By Corinne Young, Chief Advocate and Michele Jalbert, Chief Operating Officer of the Renewable Chemicals and Advanced Materials Alliance (re:chem)
Special to The Digest
While naysayers contend changing the US tax code is implausible, we at the Renewable Chemical and Advanced Materials Alliance (re:chem), see possibility – in fact, necessity – to ensure US global competitiveness in the new economy. Buoyed in wake of our successful Farm Bill expansion of USDA 9003 loan guarantees to renewable chemicals/bioproduct manufacturing and progress toward bipartisan TSCA reform, re:chem remains resolutely focused on enacting a PTC for renewable chemicals.
While the US Congress continues to kick the tax extenders can forward annually – and sometimes backwards with last year’s extenders package — there is an opportunity to include modest tweaks in legislative language, incorporating hard-fought changes that enjoy bipartisan support.
Adding a renewable chemical production tax credit (PTC) per specific amount of biomass-based renewable chemical produced is such an initiative that we advanced in various stand-alone bills introduced over the last two sessions of Congress. It is overdue to include this bipartisan, modest and pragmatic tax provision in the extenders tax package moving forward this year.
Unlike other, far more expensive production tax credits that have been extended for decades, renewable chemical production tax credit proposal would be capped at $500 million and last no longer than five years. It is a precision policy instrument to incent development here in the US, for an industry that offers significant return on investment and innovation to spur a manufacturing renaissance.
Simply, a renewable chemical PTC is vital to catalyzing step-change advanced and additive manufacturing and export opportunities for which the US is clamoring – and help ensure US parity in the global economy as the renewable chemical sector decides where to deploy and put steel in the ground.
By tying the credit to actual production, such a tax credit would encourage companies to site manufacturing facilities that offer cutting-edge, high-value, sophisticated jobs here in the US. It would help level the playing field as rapidly emerging renewable chemical companies are courted abroad. Competing incentives range from direct equity, low or zero-interest loans, ten-year tax holidays and abatement, as well as pre-permitted and built-out infrastructure.
At re:chem, we continue to push forward an actionable short list of critical policy priorities that collectively enable robust industry deployment and value chains – and the associated jobs here in this country, as well as aligning policies for inevitable global growth. Providing renewable chemical parity in the tax code would be another significant step forward, coupled with parity in USDA’s 9003 loan guarantees, TSCA reform underway, and next wave of funding opportunities from the Departments of Agriculture and Energy open to renewable chemicals and advanced materials. Collectively, these low hanging fruit policies give the US a fighting chance to encourage the sector to take route and flourish here rather than abroad.