Levin Unveils Renewable Energy Tax Credit Bill

House Ways and Means Committee Chairman Sandy Levin (D-Mich.) has released a draft bill that would provide tax credits for manufacturers of renewable energy equipment and funding for other sources of clean energy.

House Ways and Means Committee Chairman Sandy Levin (D-Mich.) has released a draft bill that would provide tax credits for manufacturers of renewable energy equipment and funding for other sources of clean energy.

The draft legislation aims to encourage domestic manufacturing of energy equipment and renewable fuel development. The Domestic Manufacturing and Energy Jobs Act of 2010 includes $6.5 billion worth of investment tax credits for taxpayers that re-equip, expand or establish domestic manufacturing facilities that produce advanced energy equipment. The tax credits would encourage an estimated $22 billion of investment in domestic manufacturing facilities and build upon the $2.3 billion of investment tax credits provided in the Recovery Act.

And, the proposal also would extend for one year (through 2011) the per-gallon tax credits and outlay payments for ethanol at a reduced rate of 36 cents per gallon, down from the current 45 cents. The proposal would also extend for one year (through 2011) the existing 14.27 cents per liter (54 cents per gallon) tariff on imported ethanol and the related 5.99 cents per liter (22.67 cents per gallon) tariff on ethyl tertiary-butyl ether.

The proposal would reinstate for 2011 the per-gallon tax credits and outlay payments for biodiesel and renewable diesel. The extension of these tax credits and outlay payments for 2010 has previously passed both the House and the Senate at different times but has not become law. The extension for 2010 would be incorporated into this legislation if that extension has not been enacted by the time this legislation is considered.

The proposal would allow algae-based fuels to qualify for $1.01 per gallon tax credit for producers of cellulosic biofuel. The proposal would also clarify that the cellulosic biofuel producer credit is awarded to taxpayers that make crude oil from algae if this oil is subsequently refined into a fuel.

Under current law, producers of cellulosic biofuel are allowed to claim a $1.01 tax credit for each gallon of cellulosic biofuel that they produce and sell for use as a fuel. Under the proposal, producers of cellulosic biofuel or algae-based biofuel (collectively, "second generation biofuel"), would be allowed to elect to receive a 30 percent investment tax credit for property (including property affixed to a traditional ethanol facility) that is used exclusively to produce second generation biofuel. This investment tax credit would be provided in lieu of any other per gallon tax credits and outlay payments that would be available for biofuel produced by that property. Any taxpayer making this election would also be allowed to elect to participate in the direct payment in lieu of investment tax credits program.

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