Budget proposal extends biofuel tax credit, cuts oil subsidies
President Obama’s Fiscal Year 2015 budget proposal released March 4, calls for extending a tax credit for cellulosic biofuels and puts forward the idea of cutting billions in fossil fuel subsidies.
“It is this type of budget package that will create new jobs in new industries in the coming decade, and put the United States in the best position to succeed when it comes to developing next-generation fuels,” said Brooke Coleman, executive director of the Advanced Ethanol Council, in a prepared statement.
The tax credit for cellulosic biofuels expired in 2013, just as the industry was reaching for commercialization, Coleman said. A multiyear extension will help make the U.S. a winner in the global effort to commercialize cellulosic biofuels. “Reinstating the provision will ensure that the next wave of commercial cellulosic biofuel plants will be built by Americans on American soil,” he said.
He also mentioned the President’s proposal to do something about the issue of subsidies for fossil fuels, which have driven investments away from renewable fuels. The proposed budget calls for $4 billion in annual cuts to fossil fuel subsidies to oil, gas and other fossil fuel producers. “Doing away with decades-old subsidies to oil and gas will not hurt those industries given their maturity and wealth, but will send a clear signal to the marketplace to invest in innovative, low-carbon alternatives to petroleum,” he said.
In addition, the budget calls for establishing an Energy Security Trust of $2 billion invested over 10 years. The money would be drawn from revenues generated from Federal oil and gas development and would help support research and development in technologies such as advanced vehicles that run on homegrown biofuels, electricity, renewable hydrogen and domestically produced natural gas. Finally, the U.S. DOE portion of the President’s budget provides $253 million for development and demonstration of advanced biofuels, specifically mentioning “drop in” replacements for gasoline, diesel and jet fuel.
Americans United for Change also chimed in, saying the proposed budget was a big win for taxpayers and consumers. Specifically, the group was elated that the President was working to doing away billions in subsidies for Big Oil. “100 years of Big Oil tax breaks is more than enough—especially for an industry that made $100 billion in profits last year and pays very little taxes in return,” said Caren Benjamin, the group’s executive director. “To be consistent with the President’s budget, the EPA should also reconsider its plan to give a back door subsidy to Big Oil by gutting the renewable fuel standard. It’s a proposal that runs totally counter to the President’s strategy to address climate change by supporting clean energy—because a weak RFS means less incentive for innovation in cleaner burning, next generation renewable fuels and guarantees a greater use of dirty fossil fuels.”