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A fiscal cliff soybean gift

01/02/2013 @ 1:16pm

The tax bill headed to the president for his signature Wednesday includes a number of late Christmas gifts for the alternative-energy industry.

The headline-grabbing provision extended a tax credit for generating electricity at wind farms, worth about $12 billion over 10 years.

Congress also extended tax breaks for other forms of renewable-energy production and investments in energy-efficient buildings. The tax credits were generally extended until the end of 2013, meaning the bill offered a welcome, but not permanent policy change.

"It's not a home run, but it's a base hit, maybe even a double," said Karl Gawell, executive director of the Geothermal Energy Association.

The bill's electricity-production tax credit is available not just to wind, but to power plants using geothermal, hydropower and other renewable energy sources so long as those projects start construction by the end of 2013. Previously, the credit was only available to renewable-energy projects that were fully completed by the end of 2013.

Mr. Gawell said geothermal projects take years to build, so more developers will be able to claim the tax credit now that the deadline is tied to beginning construction on projects, rather than finishing them. Geothermal power plants generate electricity using heat from wells drilled deep underground.

Projects in a dozen states could be "stimulated to move forward" thanks to the policy change, representing as much as 800 megawatts of additional geothermal capacity, Mr. Gawell said. Current U.S. capacity is about 3200 megawatts, he said.

The federal tax credit for investing in solar power systems doesn't expire until 2016 and wasn't included in the tax bill.

The bill also extended until the end of 2013 a tax credit for next-generation fuels, such as ethanol made from nonedible plants and alternative diesel fuels made from cooking oil or soybeans.

The alternative diesel fuel credit is worth $1.00 per gallon and is expected to cost about $2.1 billion over 10 years, according to the Joint Committee on Taxation, making it one of the largest provisions in the tax package. National Biodiesel Board Vice President Anne Steckel said in a statement that the decision will result in "companies expanding production and hiring new employees" after "a long year of missed opportunity." The credit had expired at the end of 2011.

Another provision extends until the end of 2013 a tax credit for 30% of the cost of building infrastructure to fill up vehicles with alternative fuels.

That will aid the ethanol industry in its push to have more filling stations sell gasoline with 15% ethanol, or E15, rather than the 10% blend widely available today. Adding E15 to the fuels available at some stations will require investing in new equipment.

The provision "will accelerate E15's entry into the marketplace this coming year," said a written statement from Bob Dinneen, president of the Renewable Fuels Association, an ethanol trade group.

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