Algae biofuel industry seeks tax incentive

WASHINGTON, March 4 (UPI) -- The U.S. Congress is coming under increased lobbying pressure from the Algal Biomass Organization, a non-profit organization devoted to promoting the development of viable commercial markets for renewable and sustainable commodities derived from algae.

In a statement Thursday, ABO called on Congress to provide tax parity to algae biofuels and make incentives available to the industry at parity with other biofuel industry sectors.

Modest changes in federal tax policy would address significant barriers to commercialization of algae fuels and help create new jobs, said the organization, the leading trade association for the industry.

In communications to Congress and Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen Chuck Grassley, R-Iowa, the group urged Congress to adopt an amendment offered by Sens. Bill Nelson , D-Fla.; Mike Crapo, R-Idaho; and Jeff Bingaman, D-N.M., to the Tax Extenders Act of 2009.

The amendment would ensure algae fuels receive the financial and regulatory benefits afforded to other advanced biofuel feedstocks and promote the development and commercialization of algae fuels, said ABO.

The adoption of this amendment will be a significant step in creating jobs, increasing energy security and reducing greenhouse gas emissions, it added.

"This amendment would address one of biggest barriers to the further commercialization of algae-based biofuels -- financial parity with other feedstocks," said ABO Executive Director Mary Rosenthal.

"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 renewable attributes have won over many campaigners for sustainable alternatives to hydrocarbons and other non-renewable sources of energy.

Current federal tax policy discourages the production of algae fuels by failing to provide the same incentives accorded to other advanced biofuels feedstocks, which has made it more difficult for algae producers to attract the capital required to construct commercial-scale production facilities.

Specifically, algae producers' inability to access the $1.01 per gallon production tax credit afforded to other advanced biofuels has slowed the algae industry's development, lobbyists said.

"The recent ruling by the Environmental Protection Agency that algae-based fuels provide at least 50 percent emissions reductions compared to petroleum-based fuels supports what we've been saying all along: algae-based fuels are one of the most environmentally sustainable biofuels in the United States," said Rosenthal.

She added, "Algae's environmental benefits, coupled with its enormous potential to stimulate our green economy, are just a few of the many reasons Congress should ensure that the tax code provides incentives to advance the development of an entire industry focused on creating renewable, sustainable and domestically-produced fuels that reduce emissions, enhance American energy security and, when fully commercialized, create tens of thousands of American jobs."

Last month, ABO praised U.S. President Barack Obama for his strong support of the U.S. biofuels industry.