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U.S. ethanol production remains sluggish as low gas prices and a lack of investment capital have held back plans for new plants.  In addition, Congress’  inability to  extend biofuel subsidies that expired that the end of 2009 means that China has surged ahead of the rest of the G20 both in energy consumption and in clean energy investment.

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.

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.

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.

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

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.

• 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.”

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.