Not just more, but smarter bucks for advanced biofuels

This post by Steven Mufson reports on the advanced biofuels industry wanting addition incentive and particularly an investment tax credit. Last year, NRDC proposed a "Billion Gallon Challenge" program linking rich incentives for the first billion gallon of produciton capacity of advanced biofuels to very strict environmental performance standards. I still think this makes a lot of sense.

At a minimum though, rather than just adding an investment tax credit to the existing hodge-podge of incentives, I suggest the following simple step in the right direction: let's extend the existing $1.01 cellulosic tax credit for 5 years, make it refundable for the first 1 billion gallons of capacity, and requirement the producers to meet the RFSII GHG standard for cellulosic fuels (60% better than gasoline). As it is the tax credit expires in 2012 so it's all but useless to the industry, which will be doing well if it produces 6.5 million gallons this year and refundability makes the incentive as good as cash. So this would be one small step towards performance-base tax credits and one big leap forward for the industry.

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