Algae-Based Biofuels Win Spot in Fiscal Cliff Bill

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Researched by Industrial Info Resources (Sugar Land, Texas)--You may want to pull a Wile E. Coyote if you here the term "fiscal cliff" one more time and go down in a puff of dust on the canyon floor, but scroll down to Title IV-Energy Tax Extenders in Section 404 of the 153 page fiscal cliff bill [PDF] and you will see what biofuel producers and businesses tied to the industry are so excited about.

It reads: "SEC. 404. EXTENSION AND MODIFICATION OF CELLULOSIC BIOFUEL PRODUCER CREDIT. (a) Extension. -- (1) In general. -- This paragraph shall apply with respect to qualified cellulosic biofuel production after December 31, 2008, and before January 1, 2014 (ii) No carryover to certain years after expiration . -- If this paragraph ceases to apply for any period of reason of clause (i), rules similar to the rules of subsection (e) (2) shall apply."

Written in true lawmaker form, you must have had to pass the state bar to make any sense of it. In layman's terms, the American Taxpayer Relief Act of 2012 will extend three key biofuel related tax credits: the cellulosic producer tax credit, depreciation rules that support cellulosic ethanol, and a revived biodiesel tax credit that had expired at the end of 2011.

Now signed by President Barack Obama, algae-derived fuels are, for the first time ever, are a "qualified feedstock" under section 40 of the United States Code, meaning that producers of algae fuel are eligible for a $1.01 per gallon tax credit.

The retroactive portion of the credit, which will run through the end of 2013, represents a benefit to the blenders of about $1 billion. And the $1 per gallon of biodiesel amounts to roughly one-quarter of the fuel's current wholesale price. The package also allows a credit of up to $100,000 per filling station that is expected to help gas stations invest in selling a blend of 85% ethanol or less.

All great news for producers and sellers, but the consumer is again left in a weak condition until all vehicles can operate with the increased blends. Simply put: Build the pumps and they will come.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.