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Biofuel Renewable Energy Tax Incentives in the United Stated and their Importance

The U.S. Department of Energy, in charge of energy efficiency and renewable energy, has established some tax incentives that are really attractive to sellers and people with business related to biodiesel or biofuel.

Basically, these policies have been made to “incentive” the production, investment, improvement and even the creation of new biodiesel types, and to reduce the dependency of imported oils.

Importance of the Incentives and Programs

Not only tax incentives are all you can get from this organization but different programs that will help operators and landowners through financial assistance such as loans and grants to establish, produce, and even deliver biomass feedstock crops.

By promoting these activities, people feel more interested in investing money with this renewable energy fuel which can lead to greater advances that might make U.S. fuel competitive in the industry as well as the creation of new biofuel blends.

Among all the tax incentive programs established by the U.S. Department of Energy we can find:

Advanced Biofuel Feedstock Incentive

This is a Biomass Crop Assistance Program that will provide financial aids to contractors and landowners in order to deliver, produce, and commercialize biomass feedstock crops.

Qualified producers can get yearly payments for up to five years for herbaceous feedstocks and fifteen years for woody feedstocks as well as a reimbursement of the 50% of the cost of the crop.

Biodiesel Mixture Excise Tax Credit

For this program are eligible all biodiesel blenders, the only requirement is that they have to be registered with the IRS (Internal Revenue Service). The tax intensive is 1$ per gallon of pure biodiesel, renewable diesel with petroleum diesel in order to produce a blend of 0.1% of diesel fuel.

The incentive is first taken as a credit against the blender tax liability if there are any excess, the IRS can claim it as a direct payment.

Second Generation Biofuel Producer Tax Credit

Applicants for this program have to be also registered with the Internal Revenue Service and are all the producers of secondgeneration biofuel and the amount is 1.01$ per second generation biofuel gallon.

Among the conditions for the claim, this tax incentive is that the purchaser uses the fuel to produce a second generation biofuel mixture; the buyer uses the fuel as a motor vehicle fuel; used by the producer as a fuel for business reasons; etc.

The credit reduces in 0.46$ per gallon when is biofuel with ethanol and 0.41$ per gallon when doesn’t have ethanol.

Biodiesel Income Tax Credit

The sellers of unblended biodiesel (B100) that delivers into the tank of the buyer´s vehicle biodiesel as an on-road fuel are eligible for the tax incentive that goes up to 1.00$ per gallon.

Only the person that sold at retail and placed the biodiesel into the customer´s car has the opportunity and is eligible for the tax incentive, alike the Biodiesel Mixture Excise Tax Credit, the incentive is a credit against the applicant´s income tax liability.


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