BIOMASS HUB

The U.S. Congress is coming under increased lobbying pressure from the algal organizations to extend tax code parity to algae biofuel.

Algal Biomass Organization (ABO) and members of the Biotechnology Industry Organization (BIO) are urging the Senate Finance Committee chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) to adopt an amendment offered by Sens. Bill Nelson (D-FL), Mike Crapo (R-ID), and Jeff Bingaman D-(NM) to the Tax Extenders Act of 2009.  The amendment would ensure algae fuels receive the financial and regulatory benefits available to other advanced biofuel feedstocks and promote the development and commercialization of algae fuels.

BIO said algae producers are currently at a disadvantage in attracting investments as algae-based biofuels are not recognized in the tax code as advanced biofuels.  Modest changes in federal tax policy would address significant barriers to commercialization of algae fuels and help create new jobs, according to BIO.  Specifically, a $1.01 blenders tax credit would put algae biofuels on equal footing as ethanol, which recently received a boost from the Environmental Protection Agency’s (EPA) RFS2 by way of a deep discount on corn-based ethanol’s GHG profile.

ABO Executive Director Mary Rosenthal states:

This amendment would address one of biggest barriers to the further commercialization of algae-based biofuels — financial parity with other feedstocks.  Today, producers are handicapped by a tax code that doesn’t give algae-based fuels the same tax incentives that other advanced biofuels receive, and thus handicaps the algae-based fuel industry as a whole.  Providing the tax incentives currently accorded to other advanced biofuels will level the playing field for algae and help ensure that federal policy supports the development of one of the most promising domestic, renewable, low-carbon, next-generation fuels.

Algae fuels have gained support from environmental groups and agriculturalists who are concerned about diversion of crops to energy feedstock.  In the case of algae, its sustainable attributes have won over many advocates of renewable alternatives to fossil fuels.

But algae has also come under fire in recent months.  One study in particular from the University of Virginia, reports that algae production consumes more energy, has higher GHG emissions, and uses more water than other biofuel sources, such as switchgrass, canola, and corn.  ABO claims the report was based on obsolete data and grossly outdated business models.

Europe is also taking actions when it comes to algae for biofuels led by the European Algae Biomass Association (EABA). The group’s consortium called AquaFuels started its campaign in January this year to promote algae biofuels development and commercialization.