United States (Federal) Alternative Fuel Producer
Renewable Energy Systems and Energy Efficiency Improvements Grant
Competitive grant funding and guaranteed loans are available from the U.S. Department of Agriculture Office of Rural Development's Section 9006 Energy Program for the purchase of renewable energy systems and energy improvements for agricultural producers and small rural businesses. Qualified projects must occur in a rural area and implement technology that is pre-commercial or commercially available and replicable. Research and development does not qualify. Applicants must provide at least 75% of eligible project costs, and grant assistance to a single individual or entity may not exceed $750,000. Eligible projects include biofuels, hydrogen, and energy efficiency improvements, as well as solar, geothermal, and wind. The Section 9006 Energy Program has not been funded for Fiscal Year 2008. For more information, visit the Section 9006 Program Web site, and contact the appropriate State Rural Development Office. (Reference 7 U.S. Code 8106)
Point of Contact
Office of Rural Development
U.S. Department of Agriculture
Phone (202) 690-4730
http://www.rurdev.usda.gov/rd/energy/
Small Agri-Biodiesel Producer Tax Credit
An income tax credit of $0.10 per gallon of agri-biodiesel is available to qualified small producers. A small producer is one that produces up to 60 million gallons of agri-biodiesel per year. Agri-biodiesel is defined as diesel fuel derived solely from virgin oils, including esters derived from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. The credit applies only to the first 15 million gallons of agri-biodiesel produced in a tax year and expires December 31, 2009. (Reference House Resolution 1424, 2008, and 26 U.S. Code 40A)
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Small Ethanol Producer Tax Credit
An income tax credit of $0.10 per gallon of ethanol is available to qualified small ethanol producers. A small producer is one that produces up to 60 million gallons of ethanol per year. The credit applies only to the first 15 million gallons of ethanol produced in a tax year and expires December 31, 2008. (Reference 26 U.S. Code 40)
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
U.S. EPA Raises the Renewable Fuels Standard for 2008
In response to the Energy Independence and Security Act of 2007 (EISA), signed into law by President Bush in December 2007, the U.S. Environmental Protection Agency (EPA) has subsequently the increased the 2008 Renewable Fuels Standard (RFS) to 7.76% in order to meet the new requirement that all transportation fuels sold contain a minimum of 9 billion gallons of renewable fuel in 2008, as set by the EISA. To determine these volumes, EPA calculates the percentage-based standard annually, which applies to refiners, importers, and non-oxygenate blenders of gasoline. The new RFS supersedes the 2008 RFS that EPA published in November 2007, prior to the enactment of the EISA.
The EISA requires an increase in the overall volume of renewable fuels that must be blended into transportation fuels each year, increasing to 36 billion gallons per year by 2022. In addition, beginning in 2013, a certain percentage of the renewable fuels must be advanced and/or cellulosic based biofuels and biomass-based diesel. For more information on these requirements and the RFS program, visit the EPA's RFS Program Web site as well as the RFS information on the Federal Incentives & Laws Web site.
Energy Independence and Security Act of 2007 Signed Into Law
President Bush signed the Energy Independence and Security Act (EISA) of 2007 (House Resolution 6), designed to improve vehicle fuel economy and help reduce U.S. dependence on oil. EISA aims to increase the supply of alternative fuel sources by setting a mandatory Renewable Fuel Standard (RFS) requiring transportation fuel sold in the U.S. to contain a minimum of 36 billion gallons of renewable fuels by 2022, including advanced and cellulosic biofuels and biomass-based diesel. In addition, the law requires the Corporate Average Fuel Economy (CAFE) standard to reach 35 miles per gallon by the year 2020. The EISA is projected to reduce energy consumption by 7% and greenhouse gas emissions by 9% by 2030. For a summary of the major provisions set forth by the legislation, visit the Energy Independence and Security Act of 2007 page of the Federal Incentives & Laws Web site. The complete legislation can be viewed on the Library of Congress Web site.
Biobased Products and Bioenergy Program
The goal of the Biobased Products and Bioenergy Program is to help finance technologies that are needed to convert biomass into biobased products and bioenergy in a cost-competitive manner in national and international markets. Loans for biomass conversions are eligible for financing under the Business and Industry Guaranteed Loan Program. For the purpose of this program, biomass is defined as any organic matter that is available on a renewable or recurring basis, excluding timber, and including dedicated energy crops and trees, agricultural food and feed crop residues, aquatic plants, wood and wood residues, animal wastes, and other waste materials. A biobased product is considered any commercial or industrial product that utilizes biological products or renewable domestic agricultural or forestry materials, including biofuels. For more information, visit the Biobased Products and Bioenergy Program Web site and contact the appropriate State Rural Development Office. (Reference 7 U.S. Code 8109)
Point of Contact
Office of Rural Development
U.S. Department of Agriculture
Phone (202) 690-4730
http://www.rurdev.usda.gov/rd/energy/
Biomass Research and Development Initiative
The U.S. Department of Agriculture Office of Rural Development, in conjunction with U.S. Department of Energy, provides grant funding for projects addressing research and development of biomass-based products, bioenergy, biofuels, and related processes under the Section 9008 Biomass Research and Development Initiative. Eligible recipients may receive up to $1 million for projects that involve feedstock production for biobased fuels and products, converting cellulosic biomass into biobased fuels, technologies for co-producing biobased products in biofuel production facilities, and strategic guidance for improving overall sustainability and environmental quality of biomass technologies. For more information, visit the Section 9008 Program Web site and contact the appropriate State Rural Development Office. (Reference 7 U.S. Code 8601)
Point of Contact
Office of Rural Development
U.S. Department of Agriculture
Phone (202) 690-4730
http://www.rurdev.usda.gov/rd/energy/
Value-Added Producer Grants (VAPG)
The U.S. Department of Agriculture Office of Rural Development awards Value-Added Producer Grants for planning activities and working capital for marketing value-added agricultural products and farm-based renewable energy. Eligible applicants include independent producers, farmer and rancher cooperatives, agricultural producer groups, and majority-controlled producer-based business ventures. Eligible participants may apply for either a planning grant or a working capital grant, but not both. In addition, no more than 10% of program funds may be awarded to majority-controlled producer-based business ventures. Grants will only be awarded if projects are determined to be economically viable and sustainable. For more information about grant eligibility, visit the VAPG Web site and contact the appropriate State Rural Development Office. (Reference 7 U.S. Code 1621)
Point of Contact
Office of Rural Development
U.S. Department of Agriculture
Phone (202) 690-4730
http://www.rurdev.usda.gov/rd/energy/
Renewable Fuel Standard (RFS) Program
The national RFS Program was developed to increase the volume of renewable fuel that is blended into gasoline and other transportation fuels. As required by the Energy Policy Act of 2005, the U.S. Environmental Protection Agency (EPA) finalized RFS Program regulations, effective September 1, 2007. The Energy Independence and Security Act of 2007, signed into law in December 2007, increased and expanded this standard. In 2008, 9 billion gallons of renewable fuel must be used, increasing to 36 billion gallons per year by 2022. Beginning in 2013, a certain percentage of the renewable fuels must be advanced and/or cellulosic based biofuels and biomass-based diesel, pending final rulemaking by EPA. Cellulosic biofuel is defined as any renewable fuel derived from cellulose, hemicellulose, or lignin, and achieves a 60% greenhouse gas (GHG) emissions reduction. Advanced biofuel is defined as any renewable fuel, other than ethanol derived from corn, derived from renewable biomass, and achieves a 50% GHG emissions reduction.
Each year, EPA will determine the Renewable Volume Obligation (RVO) for parties required to participate in the RFS Program. This standard is calculated as a percentage, by dividing the amount of renewable fuel (gallons) required by the RFS to be blended into gasoline for a given year by the amount of gasoline/transportation fuel expected to be used during that year. Any party that produces gasoline for use in the U.S., including refiners, importers, and blenders (other than oxygenate blenders), is considered an obligated party under the RFS Program. Parties that do not produce, import, or market fuels within the 48 contiguous states are exempt from the renewable fuel tracking program. Small refineries and refiners are also exempt from the program until 2011. A small refinery is defined as one that processes fewer than 75,000 barrels of crude oil per day, has a total crude capacity of less than 150,000 barrels per day, and employs fewer than 1,500 employees company-wide. All obligated parties are expected to meet their RVO beginning in 2007.
To facilitate and track compliance with the RFS, a producer or importer of renewable fuel must generate Renewable Identification Numbers (RINs) to represent renewable fuels produced or imported by the entity on or after September 1, 2007, assigned by gallon or batch. Assigned RINs are transferred when ownership of a batch of fuel occurs, but not when fuel only changes custody. A trading program is in place to allow obligated parties to comply with the annual RVO requirements through the purchase of RINs. Obligated parties must register with the EPA in order to participate in the trading program. For each calendar year, an obligated party must demonstrate that it has sufficient RINs to cover its RVO. RINs may only be used for compliance purposes in the calendar year they are generated or the following year. Obligated parties must report their ownership of RINs to the EPA's Office of Transportation and Air Quality on a quarterly and annual basis.(Reference 42 U.S. Code 7545(o) and 40 CFR 80.1100-80.1167)
Point of Contact
U.S. Environmental Protection Agency
Phone (202) 272-0167
http://www.epa.gov
Import Duty for Fuel Ethanol
The U.S. Customs and Border Protection imposes a 2.5% ad valorem tariff on the import of ethanol for use in fuel which is based on the percent volume of the fuel at the time of transaction. The 2008 Normal Trade Relations duty rate (formerly known as the Most Favored Nation duty) of $0.54 per gallon of ethanol also applies to imports from most countries to offset the Volumetric Ethanol Excise Tax Credit (VEETC) given by the U.S. Internal Revenue Service. Ethanol imports from countries that are part of the North Atlantic Free Trade Agreement, Caribbean Basin Initiative, and Andean Trade Preference Act may not be subject to the secondary duty provided the ethanol is fully produced with feedstocks from those nations. Importers of ethanol must follow the same regulations as domestic producers, including registering with the IRS. (Reference Harmonized Tariff Schedule Number 99010050, and Public Law 96-499, 99-514, and 109-423)
Point of Contact
U.S. Customs and Border Protection
Phone (703) 526-4200
http://www.cbp.gov/
Alternative Fuel Definition - Internal Revenue Code
The Internal Revenue Service (IRS) defines alternative fuels as liquefied petroleum gas, compressed natural gas, liquefied natural gas, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, liquid hydrocarbons derived from biomass, and P-Series fuels. Biodiesel, ethanol, and renewable diesel are not considered alternative fuels by the IRS. While the term “hydrocarbons” includes liquids that contain oxygen, hydrogen, and carbon and as such “liquid hydrocarbons derived from biomass” includes ethanol, biodiesel, and renewable diesel, the IRS specifically excluded these fuels from the definition. (Reference 26 U.S. Code 6426)
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Volumetric Ethanol Excise Tax Credit (VEETC)
Ethanol blenders registered with the Internal Revenue Service are eligible for an excise tax credit in the amount of $0.51 per gallon of pure ethanol (minimum 190 proof) blended with gasoline. Only entitles that have produced and sold or used the qualified ethanol mixture as a fuel in their trade or business are eligible for the credit. Form 720 (PDF 498 KB) may be used to claim the excise tax credit on a quarterly basis; see the Instructions for Form 720 (PDF 152 KB) for more information. This tax credit expires December 31, 2010. (Reference 26 U.S. Code 6426) Download Adobe Reader
Point of Contact
U.S. Internal Revenue Service
Phone (800) 829-1040
http://www.irs.gov/
Congress Passes Food, Conservation, and Energy Act of 2008 (Farm Bill)
In May, Congress overrode a presidential veto to pass the Food, Conservation, and Energy Act of 2008 (House Resolution 2419), which provides funding for commodity, rural development, conservation, and energy programs. The bill includes language that authorizes $1 billion in funds for renewable energy programs and new feedstock production, and reauthorizes many 2002 Farm Bill programs, including the Biomass Research and Development Initiative, the Biobased Products and Bioenergy Program, and a biodiesel education program. The bill also allows for a cellulosic biofuel production credit.
Emergency Economic Stabilization Act/Energy Improvement and Extension Act of 2008
The Emergency Economic Stabilization Act (House Resolution 1424) was signed by President Bush, enacting the Energy Improvement and Extension Act of 2008. The bill amends and extends existing biodiesel blending and production tax credits, extends existing alternative fuel excise tax credit, and extends the alternative fueling infrastructure tax credit. The bill also creates a new tax incentive toward the purchase of qualified plug-in hybrid electric vehicles, based on vehicle weight and battery capacity. Additionally, qualified idle reduction devices are exempt for heavy-duty truck retail excise taxes.
