Source: https://www.everycrsreport.com/reports/R40110.html
Timestamp: 2020-04-08 21:40:27
Document Index: 308667736

Matched Legal Cases: ['§1501', '§202', '§301', '§15331', '§203', '§708', '§302', '§1344', '§202', '§701', '§209', '§201', '§1342', '§207', '§1123', '§711', '§109', '§1501', '§301', '§1342', '§9001', '§1510', '§942']

Biofuels Incentives: A Summary of Federal Programs - EveryCRSReport.com
January 5, 2009 – January 11, 2012 R40110
January 11, 2012 (R40110)
Environmental Protection Agency (EPA)—Renewable Fuel Standard
U.S. Customs and Border Protection (CBP)—Import Duty for Fuel Ethanol
Department of Transportation (DOT)—Manufacturing Incentive for Flexible Fuel Vehicles
With recent high energy prices, the passage of the Energy Policy Act of 2005 (P.L. 109-58) and the Energy Independence and Security Act of 2007 (P.L. 110-140), and the passage of the 2008 farm bill (P.L. 110-246), there is ongoing congressional interest in promoting greater use of alternatives to petroleum fuels. Biofuels—transportation fuels produced from plants and other organic materials—are of particular interest. Ethanol and biodiesel, the two most widely used biofuels, received significant federal support in the form of tax incentives, loan and grant programs, and regulatory programs. However, many incentives for biofuels production and use expired at the end of 2011, while many farm-bill related programs will expire at the end of FY2012. The ongoing congressional debate over budget deficits and the national debt make the prospect of extending these incentives less likely. For example, six of the eight tax incentives listed in this report expired at the end of 2011 and the remaining two are set to expire at the end of 2012.
Established: 2005 by the Energy Policy Act of 2005, §1501 (P.L. 109-58); expanded by the Energy Independence and Security Act of 2007, §202 (P.L. 110-140)
Description: The Energy Policy Act of 2005 established a renewable fuel standard (RFS) for automotive fuels. The RFS was expanded by the Energy Independence and Security Act of 2007. The RFS requires the use of renewable fuels (including ethanol and biodiesel) in transportation fuel. In 2011, fuel suppliers were required to include 13.95 billion gallons of renewable fuel in the national transportation fuel supply; this requirement increases annually to 36 billion gallons in 2022. The expanded RFS also specifically mandates the use of "advanced biofuels"—fuels produced from non-corn feedstocks and with 50% lower lifecycle greenhouse gas emissions than petroleum fuel—starting in 2009. Of the 36 billion gallons required in 2022, at least 21 billion gallons must be advanced biofuel. There are also specific quotas for cellulosic biofuels and for biomass-based diesel fuel. On May 1, 2007, EPA issued a final rule on the original RFS program detailing compliance standards for fuel suppliers, as well as a system to trade renewable fuel credits between suppliers. On March 26, 2010, EPA issued final rules for the expanded program (RFS2), including lifecycle analysis methods necessary to categorize fuels as advanced biofuels, and new rules for credit verification and trading. While this program is not a direct subsidy for the construction of biofuels plants, the guaranteed market created by the renewable fuel standard is expected to stimulate growth of the biofuels industry and to raise prices above where they would have been in the absence of the mandate.
For more information: EPA website, Renewable Fuel Standard (RFS) http://www.epa.gov/otaq/fuels/renewablefuels/index.htm
Various tax credits and other incentives have been available for the production, blending, and/or sale of biofuels and biofuel blends. However, many of these incentives expired at the end of 2011. Tax credits vary by the type of fuel and the size of the producer.
Several key biofuels incentives had expired or were set to expire (e.g., a tariff on ethanol imported from most countries, as well as tax credits for biodiesel, renewable diesel, and ethanol) before the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312). The incentives included in that law were extended through the end of 2011, but support for extending these tax incentives beyond 2011 was limited.
Established: 2005 by the American Jobs Creation Act of 2004, §301 (P.L. 108-357); modified by the Food, Conservation, and Energy Act of 2008, §15331 (P.L. 110-246); further amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §203; extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312), §708
Scheduled termination: Expired December 31, 2011
Description: Gasoline suppliers who blend ethanol with gasoline are eligible for a tax credit of 45 cents per gallon of ethanol through the end of 2011.
Qualified applicant: Blenders of gasohol (i.e., gasoline suppliers and marketers)
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and Refunds http://www.irs.gov/publications/p510/ch02.html
Description: The small ethanol producer credit is valued at 10 cents per gallon of ethanol produced through the end of 2011. The credit may be claimed on the first 15 million gallons of ethanol produced by a small producer in a given year.
Established: 2005 by the American Jobs Creation Act of 2004, §302 (P.L. 108-357); extended by the Energy Policy Act of 2005, §1344 (P.L. 109-58); amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §202-203; extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312), §701
Description: Biodiesel producers (or producers of diesel/biodiesel blends) can claim a per-gallon tax credit through the end of 2011. The credit is valued at $1.00 per gallon. Before amendment by P.L. 110-343, the credit was valued at $1.00 per gallon of "agri-biodiesel" (biodiesel produced from virgin agricultural products such as soybean oil or animal fats), or 50 cents per gallon of biodiesel produced from previously used agricultural products (e.g., recycled fryer grease). The tax credit had expired at the end of 2009 and was not extended until the passage of P.L. 111-312, which retroactively applies the extension to fuel produced in 2010.
Description: The small agri-biodiesel producer credit is valued at 10 cents per gallon of "agri-biodiesel" (see Biodiesel Tax Credit, above) produced. The credit may be claimed on the first 15 million gallons of ethanol produced by a small producer in a given year through the end of 2011. The tax credit had expired at the end of 2009 and was not extended until the passage of P.L. 111-312, which retroactively applies the extension to fuel produced in 2010.
Description: Producers of biomass-based diesel fuel (or producers of diesel/renewable biodiesel blends) can claim $1.00 per gallon tax credit through the end of 2011. Renewable diesel is similar to biodiesel, but it is produced through different processes and thus is ineligible for the (above) biodiesel credits. The tax credit had expired at the end of 2009 and was not extended until the passage of P.L. 111-312, which retroactively applies the extension to fuel produced in 2010.
Qualified applicant: Renewable diesel producers and blenders
Established: 2006 by the Tax Relief and Health Care Act of 2006, §209 (P.L. 109-432); amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §201
For more information: See Senate Finance Committee, Summary of House-Senate Agreement on Tax, Trade, Health, and Other Provisions, December 7, 2006.
Established: 2005 by the Energy Policy Act of 2005 §1342 (P.L. 109-58); extended by the Energy Improvement and Extension Act of 2008, §207 (P.L. 110-343, Division B); expanded by the American Recovery and Reinvestment Act, §1123 (P.L. 111-5); extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312), §711
Description: A taxpayer may take a 30% credit for the installation of alternative fuel infrastructure, up to $30,000, including E85 (85% ethanol and 15% gasoline) infrastructure through the end of 2011. Residential installations qualify for a $1,000 credit (biofuels pumps are not generally installed in residential applications).
Department of Agriculture (USDA)1
Annual funding: $74 million in mandatory spending for FY2009, $245 million for FY2010 (all mandatory funding to remain available until expended); authorization of an additional $150 million annually for FY2009-FY2012
Appropriations: the mandatory funding of $74 million in FY2009 and $245 million in FY2010 was authorized for loan guarantees; no discretionary funding has been appropriated through FY2012
For more information: See RBS website—http://www.rurdev.usda.gov/rbs/busp/baplg9003.htm
Appropriations: discretionary funding of $15 million was appropriated only in FY2010
For more information: See RBS website—http://www.rurdev.usda.gov/rbs/busp/RepoweringAssistance.htm
Annual funding: Mandatory funding (to remain available until expended) of $55 million for FY2009, $55 million for FY2010, $85 million for FY2011, and $105 million for FY2012, plus $25 million authorized annually for FY2009-FY2012
Appropriations: No discretionary funding has been appropriated through FY2012; mandatory funding for FY2009-FY2011 was fully available; however, mandatory funding for FY2012 was limited to $65 million
Description: Provides payments to producers to support and expand production of advanced biofuels. RBS issued a Notice of Contract Proposal June 12, 2009—http://www.rurdev.usda.gov/rbs/busp/NOCP%20FR%209005.pdf
For more information: See RBS website—http://www.rurdev.usda.gov/rbs/busp/9005Biofuels.htm
Annual funding: Mandatory CCC funds of such sums as necessary are made available for each of FY2008-F2012. Outlays depend on the number of participants. The 2010 Supplemental Appropriations Act (P.L. 111-212) limited BCAP funding to $552 million in FY2010 and $432 million in FY2011. The Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10) further reduced BCAP funding for FY2011 to $112 million. In FY2012, BCAP mandatory spending was limited to $17 million.
For more information: See FSA website—http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ener&topic=bcap
Annual funding: Mandatory CCC funds of $55 million in FY2009, $60 million in FY2010, and $70 million each in FY2011 and FY2012; an additional authorization of $25 million annually in discretionary funding for FY2009-FY2012
Appropriations: Mandatory funding for FY2009-FY2011 was fully available; however, mandatory funding for FY2012 was limited to $22 million; discretionary appropriations have been $5 million in FY2009, $40 million in FY2010, $5 million in FY2011, and $3.4 million in FY2012
Annual funding: mandatory funding (to remain available until expended) of $20 million for FY2009, $28 million for FY2010, $30 million for FY2011, and $40 million for FY2012. Discretionary funding of $35 million is authorized to be appropriated annually for FY2009-FY2012
Appropriations: no discretionary funding has been appropriated through FY2012
For more information: http://www.brdisolutions.com/default.aspx
Appropriations: $220 million in FY2010 for overall biomass program; approximately $175 million for overall biomass program in each of FY2011 and FY2012
For more information: http://www.eere.energy.gov/biomass/
Appropriations: None in FY2010-2012
Appropriations: No further appropriations in FY2010-FY2012 for additional loan authority—appropriations for administrative expenses to be offset by loan application fees
For more information: http://www.lgprogram.energy.gov/
Appropriations: None in FY2010-FY2012; $5 million in FY2008 for administrative expenses
Description: Section 942 of the Energy Policy Act of 2005 authorizes DOE to provide per-gallon incentive payments for cellulosic biofuels until annual U.S. production reaches 1 billion gallons or 2015, whichever is earlier. DOE finalized regulations on October 15, 2009. http://www.epa.gov/fedrgstr/EPA-IMPACT/2009/October/Day-15/i24778.htm.
Description: A 2.5% ad valorem tariff and a most-favored-nation duty of $0.54 per gallon of ethanol (for fuel use) applies to imports into the United States from most countries through the end of 2011; most ethanol from Caribbean Basin Initiative (CBI) countries may be imported duty-free.
For more information: CRS Report RS21930, Ethanol Imports and the Caribbean Basin Initiative (CBI), by [author name scrubbed]; Senate Finance Committee, Summary of House-Senate Agreement on Tax, Trade, Health, and Other Provisions, December 7, 2006.
Established: 1975 by the Energy Policy and Conservation Act of 1975 (P.L. 94-163); amended by various statutes, most recently the Energy Independence and Security Act of 2007, §109 (P.L. 110-140)
Original Authorizing Legislation
Mandated use of renewable fuel in gasoline: 4.0 billion gallons in 2006, increasing to 36 billion gallons in 2022
P.L. 109-58 §1501
Gasoline suppliers who blend ethanol with gasoline are eligible for a tax credit of 45 cents per gallon of ethanol
P.L. 108-357 §301
Expired at the end of 2011
An ethanol producer with less than 60 million gallons per year in production capacity may claim a credit of 10 cents per gallon on the first 15 million gallons produced in a year
Producers of biodiesel or diesel/biodiesel blends may claim a tax credit of $1.00 per gallon of biodiesel.
An agri-biodiesel (produced from virgin agricultural products) producer with less than 60 million gallons per year in production capacity may claim a credit of 10 cents per gallon on the first 15 million gallons produced in a year
Producers of renewable diesel (similar to biodiesel, but produced through a different process) may claim a tax credit of $1.00 per gallon of renewable diesel
Producers of cellulosic biofuel may claim a tax credit of $1.01 per gallon. For cellulosic ethanol producers, the value of the production tax credit is reduced by the value of the volumetric ethanol excise tax credit and the small ethanol producer credit—the credit is currently valued at 46 cents per gallon. The credit applies to fuel produced after December 31, 2008.
Plants producing cellulosic biofuels may take a 50% depreciation allowance in the first year of operation, subject to certain restrictions
Alternative Fueling Station Credit
A credit of up to $30,000 is available for the installation of alternative fuel infrastructure, including E85 (85% ethanol and 15% gasoline) pumps
P.L. 109-58 §1342
Loan guarantees and grants for the construction and retrofitting of biorefineries to produce advanced biofuels
P.L. 110-246 §9001
None—balance from previous years available until expended
Grants to biorefineries that use renewable biomass to reduce or eliminate fossil fuel use
Provides payments to producers to support and expand production of advanced biofuels
Authorizes the use of CCC funds to purchase surplus sugar, to be resold as a biomass feedstock to produce bioenergy
No appropriation to date
Provides financial assistance for biomass crop establishment costs and annual payments for biomass production; also provides payments to assist with costs for biomass collection, harvest, storage, and transportation
Dollar-for-dollar commodity payment—payments limited to $17 million in FY2012
Loan guarantees and grants for a wide range of rural energy projects, including biofuels.
Grants for biomass research, development, and demonstration projects
Funds cooperative R&D on biomass for fuels, power, chemicals, and other products
Approximately $175 million for overall biomass program
Loan Guarantees for Ethanol and Commercial Byproducts from Various Feedstocks
Several programs of loan guarantees to construct facilities that produce ethanol and other commercial products from cellulosic material, municipal solid waste, and/or sugarcane
P.L. 109-58 §§1510, 1511, and 1516
Loan guarantees for energy projects that reduce air pollutant and greenhouse gas emissions, including biofuels projects
P.L. 109-58 Title XVII
$38 million for administrative expenses to be offset by loan fees
Approximately $100 billion in loan authority from FY2008 and FY2009 appropriations; $10 billion in loan authority for renewable energy and energy efficiency
Authorizes DOE to provide per-gallon payments to cellulosic biofuel producers
P.L. 109-58 §942
No FY2010 appropriation
$5 million in FY2008 for administrative expenses
All imported ethanol is subject to a 2.5% ad valorem tariff; fuel ethanol is also subject to a most-favored-nation added duty of 54 cents per gallon (with some exceptions)
Flexible Fuel Vehicle Production Incentive
Automakers subject to Corporate Average Fuel Economy (CAFE) standards may accrue credits under that program for the production and sale of alternative fuel vehicles, including ethanol/gasoline flexible fuel vehicles (FFVs)
Incentive expires after model year 2019
For program details see CRS Report R41985, Renewable Energy Programs and the Farm Bill: Status and Issues, by [author name scrubbed].