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

4 Co-sponsors

• Michael F. Nozzolio
• Thomas F. O'Mara
• Patty Ritchie
• David J. Valesky

BILL NUMBER:S4335 REVISED 6/11/13

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 38 and amends the section to provide a tax credit of 25 cents per gallon fox 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, cellulosic ethanol produces fewer greenhouse gas emissions than other types of ethanol.

From an economic standpoint, the development of the biofuel industry in New York has the potential to create jobs, not only in biofuel refineries, but also in the areas of production, ore-processing, and transportation. A 2010 Renewable Fuels Roadmap developed by the New York State Energy and Development Authority (NYSERDA), determined that the biofuel industry offers potential for robust job growth.

Depending on the price paid for ethanol in the year 2020, NYSERDA estimates between 3,891 and 14,604 jobs can be created by direct and induced biofuel refinery growth, statewide. They further estimate that labor income, wages and salaries paid across the state, will fall between $172.6 million and $608.3 million. Overall, NYSERDA projects the gross domestic product of the industry to be between $0.46 billion and $1.7 billion.

Rural communities across New York, in particular, stand to benefit from the development of the biofuel industry as it provides an opportunity to diversify, add value to traditional products, and return abandoned farmland to the commercial sector.

In order to capitalize on both the environmental and economic opportunities afforded by the development of biofuels, New York State should generate additional incentives fox the production of cellulosic ethanol.

Legislative history

2012: S.7147 PASSED SENATE; A.9997 Referred to Assembly Ways and Means 2011: S.3345 SENATE INVESTIGATIONS AND GOVERNMENT OPERATIONS COMMITTEE 2009-10: S.3375 SENATE INVESTIGATIONS AND GOVERNMENT OPERATIONS COMMITTEE; A.3840 Assembly Ways and Means Committee. 2007-08: S.5389 PASSED SENATE; A.7570-A Assembly Ways and Means Committee.

Fiscal implications

To be determined.

Effective date

Immediately.