[Congressional Record Volume 155, Number 87 (Thursday, June 11, 2009)]
[Senate]
[Pages S6556-S6558]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON, of Florida (for himself, Mr. Crapo, Mr. Bingaman, 
        Mr. Bennet, Mr. Martinez, Mr. Cardin, and Mr. Brownback):
  S. 1250. A bill to amend the Internal Revenue code of 1986 to expand 
the definition of cellulosic biofuel to include algae-based biofuel for 
purposes of the cellulosic biofuel producer credit and the special 
allowance for cellulosic biofuel plant property; to the Committee on 
Finance.
  Mr. NELSON of Florida. Mr. President, I rise today to introduce, with 
several of my colleagues, the Algae-based Renewable Fuel Promotion Act.
  The energy, environmental, and food supply challenges confronting our 
nation are immense. The United States imports roughly 60 percent of the 
crude oil consumed domestically, much of it from unstable parts of the 
world. As global demand continues to rise, price shocks in oil markets 
are increasingly common, causing economic pain and hardship for 
American consumers. Our overwhelming reliance on traditional fossil 
fuels contributes to unsustainable greenhouse gas emissions levels and 
the damaging effects of global warming. Ethanol made from corn or 
soybean--also called first generation biofuels--serve an important 
function in diversifying our energy base, but their benefits are 
largely offset by their adverse effects on food prices and the 
environment.
  Addressing these challenges requires a multi-faceted strategy that 
invests in renewable and alternative energy sources, green technology, 
and conservation measures. If we succeed, the payoff will be a cleaner, 
healthier, and more economically prosperous future.
  I was pleased that the economic stimulus legislation enacted earlier 
this year included important investments in renewable energy and green 
technology programs. It also included a number of expanded tax 
incentives, including tax credits for renewable energy sources, such as 
wind, geothermal, hydropower, and biomass; energy-efficient home 
improvements; and plug-in electric vehicles, to name just a few.
  The legislation I am introducing today with six of my colleagues in 
the Senate--three on each side of the aisle--builds on these 
investments and incentives by recognizing the powerful potential of a 
new and emerging energy source, algae.
  After years of basic research at the academic and governmental level, 
new algae-based fuels are poised to move from the experimentation stage 
to commercial development. These fuels have the potential to make a 
significant contribution to our energy future. Algae are one of 
nature's most prolific and efficient photosynthetic organisms. They 
have a short growing cycle, high oil content, and can require little 
land or potable water. An algae-based fuel needs only sunlight, 
CO2, and in some cases, other nutrient inputs to produce 
biomass that can be converted into readily usable liquid transportation 
fuels--gasoline, jet fuel, and diesel. Unlike some of the other energy 
sources currently under development, algae-based fuels are ``drop-in'' 
fuels, that is to say, they can be incorporated into our existing 
energy infrastructure, including our pipelines, terminals, and our 
fleet of trucks, cars and jets.
  For example, over the past several months, commercial airlines have 
flown four successful test flights using a variety of biofuel jet fuel 
blends, including a Continental Airlines flight using a blend of algae- 
and jatropha-derived biofuel and a Japan Airlines flight using a 
similar blend that also included camelina.
  Moreover, some algae-based fuel production processes even sequester 
and consume CO2. Algae production facilities can use 
CO2 emitted by a coal-fired electric utility as a feedstock 
for the production of the fuel. As a result, algae-based fuels can help 
transform the energy landscape by shifting our energy consumption to a 
renewable, home-grown fuel that is carbon neutral or better.
  Unfortunately, current Federal tax policy inhibits the production of 
algae-based fuels by failing to provide a level playing--field relative 
to other alternative and renewable fuels. Tax incentives currently 
apply to the production of liquefied petroleum gas, compressed or 
liquefied natural gas, ethanol, liquefied hydrogen, biodiesel, liquid 
fuels derived from coal, and other alternative fuels. Many of these 
incentives were added to the tax code well before recent technological 
developments demonstrated the extraordinary promise of algae as a 
renewable fuel source. In order to ensure that Federal tax incentives 
stimulate the most promising and environmentally beneficial energy 
sources available, the tax code should be updated to incorporate and 
promote algae-based fuel production.
  The Algae-based Renewable Fuel Promotion Act would make two modest 
changes to the tax code to promote the development and 
commercialization of algae-based fuels in the U.S. First, the bill 
would expand the $1.01 per gallon income tax credit for cellulosic 
biofuels to cover algae-based biofuels. The bill retains the current 
law December 31, 2012, expiration date for the cellulosic biofuel 
producer credit. Second, the bill would extend the capital investment 
tax incentives for cellulosic biofuels to cover equipment used to 
produce algae-based fuels. Specifically, the bill would modify the 50 
percent bonus depreciation provision for property used to produce 
cellulosic biofuel by extending the provision to qualified algae-based 
biofuel plant property. The bill retains the current law requirement 
that qualified property must be placed in service before January 1, 
2013. By ensuring that algae-based fuels fully benefit under Federal 
tax policies that promote renewable and alternative fuels, the 
legislation will encourage investment in this sustainable energy source 
and make an important contribution to our energy landscape for years to 
come.
  Algae-based fuels are just one of the many renewable and alternative 
energy sources under development by aggressive and entrepreneurial 
start-up firms. These firms seek to capitalize on the commercial 
opportunities presented by the transition away from reliance on fossil 
fuels. It is critical that we regularly review the tax code to ensure

[[Page S6557]]

that it encourages and promotes the most promising renewable energy 
sources available. The Algae-based Renewable Fuel Promotion Act is one 
step in this direction. I encourage my colleagues to support it.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1250

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Algae-based Renewable Fuel 
     Promotion Act of 2009''.

     SEC. 2. INCLUSION OF ALGAE-BASED BIOFUEL IN DEFINITION OF 
                   CELLULOSIC BIOFUEL.

       (a) Cellulosic Biofuel Producer Credit.--
       (1) General rule.--Paragraph (4) of section 40(a) of the 
     Internal Revenue Code of 1986 is amended by inserting ``and 
     algae-based'' after ``cellulosic''.
       (2) Definitions.--Paragraph (6) of section 40(b) of such 
     Code is amended--
       (A) by inserting ``and algae-based'' after ``Cellulosic'' 
     in the heading,
       (B) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--The cellulosic and algae-based biofuel 
     producer credit of any taxpayer is an amount equal to the 
     applicable amount for each gallon of--
       ``(i) qualified cellulosic biofuel production, and
       ``(ii) qualified algae-based biofuel production.'',
       (C) by redesignating subparagraphs (F), (G), and (H) as 
     subparagraphs (I), (J), and (K), respectively,
       (D) by inserting ``and algae-based'' after ``cellulosic'' 
     in the heading of subparagraph (I), as so redesignated,
       (E) by inserting ``or algae-based biofuel, whichever is 
     appropriate,'' after ``cellulosic biofuel'' in subparagraph 
     (J), as so redesignated,
       (F) by inserting ``and qualified algae-based biofuel 
     production'' after ``qualified cellulosic biofuel 
     production'' in subparagraph (K), as so redesignated, and
       (G) by inserting after subparagraph (E) the following new 
     subparagraphs:
       ``(F) Qualified algae-based biofuel production.--For 
     purposes of this section, the term `qualified algae-based 
     biofuel production' means any algae-based biofuel which is 
     produced by the taxpayer, and which during the taxable year--
       ``(i) is sold by the taxpayer to another person--

       ``(I) for use by such other person in the production of a 
     qualified algae-based biofuel mixture in such other person's 
     trade or business (other than casual off-farm production),
       ``(II) for use by such other person as a fuel in a trade or 
     business, or
       ``(III) who sells such algae-based biofuel at retail to 
     another person and places such algae-based biofuel in the 
     fuel tank of such other person, or

       ``(ii) is used or sold by the taxpayer for any purpose 
     described in clause (i).

     The qualified algae-based biofuel production of any taxpayer 
     for any taxable year shall not include any alcohol which is 
     purchased by the taxpayer and with respect to which such 
     producer increases the proof of the alcohol by additional 
     distillation.
       ``(G) Qualified algae-based biofuel mixture.--For purposes 
     of this paragraph, the term `qualified algae-based biofuel 
     mixture' means a mixture of algae-based biofuel and gasoline 
     or of algae-based biofuel and a special fuel which--
       ``(i) is sold by the person producing such mixture to any 
     person for use as a fuel, or
       ``(ii) is used as a fuel by the person producing such 
     mixture.
       ``(H) Algae-based biofuel.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `algae-based biofuel' means any 
     liquid fuel, including gasoline, diesel, aviation fuel, and 
     ethanol, which--

       ``(I) is produced from the biomass of algal organisms, and
       ``(II) meets the registration requirements for fuels and 
     fuel additives established by the Environmental Protection 
     Agency under section 211 of the Clean Air Act (42 U.S.C. 
     7545).

       ``(ii) Algal organism.--The term `algal organism' means a 
     single- or multi-cellular organism which is primarily aquatic 
     and classified as a non-vascular plant, including microalgae, 
     blue-green algae (cyanobacteria), and macroalgae (seaweeds).
       ``(iii) Exclusion of low-proof alcohol.--Such term shall 
     not include any alcohol with a proof of less than 150. The 
     determination of the proof of any alcohol shall be made 
     without regard to any added denaturants.''.
       (3) Conforming amendments.--
       (A) Subparagraph (D) of section 40(d)(3) of such Code is 
     amended--
       (i) by inserting ``and algae-based'' after ``cellulosic'' 
     in the heading,
       (ii) by inserting ``or (b)(6)(F)'' after ``(b)(6)(C)'' in 
     clause (ii), and
       (iii) by inserting ``or algae-based'' after ``such 
     cellulosic''.
       (B) Paragraph (6) of section 40(d) of such Code is 
     amended--
       (i) by inserting ``and algae-based'' after ``cellulosic'' 
     in the heading, and
       (ii) by striking the first sentence and inserting ``No 
     cellulosic and algae-based biofuel producer credit shall be 
     determined under subsection (a) with respect to any 
     cellulosic or algae-based biofuel unless such cellulosic or 
     algae-based biofuel is produced in the United States and used 
     as a fuel in the United States.''
       (C) Paragraph (3) of section 40(e) of such Code is amended 
     by inserting ``and algae-based'' after ``cellulosic'' in the 
     heading.
       (D) Paragraph (1) of section 4101(a) of such Code is 
     amended--
       (i) by inserting ``or algae-based'' after ``cellulosic'', 
     and
       (ii) by inserting ``and 40(b)(6)(H), respectively'' after 
     ``section 40(b)(6)(E)''.
       (b) Special Allowance for Cellulosic Biofuel Plant 
     Property.--Subsection (l) of section 168 of the Internal 
     Revenue Code of 1986 is amended--
       (1) by inserting ``and Algae-Based'' after ``Cellulosic'' 
     in the heading,
       (2) by inserting ``and any qualified algae-based biofuel 
     plant property'' after ``qualified cellulosic biofuel plant 
     property'' in paragraph (1),
       (3) by redesignating paragraphs (4) through (8) as 
     paragraphs (6) through (10), respectively,
       (4) by inserting ``or qualified algae-based biofuel plant 
     property'' after ``cellulosic biofuel plant property'' in 
     paragraph (7)(C), as so redesignated,
       (5) by striking ``with respect to'' and all that follows in 
     paragraph (9), as so redesignated, and inserting ``with 
     respect to any qualified cellulosic biofuel plant property 
     and any qualified algae-based biofuel plant property which 
     ceases to be such qualified property.'',
       (6) by inserting ``or qualified algae-based biofuel plant 
     property'' after ``cellulosic biofuel plant property'' in 
     paragraph (10), as so redesignated, and
       (7) by inserting after paragraph (3) the following new 
     paragraphs:
       ``(4) Qualified algae-based biofuel plant property.--The 
     term `qualified algae-based biofuel plant property' means 
     property of a character subject to the allowance for 
     depreciation--
       ``(A) which is used in the United States solely to produce 
     algae-based biofuel,
       ``(B) the original use of which commences with the taxpayer 
     after December 31, 2008,
       ``(C) which is acquired by the taxpayer by purchase (as 
     defined in section 179(d)) after December 31, 2008, but only 
     if no written binding contract for the acquisition was in 
     effect on or before such date, and
       ``(D) which is placed in service by the taxpayer before 
     January 1, 2013.
       ``(5) Algae-based biofuel.--
       ``(A) In general.--The term `algae-based biofuel' means any 
     liquid fuel which is produced from the biomass of algal 
     organisms.
       ``(B) Algal organism.--The term `algal organism' means a 
     single- or multi-cellular organism which is primarily aquatic 
     and classified as a non-vascular plant, including microalgae, 
     blue-green algae (cyanobacteria), and macroalgae 
     (seaweeds).''.
       (c) Effective Dates.--
       (1) Cellulosic biofuel producer credit.--The amendments 
     made by subsection (a) shall apply to fuel produced after 
     December 31, 2008.
       (2) Special allowance for cellulosic biofuel plant 
     property.--The amendments made by subsection (b) shall apply 
     to property purchased and placed in service after December 
     31, 2008.

  Mr. CRAPO. Mr. President, I rise today to speak in support of the 
Algae-based Renewable Fuel Promotion Act.
  I would first like to thank Senator Bill Nelson for his leadership on 
this extraordinary piece of legislation, which gives algae-based 
biofuels the same tax incentives that cellulosic biofuels currently 
enjoy. Specifically, the bill would provide a $1.01 per gallon tax 
credit and offer 50 percent bonus depreciation for property used in the 
production of algae-based biofuels. In short, this legislation will 
level the playing field for algae, resulting in enhanced development 
and commercialization.
  Recent technological advances have showcased the tremendous potential 
of algae as a renewable fuel source. Algae-based biofuels can be 
refined into gasoline, jet fuel and diesel. These fuels are renewable, 
have a low-carbon footprint, and can fit seamlessly into our existing 
energy infrastructure. Additionally, algae does not compete for arable 
land or potable water. Algae grows best in very sunny climates, making 
the desert an ideal place for production, and it utilizes saltwater, 
not freshwater, to grow. It also has a short-life cycle and high oil 
content.
  Algae-based renewable fuels will play an important role in America's 
clean energy portfolio, and provide an answer to the question of how we 
will decrease our dependence on foreign oil and increase our domestic 
security. Again, I thank my colleague, Senator Bill Nelson, and I look 
forward to working with my colleagues in the Senate on this important 
piece of legislation.

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