Proposed GREEN Act Includes Tax Benefits for Biofuels & Bioenergy

Rep. Mike Thompson, (D-Calif.), Chairman of the House Ways and Means Subcommittee on Select Revenue Measures, announced in early February the introduction of the Growing Renewable Energy and Efficiency Now (GREEN) Act, which includes several tax benefits that would support the renewables sector at both the manufacture and consumer levels, including the biofuel and bioenergy industries.

Per Chairman Thompson, broad elements of the GREEN Act include:

Build on current successful tax incentives that promote the deployment of green energy technologies, while providing new incentives for activities that reduce greenhouse gas emissions.
Encourage residential investments in green energy and energy efficiency.
Expand incentives for energy efficiency and conservation in homes and buildings, with updated standards.
Support widespread adoption of zero-emission cars, vans, and buses through tax credits for purchasing vehicles, and support deployment of publicly accessible electric vehicle charging infrastructures.
Invest in the green workforce by providing tax credits for advanced manufacturing facilities and mechanical insulation installations.
Advance environmental justice using tax credits for research and other academic programs.
Price greenhouse gas emissions.
Specifically related to the renewables sector, the bill would extend the Section 45 production tax credit (PTC) for electricity produced from certain renewable resources. For facilities that produce electricity from landfill gas, trash or hydropower, the credit would be extended through 2026. It would also extend the investor tax credit (ITC) to 30% for solar projects that begin construction before 2027, then phase down incrementally for projects that begin construction thereafter. The new ITC for offshore wind would also be extended for projects that begin construction before the end of 2026.

The proposed legislation would also allow taxpayers to opt for a refund of up to 85% of the ITC and PTC, where they could essentially take the credit as a refund even if they don’t have sufficient taxable income to offset the credits. The National Law Review notes that “This would be a game-changer for many industry participants, who currently have to enter into complex transactions to monetize the credits, and would allow further expansion of the renewables industry, which some argue is limited by the approximately $12 to $16 billion per year in available third-party tax equity investment.”

Per Biomass Magazine, “For renewable fuels, the bill would extend the income and excise tax credits for biodiesel and biodiesel mixtures at $1.00 per gallon through 2022, with the credit phased down to 75 cents per gallon in 2023, 50 cents per gallon in 2024 and 33 cents per gallon in 2025. The credit would expire at the end of 2025. The legislation would also extend the 10 cent per gallon small agri-biodiesel producer credit through the end of 2025. Other provisions of the bill aim to extend the second-generation biofuel income tax credit and the alternative fuel refueling property credit through 2026.”

“Climate change is the most pressing issue of our time and we must act boldly to address this existential threat. That’s why I am proud to again introduce the GREEN Act, a sweeping bill that will use our tax code to help tackle climate change,” said Chairman Thompson. “This bill expands the use of renewable energy through Federal tax incentives that will promote clean energy technologies and faster deploy zero-emissions vehicles. These incentives will, in turn, shift our energy use and lessen our carbon footprint, dramatically reducing greenhouse gas emissions.

To read the full text of the GREEN Act, click here. You may also click here for a section-by-section review, and here for a summary.

By John Greene | March 10, 2021

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