"There are few issues more important right now than America's energy needs and the need to reduce our dangerous dependence on foreign oil and expand our use of alternative sources of energy," Grassley said. "Harvesting renewable farm-ready resources to meet our growing domestic energy needs is smart public policy. The time is right to tap American agriculture to offer solutions to our energy problems."
Grassley said the renewable energy tax package he shepherded through the legislative process includes a number of provisions he's championed over many years to encourage positive, environmentally conscious ways to produce energy:
- Wind energy. The package includes Grassley's pending legislation, the Bipartisan Renewable, Efficient Energy with Zero Effluent (BREEZE) Act (S. 530), to extend the production tax credit for energy generated by wind through Dec. 31, 2006. Grassley authored the Wind Energy Incentives Act of 1993, which established the first-ever wind energy production tax credit.
- Biomass. The package includes Grassley's bill, the Growing Renewable Energy for Emerging Needs (GREEN) Act (S. 756), which extends the tax credit for the production of biomass, which Grassley authored and which became law in 1992, and expands the definition of biomass to include saw dust, tree trimmings, agricultural byproducts and untreated construction debris. Also included is the extension of the tax credit for the production of electricity from poultry waste and closed loop biomass co-fired with coal, including an important Iowa switch grass project.
- Biodiesel. The package includes a proposal from Grassley and Democratic Sen. Blanche Lincoln to provide an income tax credit and excise tax rate reduction for biodiesel fuel mixtures. These new incentives will encourage the production of biodiesel, a clean-burning alternative fuel made from domestic renewable sources, such as soybean oil. Another Grassley amendment expanded the income tax credit to biodiesel made from vegetable oil and animal fats. Iowa is the nation's largest producer of soybeans and is home to two biodiesel plants.
- Small ethanol producer credit. The legislation expands the definition of an eligible small ethanol producer so small cooperative producers of ethanol will receive the same tax benefits as large companies. It also clarifies that the tax credit can flow through to the patrons of the cooperatives. Grassley's legislation, the Tax Empowerment and Relief for Farmers and Fishermen Act (TERFF) (S. 312), includes these provisions.
Grassley has a long history of promoting ethanol as a clean-burning, renewable, domestically produced energy source. He scored a major victory for the Midwest when he not only blocked anti-ethanol efforts, but also countered by orchestrating congressional approval to extend the ethanol excise tax exemption to 2007.
- Fuel taxes. The bill moves a portion of the taxes from gasohol ? gasoline blended with ethanol ? from the general fund into the Highway Trust Fund to ensure that fuel taxes are used for highways, not unrelated government programs.
- Energy-efficient appliances. The package includes legislation Grassley originally authored and co-sponsored in this Congress, the Resource Efficient Appliance Incentives Act (S. 686), to encourage the manufacture and use of super energy-efficient washing machines and refrigerators with a tax credit for the production of those appliances.
- Swine and bovine waste. The package includes Grassley's legislation, the Providing Opportunities With Effluent Renewables (POWER) Act of 2001 (S. 1219), which provides new opportunities for energy production, a useful method of waste disposal and increased farm income by creating a production tax credit for electricity generated from swine and bovine waste.
Grassley also worked with Sen. Chuck Hagel of Nebraska to help win strong, bipartisan support for the Renewable Fuels Standard that is part of the overall energy bill. The legislation calls for using 5 billion gallons of renewable fuels by 2010. "Sen. Grassley is a true champion for farmers and ethanol, and we at the Renewable Fuels Association are tremendously grateful," said Bob Dineen, President and CEO of the Renewable Fuels Association.
"Renewable fuels improve air quality, strengthen national security, reduce the trade deficit, decrease dependence on Saddam Hussein for oil, and expand markets for agricultural products," Grassley said. "Ethanol is a particularly good alternative because ethanol can make an immediate difference for national security. We can start using more ethanol tomorrow and ramp-up quickly. It can have an impact this year and next year rather than five or ten years down the road."
The final energy bill also included a bipartisan amendment sponsored by Grassley and Sen. Mark Dayton of Minnesota that requires the federal government to increase the use of ethanol and biodiesel fuels in its vehicles. The requirement will help the government lead by example in using renewable fuels.
The Senate-passed and House-passed energy bills now will go to a conference committee, where members will reconcile differences between the two bills. Grassley is the ranking member of the Senate Finance Committee, which is responsible for all tax legislation.