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Fuel Provisions in the Tax Relief Bill

Green Car Congress
December 18, 2010

US President Barack Obama on Friday signed H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“Middle
Class Tax Relief Act of 2010”). The bill, among its other provisions, contains a number of provisions related to energy (Title VII, Subtitle A) and within that, provisions related to fuels.

Ethanol. The bill extends the Volumetric Ethanol Excise Tax Credit (VEETC) through 2011 at the current rate of $0.45/gallon US. The bill also extends through 2011 the existing $0.54/gallon, secondary tariff on imported ethanol and the related tariff ($0.227/gallon) tariff on ethyl tertiary-butyl ether (ETBE).

The bill also extends through 2011 the $0.10/gallon producer tax credit for small ethanol producers producing no more 60 million gallon of ethanol a year. The tax credit is applicable to only the first 15 million gallons of production for eligible producers.

Biodiesel and renewable diesel. The bill extends the $1/gallon US production tax credit for biodiesel and diesel fuel created from biomass, as well as the $0.10/gallon credit for small agri-biodiesel producers through 2011.

Alt fuel and alt fuel mixtures. The bill extends through 2011 the $0.50/gallon production tax credit for alternative liquid fuels derived from biomass, compressed or liquefied biogas, national gas and propane. The bill excludes black liquor (liquid fuel derived from a pulp or paper manufacturing process) from credit eligibility.

Alternative fuel vehicle refueling property. The measure extends the 30% investment tax credit for alternative vehicle refueling property for one year, through 2011.

Refined Coal. The bill extends through 2011 the placed-in-service deadline for qualifying refined coal facilities. As defined in Title 26 of the US Code (The Internal Revenue Code of 1986), refined coal means a fuel which is a liquid, gaseous or solid fuel produced from coal (including lignite) or high carbon fly ash, including such fuel used as a feedstock; and is sold with the reasonable expectation that it will be used to produce steam, resulting in a qualified emission reduction.

Suspension of Limitation on Percentage Depletion for Oil and Gas from Marginal Wells. The bill extends for one year the suspension on the taxable income limit for purposes of depleting a marginal oil or gas well.