the future of the renewable fuels industry. They help stimulate the commercialization of new feedstocks and fuels, while at the same time encouraging the build-out of the infrastructure needed to distribute low-carbon renewable fuels more broadly across the nation.”

NCGA President John Linder: “The assistance provided by this bill will go a long way in providing the certainty corn growers need to recover from the impact of the coronavirus on our industry,” said . “We thank those members who fought to deliver this needed relief and ensure we can continue to feed and fuel the world.”

American Coalition for Ethanol (ACE) CEO Brian Jennings. “We’re grateful to Congress for stepping up and preventing needless uncertainty from holding back the rural recovery,” said Growth Energy CEO Emily Skor. “In 2020, ethanol production is down about 13% compared to the previous year, and 2021 is also projecting to be lower than 2019 levels. Ensuring stability is imperative as we head into the new year, and we urge Secretary Perdue to move quickly on providing relief to the biofuels industry. Securing relief for ethanol producers suffering historic economic losses from the coronavirus pandemic has been our most urgent priority in 2020. While we have been urging Congress to include specific authority requiring USDA to make relief payments to biofuel producers, we are nevertheless grateful this package gives USDA the discretion to provide economic assistance to our industry.

Reaction from the legislators

House Appropriations Committee Chairwoman Nita M. Lowey said: “I’m incredibly honored that my final legislation as a Member of Congress will provide full-year funding for all of government and deliver urgently-needed coronavirus relief to save lives and livelihoods,” said  “The process was not always smooth, but at the end of the day we secured funding increases for critical priorities and strong emergency relief to crush the virus and put more money in people’s pockets. Work remains, but so too does Democrats unwavering commitment to the American people.”

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said: It’s past time Congress acted to provide relief to the families, communities and small businesses suffering because of the pandemic. “I’m glad that major provisions within the Finance Committee’s jurisdiction were part of this relief package. We will extend the federal enhancement to unemployment insurance.  The funding granted to states and localities under the CARES Act also needed to be used by the end of the year, meaning many would not be able to take full advantage of these resources. This legislation will extend the deadline another full year, so those entities can fully plan and properly utilize those resources. 

Item by item highlights: a primer

Holland & Knight circulated a section by section highlight of the Energy Act of 2020.  The four titles in the Act of highest interest to the bioeconomy are: Title IV – Carbon Management; Title V – Carbon Removal; Title VI – Industrial and Manufacturing Technologies and Title X – ARPA-E Amendments.

Title IV – Carbon Management

  • Section 4001. Fossil energy.
  • Section 4001 amends EPACT05 to include additional objectives for fossil energy programs.
  • Section 4002. Establishment of carbon capture technology program.
  • Section 4002 directs the Secretary of Energy to conduct RDD&CA activities for carbon capture
  • technologies. It also authorizes and encourages support for large-scale pilot projects. This
  • section includes carbon capture research facilities. Includes a first-of-a-kind through third-of-a-kind
  • commercial-scale carbon capture technology demonstration program to show substantial
  • improvements in the efficiency, effectiveness, costs, and environmental performance of carbon
  • capture technologies for power, industrial, and other commercial applications.
  • Section 4003. Carbon storage validation and testing.
  • Section 4003 directs the Secretary of Energy to establish an RD&D program for carbon
  • storage, a large-scale carbon sequestration demonstration program, and an integrated storage
  • program.
  • Section 4004. Carbon utilization program.
  • Section 4004 establishes a DOE RD&D program for carbon utilization. This section authorizes
  • research to identify and evaluate novel uses for carbon, and includes a program to demonstrate
  • applications of carbon utilization for a variety of sectors. Includes a national Carbon Utilization
  • Research Center for early-stage R&D activities.
  • Section 4005. High efficiency turbines.
  • Section 4005 establishes a DOE RD&D program to improve the efficiency of various types of
  • gas turbines used in power generation and aviation.
  • Section 4006. National energy technology laboratory reforms.
  • Section 4006 provides the Director of the National Energy Technology Laboratory (NETL)
  • special hiring authority to allow more effective recruiting of highly-talented individuals for
  • certain positions. It also delegates the Director additional human resources authority to meet
  • research needs. This section extends to NETL authority for laboratory-directed R&D.
  • Section 4007. Study on Blue Hydrogen Technology.
  • Section 4007 requires the Secretary of Energy to conduct a study on the benefits of blue
  • hydrogen technology and how that technology can further enhance the deployment and
  • adoption of carbon capture and storage.
  • Section 4008. Produced water research and development.
  • Section 4008 authorizes the Secretary of Energy to carry out an R&D program for technologies
  • to reduce the environmental impact of produced water and opportunities to reprocess
  • produced water at natural gas or oil development sites.

Title V – Carbon Removal

  • Section 5001. Carbon removal.
  • Section 5001 establishes an RD&D program to examine the methods, technologies, and
  • strategies to remove carbon dioxide from the atmosphere at a large scale. It also requires the
  • Secretary of Energy to award prizes to pre-commercial and commercial direct air capture
  • projects for qualified facilities that capture carbon dioxide directly from the ambient air.
  • Authorizes Direct Air Capture Test Centers.
  • Section 5002. Carbon dioxide removal task force and report.
  • Section 5002 directs the Secretary of Energy to prepare a report identifying tools the Federal
  • Government can use to advance deployment of carbon dioxide removal projects. It also
  • establishes a Carbon Dioxide Removal Task Force to advise the Secretary of Energy on matters
  • pertaining to carbon dioxide removal, identify barriers to the advancement of carbon dioxide
  • removal projects, and tools for advancing and deploying such projects.

Title VI – Industrial and Manufacturing Technologies

  • Section 6001. Purpose.
  • Section 6001 outlines the purposes of the title, which are to encourage the development and
  • evaluation of technologies that increase the technological and economic competitiveness of U.S.
  • industry and manufacturing and decrease the emissions of non-power industrial sectors.
  • Section 6002. Coordination of research and development of energy efficient
  • technologies for industry.
  • Section 6002 updates the American Energy Manufacturing Technical Corrections Act to ensure
  • references in the Act reflect the current organization of DOE.
  • Section 6003. Industrial emissions reduction technology development program.
  • Section 6003 establishes a cross-cutting RDD&CA program to further development and
  • commercialization of economic and competitive technologies that reduce emissions from nonpower
  • industrial sectors. The program focuses on several areas, including reducing emissions
  • from production processes for iron, steel, aluminum, cement, and chemical production, as well
  • as from high temperature heat generation. The program also encourages leveraging smart
  • manufacturing and sustainable manufacturing; increasing energy efficiency; using alternative
  • materials and developing net-zero emissions fuels. It further focuses on reducing emissions
  • from shipping, aviation, and long-distance transportation; using industrial carbon capture; and
  • harnessing high-performance computing to develop technologies in these focus areas.
  • Section 6004. Industrial Technology Innovation Advisory Committee.
  • Section 6004 authorizes a Federal Advisory Committee composed of members from relevant
  • federal agencies, labor groups, academia, national labs, nonprofit organizations, State
  • government, and industry. The advisory committee is directed to work with the Secretary of
  • Energy to develop missions and goals of the program established in Section 6003, as well as to
  • develop a strategic plan on how to achieve those goals.
  • Section 6005. Technical assistance program to implement industrial emissions
  • reduction.
  • Section 6005 authorizes a program to provide technical assistance to eligible entities to
  • promote commercial application of technologies that reduce emissions from the sectors
  • identified in Section 6003.
  • Section 6006. Development of national smart manufacturing plan.
  • Section 6006 requires the Secretary of Energy, in consultation with the National Academies, to
  • develop a national plan for smart manufacturing technology development and deployment to
  • improve domestic manufacturing sector productivity and efficiency.

Title X – ARPA-E Amendments

  • Section 10001. ARPA–E amendments.
  • Section 10001 amends the America COMPETES Act (42 U.S.C. 16538(b)) to authorize ARPA-E
  • to support projects addressing nuclear waste clean-up and management, and to improve the
  • resilience, reliability, and security of our energy infrastructure, in addition to its existing
  • missions. It also adds an annual reporting requirement on ARPA-E’s scale-up, demonstration,
  • and coordination activities.

Looking for 6000 pages of holiday reading? 

The complete 6000 page bill is here.

The text of the spending package, H.R. 133, is available here. The joint explanatory statement for Front Matter is here, Division A here, Division B here, Division C here, Division D here, Division E here, Division F here, Division G here, Division H here, Division I here, Division J here, Division K here, and Division L  here. A division-by-division summary of the appropriations provisions is here. A division-by-division summary of the coronavirus relief provisions is here. A division-by-division summary of the authorizing matters is here.

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