Includes the production of cellulosic ethanol within the biofuel production tax credit

BILL NUMBER:S3345

Title of bill

An act to amend the tax law, in relation to biofuel production credit for production of cellulosic ethanol

Purpose or general idea of bill

To provide an additional tax credit for production of cellulosic ethanol in the amount of 25 cents per gallon after the production of the first 40,000 gallons.

Summary of specific provisions

Section 1 renumbers Section 28 of the tax law as Section 35 and amends the section to provide a tax credit of 25 cents per gallon for the production of cellulosic ethanol after the production of the first forty thousand gallons per year presented to market. The section further defines "cellulosic ethanol," and amends the definition of "biofuel plant" to include any commercial facility where cellulosic ethanol is one or more of the biofuels being produced at such facility, and, for purposes of applying the tax credit, the facility shall be considered a separate biofuel plant.

Justification

In Chapter 62 of the laws of 2006, New York State established a biofuel production credit equal to 15 cents per gallon after the production of the first forty thousand gallons of biofuels. This legislation demonstrated New York State's commitment to mass production of biofuels such as ethanol made from corn. The legislation was also intended to support commercialization of new technologies developed at SUNY ESF, Cornell and Clarkson universities for production of cellulosic ethanol using different feedstocks, such as willow, northern hardwoods, and grasses.

Cellulosic ethanol has numerous benefits over ethanol produced from corn or sorghum. First, willows and northern hardwoods are well-suited to the climate of New York State. Therefore, New York State's existing natural resources are uniquely positioned to contribute to increased production of cellulosic ethanol. Second, the U.S. Department of Energy and U.S. Department of Agriculture reported in April 2005 that the United States has the capacity to sustainably produce 1.3 billion tons of biomass each year, which would displace at least 30 percent of current petroleum consumption in the United States. Furthermore, cellulose ethanol produces fewer greenhouse gas emissions than other types of ethanol. For these reasons, New York State should generate additional incentives for production of cellulosic ethanol.

Fiscal implications

To be determined.

Effective date

Immediately.