Yesterday, House Ways and Means Committee Democrats released a discussion draft of a proposal to extend energy tax extenders through 2024. Despite its title, the bill – the Growing Renewable Energy and Efficiency Now (GREEN) Act – is anything but “GREEN.” That is unless you’re talking about the greenbacks it will cost taxpayers! It would continue decades of subsidies for mature biomass and biofuels industries that may actually increase greenhouse gas (GHG) emissions instead of reducing them. Many subsidies – ranging from those for biodiesel to ethanol blender pumps – cause numerous unintended consequences and long-term taxpayer liabilities by subsidizing food-based biofuels, distorting markets, and picking winners and losers.
Contrary to the bill’s goal of reducing GHG emissions, the National Academies of Sciences (https://www.nap.edu/read/18299/chapter/7) predicts that eliminating biofuels tax extenders would actually help the climate – rather than extending them, as the Committee proposes. While at least two bioenergy tax credits – including the biodiesel tax credit – would receive a five-year extension and phase-out starting in 2022 (in addition to a 2-year retroactive extension for 2018 and 2019), taxpayers and the environment would be better off if they were simply left as is – expired since in 2017 under current law .
Tax credits for cellulosic ethanol have also proven to be a dead-end. One of the last producers of corn stover cellulosic ethanol – ethanol giant POET – just announced this week that it plans to “pause” production at its Emmetsburg, Iowa, facility. Taxpayers have wasted hundreds of millions of dollars on POET’s facility and similar projects that have since closed (DuPont – https://www.energy.gov/eere/success-stories/articles/eere-success-story-largest-cellulosic-ethanol-plant-world-opened) or gone bankrupt (Abengoa and Range Fuels – https://www-1.kansas.com/news/business/article119902263.html).
– Open- and closed-loop biomass production tax credits (PTC): extension for 2018-2024 (retroactive for 2018 and 2019).
– Biodiesel tax credit: extension and phase-down of the biodiesel income and mixture tax credits ($1.00/gallon for 2018-2021, $0.75/gallon for 2022, $0.50/gallon for 2023, and $0.33/gallon for 2024). According to the Joint Committee on Taxation, the biodiesel tax credit is one of the most expensive special interest tax breaks at a cost of $3 billion/year in recent years, and a total taxpayer cost of $12 billion from 2005-2017.
– Alternative fuel excise tax credit (available for liquid fuel derived from biomass other than ethanol, biodiesel, or fuel derived from the pulp or paper production process): phase-down proposed ($0.50/gallon for 2018-2021, $0.38/gallon in 2022, $0.25/gallon in 2023, and $0.17/gallon in 2024).
– Alternative fuel vehicle refueling property credit (electric vehicle recharging, natural gas fuel dispensers, E85 blender pumps, and equipment dispensing biodiesel, etc. are eligible): increased and extended for 2018-2024
– Second-generation biofuel tax incentives (for cellulosic production and special depreciation of cellulosic biofuel property): extension for 2018-2024
– Biomass would be added as a eligible fuel type under the Residential Energy Efficient Property Tax Credit: biomass used in home heating would be added as an allowed type of energy under this tax credit. There are no restrictions on which types of biomass are eligible for the credit.