Crunch Time for Biomass Incentives

Our entire industry has been vocal about Section 1603, especially in the past couple weeks, as fear of the end of the program and its benefits mounts.
By Lisa Gibson | December 16, 2011

My email inbox was inundated this week with statements from obscure groups pushing one way or the other on a number of Congressional votes that must be finalized before year’s end. Most aren’t related to biomass and I’m not sure how I ended up on their distribution lists, because I have no interest in their asinine opinions. But that’s a blog for another day. Let’s move on.

My interest lies in the programs that need extensions now in order to keep biomass development alive, and the opinions of industry organizations with some clout. The Biomass Power Association sent a letter to the Senate Finance Committee this week, urging it to extend the Section 1603 cash grant program and the Section 45 production tax credit. Our entire industry has been vocal on these issues, specifically when it comes to 1603, and especially in the past couple weeks, as fear of the end of the program and its benefits mounts.

With a construction deadline of the end of this year, Section 1603 has awarded more than $171 million to 46 biomass projects since it was established. Multiple developers tout its significance to the industry, and to their projects in particular.

The American Biogas Council recently reached out to all of its members, asking that they contact their Senators and request an extension. In addition, a 1603 Coalition letter sent to Congressional leaders was signed by more than 760 companies and organizations, including the ABC and the BPA. “The 1603 Treasury Program has been a resounding success,” the letter reads, adding that a need for the program still remains.

“As a result of the shortage of equity financing, for the time being the 1603 Program is by far the most successful federal tax program benefitting biomass,” BPA President and CEO Bob Cleaves wrote in his letter to the Senate Finance Committee. He added that he expects more than $1.3 billion in invested capital to be put to work through 2012 in our industry, all the result of 1603 or the Investment Tax Credit.

I will remain cautiously optimistic, with an emphasis on cautiously. Ideally, I’d like to see Section 1603 and Section 45 extensions that cover up to five years instead of just one, avoiding repeating this industry anxiety in a year. Leaving the political commentary to the real experts, I’ll say only that it seems difficult to make meaningful progress on real issues lately, especially when it’s down to the wire and hurried.