To encourage the continued growth and expansion of renewable fuels like ethanol, federal and state governments offer financial incentives to help drive innovation in the industry and to make ethanol more accessible to American consumers. However, to be truly effective, federal renewable fuel tax policy must be reformed in a way that creates a consistent and stable tax policy framework for ethanol producers and industry investors.
RFA is also working to expand the incentives available to the industry so they recognize changing market dynamics and ongoing consumer and industry challenges. That’s why the RFA is working together with policymakers to improve current renewable fuel tax policy, making it more effective at driving growth and innovation in the industry. However, until such tax policy reforms can pass Congress, the RFA continues to advocate for multiyear extensions of the biofuel tax incentives currently in law.
Just before the Christmas recess, Congress passed H.R. 1865, the Further Consolidated Appropriations Act, 2020, which included multiyear extensions of several key tax incentives that are designed to encourage the production and use of ethanol. The legislation, which was signed into law by President Trump on December 20, 2019, (reference Public Law 116-94 and 26 U.S. Code § 40) provided 3 year extensions (2 years retroactive and 1 year prospective) through 2020, of each of the following ethanol-related tax incentives:
- Second Generation Biofuel Producer Credit
- Special Allowance for Second Generation Biofuel Plant Property
- Alternative Fuel Vehicle Refueling Property Credit
The funding bill also included a 5 year extension of the Biodiesel Tax Credit through 2022.
Going forward, the RFA is committed to finding a long-term solution to the yearly tax extender fights, and is working with our friends and champions in the House and Senate to help modify the existing suite of tax incentives to make them more effective in driving investment and innovation in the industry.