WASHINGTON — Sen. Chuck Grassley today said that an agreement was made early this morning between the House and Senate on legislation on a comprehensive energy bill. The legislation includes tax incentives for farmer friendly renewable fuels as well as a 7.5 billion gallon ethanol mandate.
Grassley was a member of the conference committee and played a leading role to ensure that ethanol, biodiesel and other renewable fuels remained at the forefront of the negotiations. He worked with Sen. Pete Domenici of New Mexico, the lead Senate negotiator, to assure the best possible Renewable Fuels Standard.
"The House came a long way to come even close to the Senate language. We had an 8 billion gallon mandate in the Senate bill and the House had a 5 billion gallon mandate in their bill. Any way you slice it, I think America’s farmers came out on top," Grassley said. "Iowa is leading the way in developing alternative sources of energy. Iowans have launched efforts to diversify the state’s economy and found creative ways to extract a greater return from corn, soybeans, biomass and other natural resources found in our state."
The energy tax incentives included in the bill were developed in the Senate Finance Committee, of which Grassley is the Chairman and the House Ways and Means Committee. The tax incentives in the bill extend the production tax credit for electricity produced from renewable sources including wind, biomass, and other renewables for two years.
Here are several provisions from the tax incentives package.
Wind energy – Since the inception 13 years ago of the wind energy tax credit, wind energy production has grown considerably. Wind energy helps to empower rural communities to reap continued economic benefits. The installation of wind turbines has a stimulative economic effect because it requires significant capital investment which results in the creation of jobs and the injection of capital into often rural economic areas. This provision extends the placed-in-service date through December 31, 2007.
Biomass – Open loop biomass includes organic, non-hazardous materials such as saw dust, tree trimmings, agricultural byproducts and untreated construction debris. The development of a local industry to convert biomass to electricity has the potential to produce enormous economic benefits and electricity security for rural America. In addition, studies show that biomass crops could produce between $2 billion and $5 billion in additional farm income for American farmers. This provision extends the placed-in-service date through December 31, 2007.
Pig and Cow Manure – Anaerobic digestion of manure improves air quality because it eliminates as much as 90 percent of the odor from feedlots and improves soil and water quality by dramatically reducing problems with waste run-off. The technology used to create the electricity results in the production of a fertilizer product that is of a higher quality than unprocessed animal waste. By using animal waste as an energy source, an American livestock producer can reduce or eliminate monthly energy purchases from electric and gas suppliers and provide excess energy for distribution to other members of the community. This provision extends the placed-in-service date through December 31, 2007.
Small producers credit for the production of ethanol and Biodiesel – Modern science is allowing us to slowly substitute natural renewable agricultural sources for traditional petroleum. Renewable fuels like ethanol and biodiesel will improve air quality, strengthen national security, reduce the trade deficit, decrease dependence on the Middle East for oil, and expand markets for agricultural products. The small ethanol producer tax credit provision expands the definition of a small producer for up to 60 million gallons. The biodiesel tax credit provision is extended through December 31, 2008.
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