SEC. 2. INCLUSION OF ALGAE-BASED BIOFUEL IN DEFINI-
TION OF CELLULOSIC BIOFUEL. 
(a) CELLULOSIC BIOFUEL PRODUCER CREDIT.— 
(1) GENERAL RULE.—Paragraph (4) of section 
40(a) of the Internal Revenue Code of 1986 is 
amended by inserting ‘‘and algae-based’’ after ‘‘cel-
lulosic’’. 
(2) DEFINITIONS.—Paragraph (6) of section 
40(b) of such Code is amended— 
(A) by inserting ‘‘AND
ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading, 
(B) by striking subparagraph (A) and in-
serting the following: 
‘‘(A) IN
GENERAL.—The cellulosic and 
algae-based biofuel producer credit of any tax-
payer is an amount equal to the applicable 
amount for each gallon of— 
‘‘(i) qualified cellulosic biofuel produc-
tion, and 
‘‘(ii) qualified algae-based biofuel pro-
duction.’’, 
(C) by redesignating subparagraphs (F), 
(G), and (H) as subparagraphs (I), (J), and 
(K), respectively, 
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(D) by inserting ‘‘AND
ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading of subpara-
graph (I), as so redesignated, 
(E) by inserting ‘‘or algae-based biofuel, 
whichever is appropriate,’’ after ‘‘cellulosic 
biofuel’’ in subparagraph (J), as so redesig-
nated, 
(F) by inserting ‘‘and qualified algae-based 
biofuel production’’ after ‘‘qualified cellulosic 
biofuel production’’ in subparagraph (K), as so 
redesignated, and 
(G) by inserting after subparagraph (E) 
the following new subparagraphs: 
‘‘(F) QUALIFIED
ALGAE-BASED
BIOFUEL 
PRODUCTION.—For purposes of this section, 
the term ‘qualified algae-based biofuel produc-
tion’ means any algae-based biofuel which is 
produced by the taxpayer, and which during the 
taxable year— 
‘‘(i) is sold by the taxpayer to another 
person— 
‘‘(I) for use by such other person 
in the production of a qualified algae- 
based biofuel mixture in such other 
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person’s trade or business (other than 
casual off-farm production), 
‘‘(II) for use by such other per-
son as a fuel in a trade or business, 
or 
‘‘(III) who sells such algae-based 
biofuel at retail to another person and 
places such algae-based biofuel in the 
fuel tank of such other person, or 
‘‘(ii) is used or sold by the taxpayer 
for any purpose described in clause (i). 
The qualified algae-based biofuel production of 
any taxpayer for any taxable year shall not in-
clude any alcohol which is purchased by the 
taxpayer and with respect to which such pro-
ducer increases the proof of the alcohol by addi-
tional distillation. 
‘‘(G) QUALIFIED
ALGAE-BASED
BIOFUEL 
MIXTURE.—For purposes of this paragraph, the 
term ‘qualified algae-based biofuel mixture’ 
means a mixture of algae-based biofuel and gas-
oline or of algae-based biofuel and a special fuel 
which— 
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‘‘(i) is sold by the person producing 
such mixture to any person for use as a 
fuel, or 
‘‘(ii) is used as a fuel by the person 
producing such mixture. 
‘‘(H) ALGAE-BASED
BIOFUEL.—For pur-
poses of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘algae- 
based biofuel’ means any liquid fuel, in-
cluding gasoline, diesel, aviation fuel, and 
ethanol, which— 
‘‘(I) is produced from the bio-
mass of algal organisms, and 
‘‘(II) meets the registration re-
quirements for fuels and fuel additives 
established by the Environmental Pro-
tection Agency under section 211 of 
the Clean Air Act (42 U.S.C. 7545). 
‘‘(ii) ALGAL
ORGANISM.—The term 
‘algal organism’ means a single- or multi- 
cellular organism which is primarily aquat-
ic and classified as a non-vascular plant, 
including 
microalgae, 
blue-green 
algae 
(cyanobacteria), 
and 
macroalgae 
(sea-
weeds). 
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‘‘(iii) EXCLUSION OF LOW-PROOF AL-
COHOL.—Such term shall not include any 
alcohol with a proof of less than 150. The 
determination of the proof of any alcohol 
shall be made without regard to any added 
denaturants.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Subparagraph (D) of section 40(d)(3) 
of such Code is amended— 
(i) by inserting ‘‘AND ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading, 
(ii) by inserting ‘‘or (b)(6)(F)’’ after 
‘‘(b)(6)(C)’’ in clause (ii), and 
(iii) by inserting ‘‘or algae-based’’ 
after ‘‘such cellulosic’’. 
(B) Paragraph (6) of section 40(d) of such 
Code is amended— 
(i) by inserting ‘‘AND ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading, and 
(ii) by striking the first sentence and 
inserting ‘‘No cellulosic and algae-based 
biofuel producer credit shall be determined 
under subsection (a) with respect to any 
cellulosic or algae-based biofuel unless such 
cellulosic or algae-based biofuel is produced 
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in the United States and used as a fuel in 
the United States.’’ 
(C) Paragraph (3) of section 40(e) of such 
Code is amended by inserting ‘‘AND
ALGAE- 
BASED’’ after ‘‘CELLULOSIC’’ in the heading. 
(D) Paragraph (1) of section 4101(a) of 
such Code is amended— 
(i) by inserting ‘‘or algae-based’’ after 
‘‘cellulosic’’, and 
(ii) by inserting ‘‘and 40(b)(6)(H), re-
spectively’’ after ‘‘section 40(b)(6)(E)’’. 
(b) SPECIAL ALLOWANCE FOR CELLULOSIC BIOFUEL 
PLANT PROPERTY.—Subsection (l) of section 168 of such 
Code is amended— 
(1) by inserting ‘‘AND ALGAE-BASED’’ after 
‘‘CELLULOSIC’’ in the heading, 
(2) by inserting ‘‘and any qualified algae-based 
biofuel plant property’’ after ‘‘qualified cellulosic 
biofuel plant property’’ in paragraph (1), 
(3) by redesignating paragraphs (4) through 
(8) as paragraphs (6) through (10), respectively, 
(4) by inserting ‘‘or qualified algae-based 
biofuel plant property’’ after ‘‘cellulosic biofuel plant 
property’’ in paragraph (7)(C), as so redesignated, 
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(5) by striking ‘‘with respect to’’ and all that 
follows in paragraph (9), as so redesignated, and in-
serting ‘‘with respect to any qualified cellulosic 
biofuel plant property and any qualified algae-based 
biofuel plant property which ceases to be such quali-
fied property.’’, 
(6) by inserting ‘‘or qualified algae-based 
biofuel plant property’’ after ‘‘cellulosic biofuel plant 
property’’ in paragraph (10), as so redesignated, and 
(7) by inserting after paragraph (3) the fol-
lowing new paragraphs: 
‘‘(4) QUALIFIED ALGAE-BASED BIOFUEL PLANT 
PROPERTY.—The term ‘qualified algae-based biofuel 
plant property’ means property of a character sub-
ject to the allowance for depreciation— 
‘‘(A) which is used in the United States 
solely to produce algae-based biofuel, 
‘‘(B) the original use of which commences 
with the taxpayer after December 31, 2008, 
‘‘(C) which is acquired by the taxpayer by 
purchase (as defined in section 179(d)) after 
December 31, 2008, but only if no written bind-
ing contract for the acquisition was in effect on 
or before such date, and 
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‘‘(D) which is placed in service by the tax-
payer before January 1, 2013. 
‘‘(5) ALGAE-BASED BIOFUEL.— 
‘‘(A) IN GENERAL.—The term ‘algae-based 
biofuel’ means any liquid fuel which is produced 
from the biomass of algal organisms. 
‘‘(B) ALGAL ORGANISM.—The term ‘algal 
organism’ means a single- or multi-cellular or-
ganism which is primarily aquatic and classified 
as a non-vascular plant, including microalgae, 
blue-green 
algae 
(cyanobacteria), 
and 
macroalgae (seaweeds).’’. 
(c) EFFECTIVE DATES.— 
(1) CELLULOSIC
BIOFUEL
PRODUCER
CRED-
IT.—The amendments made by subsection (a) shall 
apply to fuel produced after December 31, 2008. 
(2) SPECIAL
ALLOWANCE
FOR
CELLULOSIC 
BIOFUEL
PLANT
PROPERTY.—The 
amendments 
made by subsection (b) shall apply to property pur-
chased and placed in service after December 31, 
2008. 
Æ 
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