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RFA: Industry will fight for cellulosic tax credits

The federal ethanol blenders’ tax credit for grain-based ethanol expired without protest from the ethanol industry at the end of 2011. 

But the head of the Renewable Fuels Association—Bob Dinneen—says the industry will work to ensure that tax credits for cellulosic ethanol will continue past the end of 2012.

“We think that the production tax credit and the depreciation that is now allowed for cellulose needs to continue,” Dinneen says.

Extension of the cellulosic tax credits will send an important signal to the marketplace and encourage investment in the next generation of ethanol technology, Dinneen says.   

And to those who consider it just another federal subsidy for ethanol…

“They need only look at the tax incentive for grain-based ethanol that has just expired–that demonstrates you don’t need a tax incentive forever,” Dinneen says.

“You need to encourage investment—convince the marketplace that there is going to be consistent government support that will allow the industry to get on its feet.”

Cellulosic ethanol has not yet been produced commercially, but according to the U.S. Department of Energy web site, several commercial cellulosic plants are under construction.

Those include an Abengoa plant at Hugoton, Kansas and POET’s Project Liberty plant at Emmetsburg, Iowa.

In late June of last year, DuPont Danisco Cellulosic Ethanol announced plans to locate its first commercial-scale plant at Nevada Iowa.