Includes the production of cellulosic ethanol, densified biofuel and renewable fuel oil within the biofuel production tax credit

4 Co-sponsors

• John J. Bonacic
• Thomas F. O'Mara
• Patty Ritchie
• David J. Valesky

BILL NUMBER:S1915A

Title of bill

An act to amend the tax law, in relation to the biofuel production credit for the production of cellulosic ethanol, densified biofuel and renewable fuel oil

Purpose or general idea of bill

To provide an additional tax credit for production of cellulosic ethanol, densified biofuel and renewable fuel oil.

Summary of specific provisions

Section 1 renumbers Section 28 of the tax law as Section 38 and amends the section to authorize a 25 cents per gallon tax credit for the production of cellulosic ethanol or renewable fuel oil after the first forty thousand gallons per year presented to market. The section further provides a $15 dollar per bone dry ton tax credit for densified biofuel after the first 10 thousand tons per year. The tax credit is allowable for a maximum of ten million dollars per taxpayer per year for a maximum of ten consecutive years. Definitions are provided for "renewable fuel oil," "cellulosic ethanol," and "densified biofuel." The definition of "biofuel plant" is amended 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 biofuels 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.

New York has seen the commercialization of new technologies developed at SUNY ESF, Cornell and Clarkson universities for production of cellulosic ethanol using different feedstock, such as willow, northern hardwoods, and grasses. The proposed legislation builds on the incentives advanced for corn ethanol by extending a comparable production incentive to cellulosic ethanol, densified biofuels such as wood pellets, and renewable fuel oil from biomass.

Biofuels like cellulosic ethanol and densified biofuels (or pellets) have numerous benefits over. First, willows, grasses and northern hardwoods are well-suited to the climate of New York State. Therefore, New York State's native natural resources offer a diversity of feedstock to be used in the increased production of cellulosic ethanol, densified biofuels and renewable fuel oil.

Second, New York is an area particularly suited to not only the production, but also the use of densified biofuels and renewable fuel oil as heating fuels. This has potential to provide a local supply that could decrease transportation costs and offer economic growth to the areas growing and processing the feedstocks needed to make densified biofuels and renewable fuel oils.

Third, this incentive would provide a new market incentive for farmers and family forest owners to improve the quality of their soils and

forests, by sequestering soil carbon, reducing nutrient losses, and providing much needed habitat for flora and fauna.

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. Even more compelling, densified biofuels and renewable fuel oil generated from New York's existing feedstock will help to decrease dependence on foreign oil while also offering economic stimulus to the regions most capable of producing the necessary feedstock.

Legislative history

2013,2014: S.4563/A.9525-AReported and Committed to Finance

Fiscal implications

To be determined.

Effective date

Immediately.