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Parity in the Production Tax Credit

By Bob Cleaves
The Biomass Power Association recently addressed government officials and other renewable energy industry representatives at a Biopower Workshop in Denver, sponsored by the U.S. DOE. The focus of the workshop was to understand the developing trends in the bioenergy field in order to help the DOE focus its efforts on the research and development that would produce the best results.

Former BPA Chairman Bill Carlson made a compelling case for the importance of analyzing the optimal cost/benefit relationship between the location and size of traditional wood waste biomass power plants. His complete study "Bigger Not Necessarily Better or Cheaper," can be found at http://smallwoodnews.com/Docs/PDF/Supply/BIOMASS%20POWER%20AS%20A%20FIRM%20UTILITY%20RESOURCE.pdf.

My presentation focused on steps that Congress could take now, irrespective of research and development, to expand the role of biomass power in America and allow all renewable energy sources to operate on a level playing field.

Under the American Recovery and Reinvestment Act of 2009, wood-fired biomass power plants were awarded half the production tax credit that other renewable energy sources such as wind and geothermal power received. What's worse, the tax credit was also awarded for half the time period, which is why BPA is currently fighting to get those production tax credits extended for an additional five years.

The disparity in the credit, however, does not stop with wind and geothermal power. As demonstrated in the table below, biomass power receives only $2.93 per kilowatt hour. When compared with ethanol, cellulosic ethanol, biodiesel, wind, geothermal and advanced nuclear power, wood-fired biomass power plants receive the least support, by a long shot. There is no legitimate policy explanation for this disparity.

The table details the standard dollar amounts awarded to different renewable energy sources per million Btu generated. In other words, all of those renewable sources are calculated on the same scale. There is no difference in the quality of energy produced, just in some cases the type of energy; fuel versus electricity. Considering the economic and environmental benefits of biomass power, it is inexcusable that it would receive less support than its competitors.

The BPA is urging Congress to level the playing field in the renewable sector by giving biomass power the same tax credits as other renewable energy sources. Congress must provide tax equity, or parity, in the production tax credit. No one should be picking winners and losers in the renewable energy industry.

Without parity, biomass power is at a competitive disadvantage. Additionally, this discourages the expansion of biomass power and undermines America's goals of meeting an aggressive renewable electricity standard. To protect and grow the biomass industry, tax equity is essential.

The value of a penny may seem inconsequential, even in today's weakened economy, but to a biomass power producer it can mean the difference between keeping the lights on and going dark. BIO


Bob Cleaves is president and CEO of the Biomass Power Association. To learn more about biomass power, please visit www.USABiomass.org.
 

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