Biofuels Incentives: A Summary of Federal Programs
Congressional research reportJan 11, 2012
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Biofuels Incentives: A Summary of
Federal Programs
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Section Research Manager
January 11, 2012
Congressional Research Service
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R40110
CRS Report for Congress
Prepared for Members and Committees of Congress
Biofuels Incentives: A Summary of Federal Programs
Summary
With recent high energy prices, the passage of major energy legislation in 2005 (P.L. 109-58) and
2007 (P.L. 110-140), and the passage of a farm bill in 2008 (P.L. 110-246), there is ongoing
congressional interest in promoting alternatives to petroleum fuels. Biofuels—transportation fuels
produced from plants and other organic materials—are of particular interest. However, many
incentives for biofuels production and use expired at the end of 2011, and ongoing congressional
debate over budget deficits and the national debt make the prospect of extending these incentives
less likely.
Until recently, ethanol and biodiesel, the two most widely used biofuels, received significant
government support under federal law in the form of mandated fuel use, tax incentives, loan and
grant programs, and certain regulatory requirements. While the mandate remains, several tax
incentives and other programs have terminated in recent years. The 22 programs and provisions
listed in this report were established over the past three decades, and were administered by five
separate agencies and departments: Environmental Protection Agency, U.S. Department of
Agriculture, Department of Energy, Internal Revenue Service, and Customs and Border
Protection. These programs targeted a variety of beneficiaries, including farmers and rural small
businesses, biofuel producers, petroleum suppliers, and fuel marketers. Arguably, in prior years
the most significant federal programs for biofuels had been tax credits for the production or sale
of ethanol and biodiesel. However, with the establishment of the renewable fuel standard (RFS)
under P.L. 109-58, Congress has mandated biofuels use; P.L. 110-140 significantly expanded that
mandate. In the long term, the mandate may prove even more significant than tax incentives in
promoting the use of these fuels.
The 2008 farm bill—The Food, Conservation, and Energy Act of 2008—amended or established
various biofuels incentives, including lowering the value of the ethanol excise tax credit,
establishing a tax credit for cellulosic biofuel production, extending import duties on fuel ethanol,
and establishing several new grant and loan programs (all of which are set to expire at the end of
FY2012).
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, and Congress has not acted to extend these incentives into 2012.
This report outlines federal programs that provide direct or indirect incentives for biofuels. For
each program described, the report provides details including administering agency, authorizing
statute(s), annual funding, and expiration date. The Appendix provides summary information in a
table format.
Congressional Research Service
Biofuels Incentives: A Summary of Federal Programs
Contents
Introduction...................................................................................................................................... 1
Environmental Protection Agency (EPA)—Renewable Fuel Standard ........................................... 1
Internal Revenue Service (IRS) ....................................................................................................... 2
Volumetric Ethanol Excise Tax Credit....................................................................................... 2
Small Ethanol Producer Credit .................................................................................................. 2
Biodiesel Tax Credit .................................................................................................................. 3
Small Agri-Biodiesel Producer Credit....................................................................................... 3
Renewable Diesel Tax Credit .................................................................................................... 4
Credit for Production of Cellulosic Biofuel .............................................................................. 4
Special Depreciation Allowance for Cellulosic Biofuel Plant Property .................................... 5
Alternative Fuel Station Credit.................................................................................................. 5
Department of Agriculture (USDA) ................................................................................................ 6
Biorefinery Assistance............................................................................................................... 6
Repowering Assistance.............................................................................................................. 6
Bioenergy Program for Advanced Biofuels............................................................................... 7
Feedstock Flexibility Program for Producers of Biofuels (Sugar) ............................................ 7
Biomass Crop Assistance Program (BCAP).............................................................................. 7
Rural Energy for America Program (REAP) ............................................................................. 8
Biomass Research and Development ........................................................................................ 8
Other USDA Programs .............................................................................................................. 9
Department of Energy (DOE).......................................................................................................... 9
Biorefinery Project Grants......................................................................................................... 9
Loan Guarantees for Ethanol and Commercial Byproducts from Cellulose, Municipal
Solid Waste, and Sugar Cane................................................................................................ 10
DOE Loan Guarantee Program................................................................................................ 10
Cellulosic Ethanol Reserve Auction ........................................................................................ 10
U.S. Customs and Border Protection (CBP)—Import Duty for Fuel Ethanol............................... 11
Department of Transportation (DOT)—Manufacturing Incentive for Flexible Fuel
Vehicles....................................................................................................................................... 12
Tables
Table A-1. Federal Biofuels Incentives by Agency........................................................................ 13
Appendixes
Appendix. Summary of Federal Incentives Promoting Biofuels ................................................... 13
Contacts
Author Contact Information........................................................................................................... 16
Congressional Research Service
Biofuels Incentives: A Summary of Federal Programs
Introduction
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.
This report outlines 22 current, expired, or pending federal programs that provide direct or
indirect incentives for biofuels. The programs are grouped below by administering agency. The
incentives for biofuels are summarized in the Appendix. This information is compiled from
authorizing statutes, committee reports, and Administration budget request documents.
Environmental Protection Agency (EPA)—
Renewable Fuel Standard
•
Administered by: EPA
•
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. 110140)
•
Scheduled termination: None
•
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
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Biofuels Incentives: A Summary of Federal Programs
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
Internal Revenue Service (IRS)
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.
Volumetric Ethanol Excise Tax Credit
•
Administered by: Internal Revenue Service
•
Established: 2005 by the American Jobs Creation Act of 2004, §301 (P.L. 108357); 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
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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
Small Ethanol Producer Credit
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Administered by: Internal Revenue Service
•
Established: 1990 by the Omnibus Budget Reconciliation Act of 1990, §11502
(P.L. 101-508); extended by the American Jobs Creation Act of 2004, §301 (P.L.
108-357); expanded by the Energy Policy Act of 2005, §1347 (P.L. 109-58);
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
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Biofuels Incentives: A Summary of Federal Programs
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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.
•
Qualified applicant: Any ethanol producer with production capacity below 60
million gallons per year
•
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds http://www.irs.gov/publications/p510/ch02.html
Biodiesel Tax Credit
•
Administered by: Internal Revenue Service
•
Established: 2005 by the American Jobs Creation Act of 2004, §302 (P.L. 108357); 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
•
Scheduled termination: Expired December 31, 2011
•
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.
•
Qualified applicant: Biodiesel producers and blenders
•
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds http://www.irs.gov/publications/p510/ch02.html
Small Agri-Biodiesel Producer Credit
•
Administered by: Internal Revenue Service
•
Established: 2005 by the Energy Policy Act of 2005, §1345 (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
•
Scheduled termination: Expired December 31, 2011
•
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.
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Biofuels Incentives: A Summary of Federal Programs
•
Qualified applicant: Any agri-biodiesel producer with production capacity below
60 million gallons per year
•
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds http://www.irs.gov/publications/p510/ch02.html
Renewable Diesel Tax Credit
•
Administered by: Internal Revenue Service
•
Established: 2005 by the Energy Policy Act of 2005, §1346 (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
•
Scheduled termination: Expired December 31, 2011
•
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
•
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds http://www.irs.gov/publications/p510/ch02.html
Credit for Production of Cellulosic Biofuel
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Administered by: Internal Revenue Service
•
Established: January 1, 2009, by the Food, Conservation, and Energy Act of
2008, §15321 (P.L. 110-246)
•
Scheduled termination: December 31, 2012
•
Description: Producers of cellulosic biofuel can claim $1.01 per gallon tax credit.
For producers of cellulosic ethanol, the value of the credit is reduced by the
amount of the volumetric ethanol excise tax credit and the small ethanol producer
credit (see above)—currently, the value is 46 cents per gallon. The credit applies
to fuel produced after December 31, 2008.
•
Qualified applicant: Cellulosic biofuel producers
•
Note: The credit for cellulosic ethanol varies with other ethanol credits such that
the total combined value of all credits is $1.01 per gallon. As the volumetric
ethanol excise tax credit and/or the small ethanol producer credits decrease, the
per-gallon credit for cellulosic ethanol production increases by the same amount.
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Biofuels Incentives: A Summary of Federal Programs
Special Depreciation Allowance for Cellulosic Biofuel Plant
Property
•
Administered by: Internal Revenue Service
•
Established: 2006 by the Tax Relief and Health Care Act of 2006, §209 (P.L. 109432); amended by the Energy Improvement and Extension Act of 2008 (P.L. 110343, Division B), §201
•
Scheduled termination: December 31, 2012
•
Description: A taxpayer may take a depreciation deduction of 50% of the
adjusted basis of a new cellulosic biofuel plant in the year it is put in service. Any
portion of the cost financed through tax-exempt bonds is exempted from the
depreciation allowance. Before amendment by P.L. 110-343, the accelerated
depreciation applied only to cellulosic ethanol plants that break down cellulose
through enzymatic processes—the amended provision applies to all cellulosic
biofuel plants.
•
Qualified applicant: Any cellulosic ethanol plant acquired after December 20,
2006, and placed in service before January 1, 2013. Any plant that had a binding
contract for acquisition before December 20, 2006, does not qualify.
•
For more information: See Senate Finance Committee, Summary of HouseSenate Agreement on Tax, Trade, Health, and Other Provisions, December 7,
2006.
Alternative Fuel Station Credit
•
Administered by: Internal Revenue Service
•
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. 110343, 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
•
Scheduled termination: Expired December 31, 2011
•
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).
•
Qualified applicant: Individual or business that installs alternative fuel
infrastructure
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Department of Agriculture (USDA)1
Biorefinery Assistance
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Administered by: Rural Business-Cooperative Service (RBS)
•
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
•
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
•
Scheduled termination: End of FY2012
•
Description: Grants to biorefineries that use renewable biomass to reduce or
eliminate fossil fuel use.
•
Qualified applicant: Biorefineries in existence at the date of enactment.
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For more information: See RBS website—http://www.rurdev.usda.gov/rbs/busp/
baplg9003.htm
Repowering Assistance
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Administered by: RBS
•
Annual funding: $35 million in mandatory funding for FY2009, to remain
available until expended, plus $15 million authorized annually for FY2009
through FY2012
•
Appropriations: discretionary funding of $15 million was appropriated only in
FY2010
•
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
•
Scheduled termination: End of FY2012
•
Description: Grants to biorefineries that use renewable biomass to reduce or
eliminate fossil fuel use. RBS issued a Notice of Funding Availability June 12,
2009—http://www.rurdev.usda.gov/rbs/busp/9004%20FR%20NOFA.pdf.
•
Qualified applicant: Biorefineries in existence at the date of enactment.
1
For program details see CRS Report R41985, Renewable Energy Programs and the Farm Bill: Status and Issues, by
(name redacted).
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Biofuels Incentives: A Summary of Federal Programs
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For more information: See RBS website—http://www.rurdev.usda.gov/rbs/busp/
RepoweringAssistance.htm
Bioenergy Program for Advanced Biofuels
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Administered by: RBS
•
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
•
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
•
Scheduled termination: End of FY2012
•
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
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Qualified applicant: Producer of advanced biofuels
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For more information: See RBS website—http://www.rurdev.usda.gov/rbs/busp/
9005Biofuels.htm
Feedstock Flexibility Program for Producers of Biofuels (Sugar)
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Administered by: Commodity Credit Corporation (CCC)
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Annual funding: Such sums as necessary are authorized to be appropriated—no
appropriation to date
•
Appropriations: None
•
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
•
Scheduled termination: None
•
Description: Authorizes the use of CCC funds to purchase surplus sugar, to
ensure the sugar program operates at no-net-cost, to be resold as a biomass
feedstock to produce bioenergy.
•
Qualified applicant: Producer of biofuels using eligible sugar as a feedstock
Biomass Crop Assistance Program (BCAP)
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Administered by: Farm Service Agency (FSA)
•
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
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Biofuels Incentives: A Summary of Federal Programs
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.
•
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
•
Scheduled termination: End of FY2012
•
Description: Dollar-for-dollar matching payments for collection, harvesting,
storage, and transportation (CHST) of biomass to qualified biofuel production
facilities (as well as bioenergy or biobased products), up to $45 per ton
•
Qualified applicant: Person who delivers eligible biomass to a qualified facility
•
For more information: See FSA website—http://www.fsa.usda.gov/FSA/webapp?
area=home&subject=ener&topic=bcap
Rural Energy for America Program (REAP)
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Administered by: RBS
•
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 FY2009FY2012
•
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
•
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
•
Scheduled termination: End of FY2012
•
Description: This program replaced the Renewable Energy Systems and Energy
Efficiency Improvements program in the 2002 farm bill. The program provides
grants and loans for a variety of rural energy projects, including efficiency
improvements and renewable energy projects. Although REAP is not exclusively
aimed at biofuels projects, the program could be a significant source of loan
funds for such projects.
Biomass Research and Development
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Administered by: National Institute of Food and Agriculture (NIFA)
•
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
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Established: FY2001 by the Biomass Research and Development Act of 2000,
§307 (P.L. 106-224); program extended and mandatory appropriations provided
by the Farm Security and Rural Investment Act of 2002, §9008 (P.L. 107-171);
program extended and funding authorization expanded by the Energy Policy Act
of 2005, §941 (P.L. 109-58); significantly modified by the Food, Conservation
and Energy Act of 2008, §9008 (P.L. 110-246)
•
Scheduled termination: End of FY2012
•
Description: Grants are provided for biomass research, development, and
demonstration projects. Eligible projects include ethanol and biodiesel
demonstration plants.
•
Qualified applicant: Wide range of possible applicants
•
For more information: http://www.brdisolutions.com/default.aspx
Other USDA Programs
The following programs within the Rural Business Cooperative Service could possibly be used to
assist biofuels producers indirectly:
•
Business and Industry (B&I) Guaranteed Loans
•
Rural Business Enterprise Grants (RBEG)
•
Value-Added Grants
•
Rural Economic Development Loan and Grant Programs
Department of Energy (DOE)
Biorefinery Project Grants
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Administered by: Office of Energy Efficiency and Renewable Energy
•
Annual funding: Approximately $200 million appropriated annually for the
biomass program—not all of this funding will go toward biorefinery project
grants
•
Appropriations: $220 million in FY2010 for overall biomass program;
approximately $175 million for overall biomass program in each of FY2011 and
FY2012
•
Established: FY2001 through funding authorized in various statutes
•
Scheduled termination: None
•
Description: This program provides funds for cooperative biomass research and
development for the production of fuels, electric power, chemicals, and other
products.
•
Qualified applicant: Varies from year to year, depending on program goals in a
given year
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Biofuels Incentives: A Summary of Federal Programs
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For more information: http://www.eere.energy.gov/biomass/
Loan Guarantees for Ethanol and Commercial Byproducts from
Cellulose, Municipal Solid Waste, and Sugar Cane
•
Administered by: DOE
•
Annual funding: Not specified
•
Appropriations: None in FY2010-2012
•
Established: 2005 by the Energy Policy Act of 2005, §§1510, 1511, and 1516
(P.L. 109-58)
•
Scheduled termination: Varies, depending on specific program
•
Description: The Energy Policy Act of 2005 authorizes several programs to
provide loan guarantees for the construction of facilities that produce ethanol and
other commercial products from cellulosic material, municipal solid waste, or
sugar cane.
•
Qualified applicant: Private lending institutions, to guarantee loans for the
construction of biofuels plants
DOE Loan Guarantee Program
•
Administered by: DOE
•
Annual funding: $5.4 million for administrative expenses in FY2008; authority
for $51 billion in loan guarantees for energy projects in FY2008, including $10
billion for renewable energy and energy efficiency; $6 billion additional FY2009
appropriation to cover $49 billion in loans to all projects (not just biofuels)
•
Appropriations: No further appropriations in FY2010-FY2012 for additional loan
authority—appropriations for administrative expenses to be offset by loan
application fees
•
Established: 2005 by the Energy Policy Act of 2005, Title XVII (P.L. 109-58)
•
Scheduled termination: Not specified
•
Description: Title XVII of the Energy Policy Act of 2005 authorizes DOE to
provide loan guarantees for energy projects that reduce air pollutant and
greenhouse gas emissions, including biofuels projects.
•
Qualified applicant: Private lending institutions, to guarantee loans for clean
energy projects.
•
For more information: http://www.lgprogram.energy.gov/
Cellulosic Ethanol Reserve Auction
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Administered by: DOE
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Annual funding: $1 billion total authorized for all fiscal years; not more than
$100 million may be paid in any given year
•
Appropriations: None in FY2010-FY2012; $5 million in FY2008 for
administrative expenses
•
Established: 2005 by the Energy Policy Act of 2005, §942 (P.L. 109-58)
•
Scheduled termination: Not specified
•
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.
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Qualified applicant: Any U.S. cellulosic biofuel production facility that meets
applicable requirements.
U.S. Customs and Border Protection (CBP)—
Import Duty for Fuel Ethanol
•
Administered by: U.S. Customs and Border Protection
•
Annual funding: N/A
•
Established: 1980 by the Omnibus Reconciliation Act of 1980 (P.L. 96-499);
amended by the Tax Reform Act of 1986, §423 (P.L. 99-514) extended by the Tax
Relief and Health Care Act of 2006, §302 (P.L. 109-432); further extended by the
Food, Conservation, and Energy Act of 2008, §15333 (P.L. 110-246), and the Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
(P.L. 111-312), §708
•
Scheduled termination: Expired December 31, 2011
•
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.
•
Covered Entities: Fuel ethanol importers
•
For more information: CRS Report RS21930, Ethanol Imports and the
Caribbean Basin Initiative (CBI), by (name redacted); Senate Finance
Committee, Summary of House-Senate Agreement on Tax, Trade, Health, and
Other Provisions, December 7, 2006.
Congressional Research Service
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Biofuels Incentives: A Summary of Federal Programs
Department of Transportation (DOT)—
Manufacturing Incentive for Flexible Fuel Vehicles
•
Administered by: National Highway Traffic Safety Administration
•
Annual funding: N/A
•
Established: 1975 by the Energy Policy and Conservation Act of 1975 (P.L. 94163); amended by various statutes, most recently the Energy Independence and
Security Act of 2007, §109 (P.L. 110-140)
•
Scheduled termination: After model year 2019
•
Description: Automakers are required to meet Corporate Average Fuel Economy
(CAFE) standards for their passenger cars and light trucks. Manufacturers may
gain credits for the sale of alternative fuel vehicles, including ethanol/gasoline
flexible fuel vehicles (FFVs). However, the credits are limited—the maximum
fuel economy increase allowed through the use of these credits is 1.2 miles per
gallon through model year (MY) 2014. The credits are phased out after MY2014
and are completely eliminated after MY2019.
Congressional Research Service
12
Biofuels Incentives: A Summary of Federal Programs
Appendix. Summary of Federal Incentives
Promoting Biofuels
Table A-1. Federal Biofuels Incentives by Agency
Administering
Agency
Program
Description
Environmental
Protection
Agency
Renewable
Fuel
Standard
Mandated use of renewable
fuel in gasoline: 4.0 billion
gallons in 2006, increasing to
36 billion gallons in 2022
Internal
Revenue Service
Volumetric
Ethanol
Excise Tax
Credit
Original
Authorizing
Legislation
FY2012
Appropriation
Expiration
Date
P.L. 109-58
§1501
N/A
None
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
N/A
Expired at
the end of
2011
Small Ethanol
Producer
Credit
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
P.L. 101-508
N/A
Expired at
the end of
2011
Biodiesel Tax
Credit
Producers of biodiesel or
diesel/biodiesel blends may
claim a tax credit of $1.00
per gallon of biodiesel.
P.L. 108-357
N/A
Expired at
the end of
2011
Small AgriBiodiesel
Producer
Credit
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
P.L. 109-58
N/A
Expired at
the end of
2011
Renewable
Diesel Tax
Credit
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
P.L. 109-58
N/A
Expired at
the end of
2011
Congressional Research Service
13
Biofuels Incentives: A Summary of Federal Programs
Administering
Agency
Department of
Agriculture
Original
Authorizing
Legislation
FY2012
Appropriation
Expiration
Date
Program
Description
Credit for
Production
of Cellulosic
Biofuel
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.
P.L. 110-246
N/A
End of 2012
Special
Depreciation
Allowance
for Cellulosic
Biofuel Plant
Property
Plants producing cellulosic
biofuels may take a 50%
depreciation allowance in the
first year of operation,
subject to certain restrictions
P.L. 109-432
N/A
End of 2012
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
N/A
Expired at
the end of
2011
Biorefinery
Assistance
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
End of
FY2012
Repowering
Assistance
Grants to biorefineries that
use renewable biomass to
reduce or eliminate fossil fuel
use
P.L. 110-246
§9001
None—balance
from previous
years available
until expended
End of
FY2012
Bioenergy
Program for
Advanced
Biofuels
Provides payments to
producers to support and
expand production of
advanced biofuels
P.L. 110-246
§9001
$65 million
End of
FY2012
Feedstock
Flexibility
Program for
Producers of
Biofuels
(Sugar)
Authorizes the use of CCC
funds to purchase surplus
sugar, to be resold as a
biomass feedstock to
produce bioenergy
P.L. 110-246
§9001
No
appropriation
to date
None
Congressional Research Service
14
Biofuels Incentives: A Summary of Federal Programs
Administering
Agency
Department of
Energy
Original
Authorizing
Legislation
FY2012
Appropriation
Expiration
Date
P.L. 110-246
§9001
Dollar-fordollar
commodity
payment—
payments
limited to $17
million in
FY2012
End of
FY2012
Loan guarantees and grants
for a wide range of rural
energy projects, including
biofuels.
P.L. 110-246
§9001
$25.4 million
End of
FY2012
Biomass
Research and
Development
Grants for biomass research,
development, and
demonstration projects
P.L. 106-224
$40 million
End of
FY2015
Biorefinery
Project
Grants
Funds cooperative R&D on
biomass for fuels, power,
chemicals, and other
products
Various
statutes
Approximately
$175 million for
overall biomass
program
None
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
No
appropriation
to date
Varies
DOE Loan
Guarantee
Program
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
None
Program
Description
Biomass
Crop
Assistance
Program
(BCAP)
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
Rural Energy
for America
Program
(REAP)
Approximately
$100 billion in
loan authority
from FY2008
and FY2009
appropriations;
$10 billion in
loan authority
for renewable
energy and
energy
efficiency
Cellulosic
Ethanol
Reserve
Auction
Congressional Research Service
Authorizes DOE to provide
per-gallon payments to
cellulosic biofuel producers
P.L. 109-58
§942
No FY2010
appropriation
August 8,
2015
$5 million in
FY2008 for
administrative
expenses
15
Biofuels Incentives: A Summary of Federal Programs
Original
Authorizing
Legislation
FY2012
Appropriation
Expiration
Date
All imported ethanol is
subject to a 2.5% ad valorem
tariff; fuel ethanol is also
subject to a most-favorednation added duty of 54 cents
per gallon (with some
exceptions)
P.L. 96-499
N/A
End of 2011
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)
P.L. 94-163
N/A
Incentive
expires
after model
year 2019
Administering
Agency
Program
Description
U.S. Customs
and Border
Protection
Import Duty
for Fuel
Ethanol
Department of
Transportation
Flexible Fuel
Vehicle
Production
Incentive
Source: CRS.
Author Contact Information
(name redacted)
Section Research Manager
/redacted/@crs.loc.gov, 7-....
Congressional Research Service
16
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