Algae Biofuel Industry Seeks Tax Incentive

The U.S. Congress is coming under increased lobbying pressure from the algal organizations to extend tax code parity to algae-based biofuels.

The Algal Biomass Organization and members of the Biotechnology Industry Organization are urging Senate Finance Committee chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) to adopt an amendment offered to the Tax Extenders Act of 2009 by Sens. Bill Nelson (D-FL), Mike Crapo (R-ID), and Jeff Bingaman D-(NM).

The amendment would ensure algae fuels receive the financial and regulatory benefits available to other advanced biofuel feedstocks and promote the development and commercialization of algae fuels.

BIO said algae producers are currently at a disadvantage in attracting investments as algae-based biofuels are not recognized in the tax code as advanced biofuels.  Modest changes in federal tax policy would address significant barriers to commercialization of algae fuels and help create new jobs, according to BIO.

Specifically, a $1.01 blenders tax credit would put algae biofuels on equal footing as ethanol, which recently received a boost from the Environmental Protection Agency’s (EPA) RFS2 by way of a deep discount on corn-based ethanol’s GHG profile.

ABO Executive Director Mary Rosenthal states:

This amendment would address one of biggest barriers to the further commercialization of algae-based biofuels — financial parity with other feedstocks.  Today, producers are handicapped by a tax code that doesn’t give algae-based fuels the same tax incentives that other advanced biofuels receive, and thus handicaps the algae-based fuel industry as a whole.  Providing the tax incentives currently accorded to other advanced biofuels will level the playing field for algae and help ensure that federal policy supports the development of one of the most promising domestic, renewable, low-carbon, next-generation fuels.

Algae fuels have gained support from environmental groups and agriculturalists who are concerned about diversion of crops to energy feedstock.  In the case of algae, its sustainable attributes have won over many advocates of renewable alternatives to fossil fuels.

But algae has also come under fire in recent months. One study in particular from the University of Virginia, reports that algae production consumes more energy, has higher greenhouse gas emissions, and uses more water than other biofuel sources, such as switchgrass, canola, and corn.

ABO claims the report was based on obsolete data and grossly outdated business models.

Europe is also taking actions when it comes to algae for biofuels led by the European Algae Biomass Association. The group’s consortium, called AquaFuels, started its campaign in January to promote algae biofuels development and commercialization.

Mackinnon Lawrence is an attorney, principal consultant with Biomass Advisors, and editor & publisher of Biomass Intel.

photo: Zoagli

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One comment on “Algae Biofuel Industry Seeks Tax Incentive

Gunther W. Mothes

Incentives are good – Tax or otherwise – however, they can be overdone. I am a firm believer in the future of not only Algae as a Feedstock, but seaweed as well.

I also believe that many of the folks involved in Algae production are also involved in an exercise of futility. So far there has been too much hype, and not enough substance with positive results. A lot of money being spent (mostly on “blue sky”), in laboratory tests, experimentation, and elaborate exotic equipment such as LED lighting, bio-reactors, fracturing, vibrating assemblies to extract the oil, carbon (CO2) infusion systems, feedstock oil being forced through a maze of large and small piping systems being periodically zapped with bacteria, nutrients, chemicals, etc., etc. Much of it a bit befuddling to the majority of us out here except for the final costs that will be based upon the above factors, and will reach at least $12.00 to $15.00 or more per gallon to produce.

I believe that a tax incentive would be much more applicable to the Algal proponent that utilizes principles of simplicity towards effective costs, proven natural methods of growing the right specie of Algae and seaweeds in the many areas of the planet that do not impact on other food crops, fresh water supplies, land acreage, and has the advantage of protected saltwater areas, ample tropical sunlight, etc. Simple growing methods require only simple harvesting methods. For Algae It is the expanse of the growing area, not the one that is expensive and way over sensible cost levels that must be borne under most of the new high technology being used today, and will certainly negate any savings in the production cycle.

We are fortunate that our area of operations is in the Central Pacific. We not only are blessed with vast supplies of feedstock from natural resources, but these resources are definitely providential (naturally renewable and sustainable), as well. Many of our Atolls and Islands have extensive lagoons (over 5,000 square miles of protected clean saltwater) with average water temp. of 85 degrees. We intend to utilize these lagoons as huge growing ponds using the proper saltwater algae and seaweed. We look towards Japan for efficient and cost effective methods of harvesting and extracting oils which they have perfected in their own Bays, Inlets and Lagoons over the past 200 to 300 years.

By using only a small area of our available lagoon area, we estimate a minimal production of 3.5 billion gpy of algae/seaweed oils. By the year 2020. We can also successfully produce 1 billion gpy of feedstock oils from our continuous supply of Green Waste Biomass (fallen Palm Fronds, leafy branches, and other green detritus from our 1,200 Islands, on a continuous year’round basis. We will shortly begin processing/refining pure coconut oil in the amount of 20,000,000 gpy With a newly designed non-catalytic superheated methanol method producing 17,000,000 gpy of certified Bio-Jet Fuels. At least by the year 2015. (Note: the above refining method is proven and commercially built by Kajima Corp. in Japan.)

A tax incentive would be nice, if only to attract investors. We, however, are seeking responsible equity partners that will provide the real impetus towards a continuous production and marketable Bio-Jet Fuel at minimum costs and optimum profits for those involved.

Gunther W. Mothes

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