Biofuels Credits Reinstated - DTN

Published in DTN - Jan. 3, 2013

STREATOR, Ill. (DTN) -- Congress reinstated the biodiesel blenders credit and extended the cellulosic biofuels producer tax credit as part of the package to avoid falling off the fiscal cliff.

The House of Representatives on Tuesday passed by a vote of 257-167 a bill to avert a set of automatic tax increases that would have gone into effect Jan. 1. The bill passed the Senate 89-8 Monday and is expected to be signed by President Barack Obama.

Under the legislation, the $1-per-gallon blenders credit for biodiesel and renewable diesel which expired Dec. 31, 2011, will go back into effect retroactively for 2012 and extend to the end of this year.

"It's been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board in a statement released late Tuesday. "In the coming months, because of this decision, we'll begin to see real economic impacts with companies expanding production and hiring new employees."

The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012, and through the end of 2013.

American Soybean Association President Danny Murphy applauded the decision to reinstate the biodiesel tax incentive, calling it a boon for soybean farmers.

"...The extension of the dollar-per-gallon credit retroactive to 2012 and through 2013 is also a significant win for the burgeoning biodiesel industry, an important market for soybean growers," Murphy said in a statement issued Wednesday. "More than half of all biodiesel produced in the U.S. uses the oil from American-grown soybeans as a feedstock, which helps to grow our domestic fuel supply and creates soy meal as a byproduct, providing protein-rich animal feed for livestock, poultry and aquaculture."

In addition to reinstating the biodiesel tax credit, the legislation also extended two cellulosic biofuels provisions.

Under current law, facilities producing cellulosic biofuel can claim a $1.01-per-gallon production tax credit on fuel produced before the end of 2012. This provision was created in the 2008 Farm Bill. The bill passed this week extends this production tax credit for one additional year, for cellulosic biofuel produced through 2013. In addition, the definition has been expanded to include cellulosic biofuel production from algae-based feedstocks.

The bill also included an extension of the 2008 Farm Bill's 50% capital costs expense bonus depreciation for cellulosic biofuels facilities. The provision extends the depreciation for one additional year for facilities that begin operations before the end of this year. This also expands the definition of qualified cellulosic biofuel production to include algae-based fuel.

"This one-year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry," Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement Wednesday morning.

He added the cellulosic fuel producer's credit "will accelerate E15's entry into the marketplace this coming year."

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Markets, Not Mandates, Shape Ethanol Production

The Main Street Economist: Agricultural and Rural Analysis | Federal Reserve Bank of Kansas City, Issue 5, 2012

by Nathan Kauffman, Economist

The 2012 drought has reignited the food versus fuel debate. After cutting U.S. corn production below recent years’ consumption, the drought sparked a U.S. grain shortage and sent global food prices soaring. As the grain shortage intensified, pressure to relieve the shortage by easing ethanol mandates mounted. Escalating ethanol mandates under the Renewable Fuel Standard (RFS), which fueled the expansion of the U.S. ethanol industry, will soon exceed the amount of ethanol than can be used in current U.S. gasoline blends. Some industry participants believe that a waiver of the mandate has the potential to reduce ethanol production and relieve high corn prices.

However, ethanol production may not decline significantly, even if the mandates are waived temporarily, a request the EPA recently denied for the 2013 mandate. The RFS mandates stipulate ethanol blending for the next decade. A temporary waiver would not relieve the pressure on current production to build credits to satisfy future mandates

Read the full report here

EPA Keeps Renewable Fuels Levels in Place After Considering State Requests - EPA News Release

FOR IMMEDIATE RELEASE

November 16, 2012 

EPA Keeps Renewable Fuels Levels in Place After Considering State Requests

WASHINGTON---The U.S. Environmental Protection Agency (EPA) today announced that the agency has not found evidence to support a finding of severe “economic harm” that would warrant granting a waiver of the Renewable Fuels Standard (RFS). The decision is based on economic analyses and modeling done in conjunction with the U.S. Department of Agriculture (USDA) and U.S. Department of Energy (DOE).

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”

To support the waiver decision, EPA conducted several economic analyses. Economic analyses of impacts in the agricultural sector, conducted with USDA, showed that on average waiving the mandate would only reduce corn prices by approximately one percent. Economic analyses of impacts in the energy sector, conducted with DOE, showed that waiving the mandate would not impact household energy costs.

EPA found that the evidence and information failed to support a determination that implementation of the RFS mandate during the 2012-2013 time period would severely harm the economy of a State, a region, or the United States, the standard established by Congress in the Energy Policy Act of 2005 (EPAct).

EPAct required EPA to implement a renewable fuels standard to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. A waiver of the mandate requires EPA, working with USDA and DOE, to make a finding of “severe economic harm” from the RFS mandate itself.

This is the second time that EPA has considered an RFS waiver request. In both cases, analysis concluded that that the mandate did not impose severe harm. In 2008, the state of Texas was denied a waiver.

More information: http://www.epa.gov/otaq/fuels/renewablefuels/notices.htm

E-15 ethanol blend makes debut in state - Lincoln Journal Star

By Art Hovey - Oct. 24, 2012

A Lexington service station has become the first in the state to sell an E-15 ethanol blend.

Neal Hoff of Uncle Neal's Phillips 66 called it "the fuel of the future for automobiles" and a logical choice for his customers.

"We put in blender pumps," Hoff said Tuesday, "and they were active by Friday night. And by Saturday night, yes, we had sales."

The Environmental Protection Agency approved E-15 for use in vehicles 2001 and newer in June.

To Hoff, the EPA stance means that "85 percent of the cars out there can use it. And it just seems logical that what's going to happen eventually is that we'll migrate from E-10 to E-15. And we're on the front end of that."

If consumers go along with a move to a higher ethanol blend nationally, it could boost overall demand and help the industry get over a so-called "blenders wall" in which the government mandate for E-10 use as a renewable fuel has been met.

Hoff is selling E-15 a nickel cheaper than E-10 and 15 cents cheaper than regular unleaded.

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