Renewable Energy Memo

March 24, 2010

Alternative Fuels Industry Still Waiting for Tax Extenders Reconciliation

After the House and Senate passed bills including an extension of the alternative fuel mixture and biodiesel tax credit program, alternative fuel producers assumed that Congress would act quickly to put the legislation into a form that could be signed by the President. 

It has been more than two weeks now, however, and still Congress has not reconciled the two bills. 

House Ways and Means Committee Chairman Sander Levin (D-Mich.) is quoted by BNA Daily Tax Reports (March 23) to say that if lawmakers must hold a formal conference committee to settle differences on legislation extending expired and expiring tax cuts, it could be a long time before a compromise is reached.

Levin’s comments came the day after he told the House Rules Committee that it is “uncertain” when the House will consider the $31 billion extenders package (H.R. 4213), telling that panel the Senate-passed legislation has “many other provisions in it we need to consider within the committee and I’m thinking we’re going to have a conference committee and if we do I think the likely result is it will take considerable time to complete it.”

According to Levin, the House and the Senate used different offsets to pay for AFM and biodiesel tax cuts that expired December 31, 2009.

Until the bills are reconciled and signed by the President, the AFM and biodiesel tax credit remain in abeyance and the alternative fuel industry remains in limbo.

March 15, 2010

Alternative Fuel Producers Push for 30% Investment Tax Credit

Filed under: Biofuels, CleanTech investing, biomass — Tags: , , , , , — Jonathan B. Wilson @ 6:00 am

Blue Fire Ethanol and a consortium of 31 other alternative fuel producers have sent a letter to Congress asking for a 30% investment tax credit for biofuels.  While alternative fuel producers were encouraged by last week’s passage of extenders legislation to extend the alternative fuel mixture and biodiesel excise tax credit programs, those extentions are temporary.

While the national renewable fuels standard contemplates increasing amounts of biofuels by 2010, there are no commercial scale cellulosic ethanol plants schedule to come online before 2011, according to one industry letter sent to Congress.

March 11, 2010

Alternative Fuels Tax Credits Extended

The U.S. Senate yesterday voted by a margin of 82-36 to pass the American Workers, State and Business Relief Act, which included H.R. 4213.  That bill includes a one year extension of the biodiesel excise tax credit and the alternative fuel mixture credit.

Producers reacted with a sign of relief and reportedly have re-commenced or ramped up production in response to the news. 

For more background on the biodiesel and alternative fuel excise tax credits, please check out our recent podcast on Lexis-Nexis.

March 8, 2010

Senate Expected to Vote on Biodiesel and Alternative Fuel Tax Credit Extensions this Week

Filed under: Biofuels — Tags: , , , — Jonathan B. Wilson @ 6:00 am

On Friday, March 5, 2010, Senate Majority Leader Harry Reid (D. NV) filed a motion for cloture on H.R. 4213, the House tax extenders bill, which includes an extension of the biodiesel tax credit and alternative fuel mixture tax credit programs through December 31, 2010.

The Senate is expected to vote on the full bill in the coming week.

February 23, 2010

Senate Passes Jobs Bill Without Alternative Fuel Tax Credit Extension

Filed under: Biofuels, biomass — Tags: , , , — Jonathan B. Wilson @ 7:47 am

The Senate voted yesterday to move  forward with Senator Reid’s stripped-down version of the Hiring Incentives to Restore Employment Act.  The bill could be voted upon by the Senate by the end of the week.  Reid’s version of the bill, however, omits the extension of the alternative fuel mixture and biodiesel tax credits that were included in the earlier (Baucus/Grassley) version of the bill.

February 14, 2010

Senate Jobs Bill Resuscitates Alternative Fuel Credit

Filed under: Biofuels, Renewable energy jobs — Tags: , , , — Jonathan B. Wilson @ 7:51 am

 Senate Finance Committee Chairman Max Baucus, D-Mont., and Ranking Member Chuck Grassley, R-Iowa, last week released a draft of their Hiring Incentives to Restore Employment (HIRE) Act.

The bill contains a number of provisions intended to spark new hiring, including a social security tax holiday for workers hired during 2010.

Of interest to the renewable energy industry is the bill’s provision to extend the alternative fuel mixture credit for another year.  The AFM credit, which expired December 31, 2009, was omitted from other tax extender bills submitted earlier, but under the HIRE Act would be extended through 2010. 

The HIRE Act would also revise the definition of “liquid fuel derived from biomass” under 6426(d)(2)(G) to exclude black liquor.  This Senate Finance draft version of this jobs bill differs from House legislation.  The House Ways and Means extenders bill allowed the 6426(d)(2)(G) “liquid fuel derived from biomass” provision to expire as of 12/31/09.  Both versions would also extend the cellulosic biofuel credit under Section 40 of the Internal Revenue Code and would likewise exclude black liquor from its definition.

The lapse of the alternative fuel mixture credit has created substantial problems for the biofuels industry and many plants were shuttered at the end of the year.  New financings have come to a halt as project developers are waiting to see whether the tax credit program will be extended.  Extending the excise tax credit program should re-start many of those plans.

February 3, 2010

Administration Announces New Program to Promote Biofuels and Renewable Energy (RFS2; Carbon Sequestration; Biomass Crop Assistance Program)

President Obama today announced a series of steps as part of a comprehensive strategy to enhance American energy independence and build a foundation for a new clean energy economy. The administration believes that the strategy will create new industries and millions of jobs. (Reuters;  Reaction from Renewable Fuels Association).  At a meeting with a bipartisan group of governors,  the President set forth three efforts that he believes will work in concert to boost biofuels production and America’s dependence on foreign oil:

• The Environmental Protection Agency (EPA) has finalized a rule to implement the long-term renewable fuels standard of 36 billion gallons by 2022 established by Congress.

• The U.S. Department of Agriculture has proposed a rule on the Biomass Crop Assistance Program (BCAP) that would provide financing to increase the conversion of biomass to bioenergy. 

• The President’s Biofuels Interagency Working Group released its first report – Growing America’s Fuel. The report, authored by group co-chairs, Secretaries Vilsack and Chu, and Administrator Jackson, lays out a strategy to advance the development and commercialization of a sustainable biofuels industry to meet or exceed the nation’s biofuels targets. 

In addition, President Obama announced a Presidential Memorandum creating an Interagency Task Force on Carbon Capture and Storage to develop a comprehensive and coordinated federal strategy to speed the development and deployment of clean coal technologies. The U.S. will continue to rely on the availability and affordability of domestic coal for decades to meet its energy needs, and these advances are necessary to reduce pollution in the meantime.

The Presidential Memorandum calls for five to ten commercial demonstration projects to be up and running by 2016.

President Obama said, “Now, I happen to believe that we should pass a comprehensive energy and climate bill. It will make clean energy the profitable kind of energy, and the decision by other nations to do this is already giving their businesses a leg up on developing clean energy jobs and technologies. But even if you disagree on the threat posed by climate change, investing in clean energy jobs and businesses is still the right thing to do for our economy. Reducing our dependence on foreign oil is still the right thing to do for our security. We can’t afford to spin our wheels while the rest of the world speeds ahead.” 

“Advancing biomass and biofuel production holds the potential to create green jobs, which is one of the many ways the Obama Administration is working to rebuild and revitalize rural America,” said Agriculture Secretary Tom Vilsack. “Facilities that produce renewable fuel from biomass have to be designed, built and operated. Additionally, BCAP will stimulate biomass production and that will benefit producers and provide the materials necessary to generate clean energy and reduce carbon pollution.”

“President Obama and this Administration are strongly committed to the development of carbon capture and storage technology as a key part of the clean energy economy. We can and should lead the world in this technology and the jobs it can create,” said Energy Secretary Steven Chu. “The actions President Obama has taken today will create jobs, slash greenhouse gas emissions and increase our energy security while helping to put America at the leading edge of the new energy economy,” said EPA Administrator Lisa P. Jackson. “The renewable fuel standards will help bring new economic opportunity to millions of Americans, particularly in rural America. EPA is proud to be a part of the President’s effort to combat climate change and put Americans back to work – both through the new renewable fuel standards and through our co-chairmanship with the Department of Energy of the Interagency Task Force on Carbon Capture and Storage.”

February 2, 2010

U.S. Endowment for Forestry Seeks Proposals for Energy Demonstration Projects

Filed under: Biofuels, Renewable energy jobs, biomass — Tags: , — Jonathan B. Wilson @ 7:42 am

The U.S. Endowment for Forestry and Communities is seeking pre-proposals for grants of up to $250,000 to develop demonstration projects for the conversion of woody biomass to energy.

The Endowment will award grants of up to $250,000 (but not more than $750,000 in total) for proposals that can convert laboratory technology for converting woody biomass to energy in a way that is sustainable, economically viable and produces employment opportunities. 

The Endowment is a non-profit corporation created in 2006 as part of a bilateral agreement between the U.S. and Canada.  The Endowment’s approach in this RFP is to find solutions that have not yet been developed to commercial scale, for harvesting trees in forets that are not suitable for traditional lumbering. 

Proposals are due on February 12, 2010 and must be submitted through the Endowment’s online grant system.

January 4, 2010

Renewable Energy Around the Web: January 4, 2010

Filed under: Around the Web, Biofuels, CleanTech investing — Tags: , , , — Jonathan B. Wilson @ 8:10 am

Welcome to our first “around the web” summary for the new year.  Renewable Energy Around the Web is a weekly compilation of renewable energy news and information.  Please write to us with idea or suggestions for topics at “editor at renewableenergymemo.com”. 

Top Ten Biofuels Predictions for 2010

Our friends at BiofuelsDigest have posted their predictions for the coming year:

#10 – Low Carbon Fuel Standards – Following California’s lead, BFD predicts that other states will also adopt low carbon fuel standards that will spur investment into renewable fuels.

#9 – Cellulosic Ethanol “Happens”- BFD predicts 102 million gallons of advanced biofuels capacity by the end of 2010 with 25 Mgy of it cellulosic ethanol at 17 facilities.

#8 – Aviation Biofuels Surge- 2009 say several successful tests of aviation biofuels.  Look for an increase in interest and investment in 2010.

#7 – Oil Companies Acquire Ethanol Capacity- BFD predicts that a major oil company will acquire 200-800 Mgy in ethanol capacity, at a discounted rate of $0.70 per gallon of capacity.

#6 – Green Chemicals and Plastics Boom – Look for big investments by ‘old’ economy chemical companies into biochemical and related lines of business.

#5 – Jatropha Revival – BFD predicts major investments in this once-maligned plant for use as a feedstock.

#4 – U.S. Renewable Fuel Standard – Congress will take up the renewable fuel banner and will extend targets into the future. 

#3 – Micrcrops / Algae- BFD predicts that Lemna, cyanobacteria and heterotrophic algae gain traction as microcrops begin transition from R&D to commercialization.

#2 – Green Ports / Marine Biofuels- Look for major deals involving marine biofuels.

#1 – Alternative Finance / REITS Move In – BFD predicts the formation of at least one $1B+ investment fund that will finance renewable energy on a build-leaseback basis.  BFD cites its earlier poston the need for project securitization to make project finance money available for biofules projects. 

Our take?  BFD’s ten predictions are an ambitious (and probably somewhat hopeful) look at the year ahead.  Some, like the commercialization of cellulosic ethanol and an interest in green chemical platforms by traditional chemical companies, seem to be the product of trends that were put into place over the past few years.  Others, like a revival of interest in Jatropha, are hard to visualize as we’re sitting here today. 

Still others, like a prediction that Congress will pace a renewable fuel standard, depend on political forces that are notoriously difficult to predict. 

If even half of these predictions come to pass, however, 2010 will bring a great deal of interest and focus to the renewable fuels sector.

And In Other News

Alternative Fuel Mixture Credit Expires.     Congress failed to act, allowing the alternative fuel mixture credit to expire on December 31st.  My tax lawyer buddies tell me that an extender bill is likely in the coming month that will be retroactive, but with this Congress there can be no guarantees.

Environmentalists vs. The EnvironmentAnother report of a large solar park planned in the Mojave Desert falling prey to environmental challenges that the site will endanger the desert tortoise.  Environmental challenges continue to make it difficult for large solar projects in the desert southwest to get permitted and get funded.

European Supergrid – Energy planners in Europe, meanwhile, are pondering the merits of a ’supergrid’ that would interconnect the electrical grids of participating states in Europe.  Carrying a price tag of nearly $30B Euros, the supergrid would link “turbines off the wind-lashed north coast of Scotland with Germany’s vast arrays of solar panels, and join the power of waves crashing on to the Belgian and Danish coasts with the hydro-electric dams nestled in Norway’s fjords.” 

(Passing interest – If you follow the link to the supergrid story, check out the picture of the solar park in Schleswig-Holstein Germay.  The park is so far north that the solar panels are point almost perpendicular to the ground in order to see the sun. )

December 29, 2009

Codexis Files for IPO

Filed under: Biofuels, CleanTech investing — Tags: , — Jonathan B. Wilson @ 9:42 am

Bioproducts company Codexis yesterday filed papers with the SEC to proceed with an initial public offering of its shares. 

Credit Suisse Securities and Goldman Sachs will be acting as joint book-running managers, with RBC Capital Markets Corporation and Pacific Crest Securities LLC acting as co-managers for the offering.

Codexis produces what it calls “optimized biocatalysts” (essentially, engineered biochemicals and enzymes) that have applications in process for biofuels, pharmaceuticals, recycling and other industrial processes.  The stock offering seeks to raise up to $100 million.

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