Grassley said his proposal builds on an effort started in 1992, when he authored the first-ever production tax credit for wind and biomass energy. The tax incentive for wind and biomass energy expired on June 30. Grassley's bill would extend and expand the credit for five years. "This tax credit is good public policy," he said. Every 10,000 megawatts of wind energy produced in the United States can reduce carbon monoxide emissions by 33 million metric tons by replacing the combustion of fossil fuels.
The clean, controlled combustion of biomass - which includes woodchips, agricultural byproducts and untreated construction debris - is a proven application that fights pollution and helps waste management.
The 1992 law restrictively defined qualifying biomass processes by requiring taxpayers to grow biomass crops solely for the purpose of combustion. This theory proved to be uneconomical, and taxpayers were unable to use the tax credit. The bill introduced today would rewrite the law to allow tax credits for clean combustion of wood waste and similar residues. "It only makes sense to encourage the conversion of 20 million tons of waste into electricity each year," Grassley said. "Biomass facilities are making a valuable contribution to a cleaner environment, but we have left them in a financially precarious position without favorable tax treatment."
Grassley said his legislation would restrict qualifying biomass materials to organic, non- hazardous materials that are clean burning. He also said the bill specifically seeks to address the growing poultry waste problem in states like Delaware, Maryland and Virginia, by making electricity generated from the combustion of poultry litter eligible for the tax credit.
Grassley developed the initiative unveiled today following a visit last year to Iowa's Chariton Valley Biomass Project. "The economic and environmental potential is tremendous," he said. A recent study found biomass crops could produce $2-5 billion in additional farm income, and supply as much as seven percent of the total electricity generated in the United States.
Grassley's bill has been endorsed by environmental groups including the Union of Concerned Scientists and the Natural Resources Defense Council.