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Rex Features/Gareth JJ Burgess |
HR 5142 - Grow a Renewable Energy Economy Now - Jumpstart Other Biofuels Act of 2010, also called the Green Job Act of 2010, was introduced in April by US Representative Allyson Schwartz (Democrat, Pennsylvania). The act aims to extend tax credits for cellulosic-based biofuels through 2016 and allow a 30% energy tax credit for investments in qualified cellulosic and algae-based biofuel facilities.
"We see a great deal of momentum in Congress and support from the Obama administration behind creating more flexible and sustained mechanisms to help advanced biofuel producers attract the investment needed to deploy new technology," says Brent Erickson, executive vice president of the Industrial and Environmental Section at US trade body the Biotechnology Industry Organization (BIO).
"The Green Job Act has gained 41 co-sponsors in the month since Reps. Allyson Schwartz, Mark Schauer (Democrat, Michigan) and Brian Bilbray (Republican, California) introduced it. There is also support among the state governors, who are contacting their Congressional delegations," he says.
"The legislation contains a provision to balance the costs of extending the tax credit by closing a loophole created by the IRS that allows certain types of fuels to qualify as cellulosic. We are therefore asking that the language be incorporated in the next appropriate tax-related or appropriations legislation," Erickson adds.
The legislation would provide potential investors some confidence that, while advanced biofuels projects are being deployed, critical support will be sustained.
"Investors have been reluctant to take risks on new technologies, particularly since government support policies lacked integration. Now that the Renewable Fuel Standard [RFS] has been finalized, and the market for advanced biofuels has been defined, loan guarantees and tax credits that help biofuel producers build biorefineries to prove the technology and produce fuels for the market are critical," says Erickson.
The Green Job Act aims to attract investment for building advanced biorefineries that are capable of making a range of products, from biofuels to bio-based chemicals.
Countries with large amounts of renewable resources would have the opportunity to develop US production and markets for fuels and chemicals with the help of innovation spurred by this new legislation.
"BIO is also advocating a flexible tax credit for bio-based chemicals and plastics, which have similar abilities to reduce greenhouse gas emissions and produce green jobs," says Erickson.
BIOFUEL PRODUCERS WEIGH IN
Cellulosic and algae biofuel producers weighed in their support for the Green Job Act, during a roundtable teleconference hosted by BIO on May 27.
Producers say a need exists to build advanced facilities to advance new technology that is ready to go to commercialization.
"The bill [that] Congresswoman Schwartz introduced is exactly what we need - it says we need to get these facilities built," says Wes Bolsen, chief marketing officer and vice president of government affairs for US-based biofuels producer Coskata.
"We need the enduring government policy that says when you build these facilities, the investors will come in behind it with private investment dollars in a monetizable investment tax credit. That is the No. 1 thing we are asking for - a monetizable investment tax credit to put this on parity with wind and solar," he adds.
Coskata currently has an integrated biorefinery outside Pittsburgh, Pennsylvania, in the US to demonstrate its technology, which is ready to scale. The company could produce roughly 100 gal (379 liters) of fuel-grade cellulosic ethanol per dry tonne of biomass.
The remaining challenges to commercialization of these ready-to-use technologies is getting private capital amid continued uncertainty in the financial market and the lack of long-term US government support, according to Martin Sabarsky, chief financial officer of HR BioPetroleum (HRBP), based in Hawaii.
"We are in the algae space and strongly support the current legislation as a way to help accelerate the initial commercialization of these technologies that are new to the world, although we have been working on them independently or with significant industry partners for some time," says Sabarsky.
HRBP has had a joint venture with Anglo-Dutch oil major Shell since December 2007 to build a demonstration facility in Hawaii that would use HRBP's algae-to-biofuel technology. HRBP is looking to commercialize the technology on the island of Maui.
"We see a great deal of momentum in Congress" Brent Erickson, executive vice president, BIO |
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Harrison Dillon, president, chief technology officer and cofounder of California, US-based Solazyme, also expresses strong support of the new Green Job Act for giving biofuels tax parity with other renewable energy sources. Solazyme is a renewable oil and bioproducts manufacturer that uses an algae-based technology platform.
Wind and solar has an investment tax credit for production facilities, but biofuels do not, Dillon points out.
"There is no justifiable reason for that," he says. "We need clear market signals to the greater industry that will help large companies and large investors cooperate for what is going to be a viable and supportable technology in order to play ball with new technologies."
Paul Woods, CEO of US-based biofuels producer Algenol, says: "The Green Job Act will not only establish parity for algae-based biofuels with cellulosic biofuels, it will go a long way in helping biofuel companies secure scarce, private sector capital to build commercial facilities."
Woods says that the timeline of the bill is right for the biofuels business. It would make the tax incentives effective through 2016. Meanwhile, Algenol expects to launch commercial production of its algae-based bioethanol in 2011.
"The current law provides tax incentives for cellulosic fuel, but curiously not for algae-based fuel. Even so, these existing credits expire after 2012, before algae companies like ours can take significant advantage of them. The bill would rectify these problems," Woods says.
THE JOB SCENE
Domestic production of next-generation biofuels can reduce US dependence on oil and associated environmental impacts, while creating thousands of high-quality domestic green jobs, asserts BIO.
"Economy-wide, more than 100,000 jobs could be created as the industry ramps up to produce the first billion gallons of advanced biofuels. By 2022, when advanced biofuel reaches the 21bn gal mark under the RFS, the industry will create more than 800,000 jobs," says Erickson.
The BIO executive points out that advanced biorefineries would provide jobs in industries that have been hardest hit by job losses because of the recent recession.
"Ten to 11% of jobs would be created in the farm sector, with more in construction, processing and transportation. A number of jobs would be directly created in research and development [R&D]. And because the industry will contribute $37bn to US economic growth by 2022, many service and supplier jobs could be created," he says.
In agriculture, some additional training in growing, processing and handling new energy crops or in harvesting residue from traditional crops will be necessary. R&D jobs, particularly in the biosciences, will require new training.
