Sen. Chuck Grassley today introduced a comprehensive tax relief bill that includes his proposal to expand production of electricity from renewable resources and gave his support to a separate initiative that would let farmers produce switchgrass or other biomass crops on acres designated for the Conservation Reserve Program.
Grassley's legislation would make any biomass and wind energy facility that starts production by July 2004 eligible for tax credits for five years. It also would expand the definition of biomass and make the existing production tax credit available for five years for electricity produced from all qualified biomass facilities, and a partial credit for electricity produced by facilities that co-fire biomass with coal. Grassley said his proposal was developed following a visit he made last year to the Chariton Valley Biomass Project in Centerville, Iowa.
Grassley also is an original co-sponsor of legislation introduced today by Sen. Tom Harkin to give farmers a reduced CRP payment in exchange for the right to grow biomass crops. The bill requires the USDA to set standards for biomass harvesting to ensure that wildlife habitat is preserved. "This bill is good for farmers, consumers, the environment, and national security,"Grassley said.
A recent study conducted by the University of Tennessee for the Agriculture and Energy Departments concludes that biomass crops could produce between $2 billion and $5 billion in additional net income for farmers, and supply as much as seven percent of the total electricity generated in the United States. The study also found that between 17.4 million acres and 41.9million acres would be shifted to biomass production.
Along with biomass, Grassley has been an effective leader in the effort to expand the use of renewable, domestically produced fuel. Last year, he won Congressional approval for a ten-year extension of the federal tax credit for corn-based ethanol.
In 1992, Grassley championed the first-ever production tax credit for wind energy. He has introduced legislation this year to extend the incentive. "These projects take a long time to develop and favorable tax treatment help facilitate more wind power construction contracts," he said. Five new wind power projects are ready to go online this year alone. They will join the already existing six facilities in Iowa. Harkin has co-sponsored Grassley's bill to extend the wind energy tax credit.