Advanced biofuels firms seek US investment tax credit

A group of more than 30 advanced biofuel companies sent US congressional leaders a letter in which they requested a 30% investment tax credit for cellulosic ethanol and a variety of other advanced biofuels.

“Advanced biofuels producers are eligible under current law for a federal production tax credit, but with no commercial production, that incentive remains unused,” the letter said. Companies signing the letter said they expect no commercial cellulosic plants to be commissioned before 2011 at the earliest.

“Just as Congress responded to the impact of this [economic] downturn on the renewable electricity industry by allowing a 30% investment tax credit in new facilities that can be monetized through a federal Treasury grant program, we believe additional tax incentives are needed for advanced biofuel,” the letter said.

Arnie Klann, chief executive officer of Bluefire Ethanol Fuels, told me that no US government mechanism exists for financing advanced biofuel project development. Meanwhile, oil companies have depletion allowances while wind, solar, and geothermal companies have investment tax credits, he said.

The letter said the investment tax credit should be technology neutral. “Ideally, this incentive would operate as a necessary precursor to the production tax credit, and would present potential renewable fuels investors with a robust incentive to commit to these technologies.”

Such an incentive would help biofuels developers attract private capital so that advanced biofuels can “meet the ambitious volume requirements of the renewable fuel standard,” the letter concluded.