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Sirs:
The Energy Independence and Security Act of 2007 mandates the use of 21
billion gallons of advanced and cellulosic biofuels by 2022. Although the law requires
the use of these fuels beginning in 2010, no commercial cellulosic biorefineries are
anticipated to be commissioned before 2011 at the earliest. The principal cause of this
delay in commercialization is lack of funding caused by the severe downturn in the U.S.
economy. Just as Congress responded to the impact of this downturn on the renewable
electricity industry by allowing a 30% investment tax credit in new facilities that can be
monetized through a federal Treasury grant program, we believe additional tax incentives
are needed for advanced biofuel refineries
The advanced biofuel industry has been diligently working on the many
challenges it must overcome before it is capable of producing substantial commercial
scale volumes of transportation fuels. These include the need to develop sustainable
supplies of feedstocks, proving pre-commercial production technology and developing a
delivery system for the large scale distribution and utilization of renewable fuels. In the
near term, however, the seemingly intractable hurdle confronting the advanced biofuel
industry is access to capital to support the timely development of commercial scale
projects.
Advanced biofuels producers are eligible under current law for a federal
production tax credit, but with no commercial production, that incentive remains unused.
To be clear, cellulosic technology deployment is currently an expensive proposition. The
total project investment for a 50 million gallon per year advanced cellulosic biofuel
refinery is estimated by the National Renewable Energy Lab to be $250 million,
compared with a total project investment of only $76 million for the same sized corn
starch ethanol plant. The conversion technology in an advanced or cellulosic biofuel
refinery is pre-commercial, which makes commercial financing virtually impossible in
the current economy, even though the projected improvement over the long-term results
in robust economics.
We believe that the advanced biofuel industry could greatly benefit from the
targeted reinstatement of a thirty percent investment tax credit for biorefineries. We
believe the ITC should be technology neutral and instead require delivery against the goal
of using renewable biomass to produce fuels that have lifecycle greenhouse gas emissions
that are at least 50 percent less than baseline lifecycle greenhouse gas emissions.
Ideally, this incentive would operate as a necessary precursor to the production tax credit,
and would present potential renewable fuels investors with a robust incentive to commit
to these technologies. This incentive will enable biofuels developers to attract private
capital on an accelerated basis to meet the ambitious volume requirements of the
renewable fuel standard.
Sincerely,
Elevance
Emerson
KL Energy
Enerkem
Live Fuels
LS9, Inc.
Mascoma
Frontier Renewable Resources, Inc.
GeoSynFuels,LLC
Osage
Triton Energy
Range Fuels
Tyson
Rentech
Velocys
QTEROS, Inc
Verenium
Solazyme
Virent
Targeted Growth