Tax Credits for Renewable Chemical Producers in the US

To incentivize the production of chemicals made from renewable resources, Iowa and Maine have implemented tax credit programs.

Iowa (Renewable Chemicals Production Tax Credit Program)

Tax credit — $0.05 per pound of renewable chemical produced

Annual limit — $1 million for startups and $500,000 for established businesses.

Applicability — High-value chemicals derived from biomass feedstocks with at least 50% biobased content as measured by ASTM D6866 testing (e.g. high-purity glycerol, oleic acid, lauric acid, methanoic or formic acid, arabonic acid, erythonic acid, glyceric acid, glycolic acid, lactic acid, 3-hydroxypropionate, propionic acid, malonic acid, serine, succinic acid, fumaric acid, malic acid, aspartic acid, 3-hydroxybutyrolactone, acetoin, threonine, itaconic acid, furfural, levulinic acid, glutamic acid, xylonic acid, xylaric acid, xylitol, arabitol, citric acid, aconitic acid, 5-hydroxymethylfurfural, lysine, gluconic acid, glucaric acid, sorbitol, gallic acid, ferulic acid, non-fuel butanol, non-fuel ethanol)

Excluded — Chemicals sold or used for food, feed or fuel

How to apply — Please contact the Iowa Economic Development Authority

Legislation — Senate Study Bill 3001 (enacted April 6, 2016)

Sources:
Iowa Economic Development Authority Renewable Chemicals Production Tax Credit Program 2017 Webinar (PDF)
The Iowa Legislature Senate Study Bill 3001

Maine (LD 1698)

Tax credit — $0.07 per pound of renewable chemical produced in the State

Higher tax credits are possible ($0.09-$0.12 per pound) for chemicals produced from forest-derived renewable biomass for companies that meet other criteria specified in the legislation.

Applicability — Substances sold or used to produce chemicals, polymers, plastics and formulated products with at least 95% biobased content as determined by ASTM D6866 testing.

Excluded — Substances used for food, feed or fuel, with limited exceptions.

The following chemicals are considered as renewable under LD 1698:

1. Cellulosic sugars used to produce aquaculture feed;
2. A food additive, supplement, vitamin, nutraceutical or pharmaceutical that does not provide caloric value and is not considered food or feed; and
3. Cellulosic ethanol, levulinic acid or similar chemicals when sold for use or for production of fuel additives in blends with gasoline or residential heating oil.

LD 1698 also reinstates the tax credit for commercial production and use of biofuels.

How to apply — Please contact the Maine Department of Economic and Community Development

Legislation — LD 1698 – An Act To Create Jobs and Slow Climate Change by Promoting the Production of Natural Resources Bioproducts (enacted March 18, 2020)

Source: 129th Maine Legislature – LD 1698, HP 1213

Nebraska (Renewable Chemical Production Tax Credit Act)

Tax credit — $0.075 per pound of chemical produced for qualifying eligible chemical businesses

Annual limit — $1.5 million

Applicability — Renewable chemicals with a significant biobased content that can be used for products including polymers, plastics, food additives, solvents, intermediate chemicals, or other formulated products with a significant non-fossil carbon content.

Renewable chemical includes:

1. Biobased chemicals that can be a food, feed, or fuel additive;
2. Supplements, vitamins, nutraceuticals, and pharmaceuticals.

Excluded — Any chemical sold or used as fuel.

LB 1107 also includes a property tax reform that will benefit biofuel plants, among others.

How to apply — Please contact the Nebraska Department of Economic Development

Legislation — LB1107 – Adopt the ImagiNE Nebraska Act, Key Employer and Jobs Retention Act, Renewable Chemical Production Tax Credit Act, Customized Job Training Act, Nebraska Transformational Projects Act, and Nebraska Property Tax Incentive Act and change and provide other related provisions (enacted August 20, 2020)

Source — Legislative Bill 1107 

Pending Legislations

• Illinois (SB1656 – Renewable Chemical Production Tax Credit Program Act)
  Status: Session Sine Die as of January 9, 2019
  It is similar to Iowa’s tax credit program.

Source: Illinois 100th General Assembly

• Kentucky (House Bill 422 – An Act Relating to the Renewable Chemicals Production Tax Credit Program)
  Status: to Appropriations & Revenue as of February 20, 2019
  It is also similar to Iowa’s tax credit program.

Source: Kentucky General Assembly 2019 Regular Session

Beta Analytic’s Rapid ASTM D6866 Testing

ISO 17025-accredited Beta Analytic has provided rapid, high-quality biobased content ASTM D6866 testing since 2004. The lab is one of the key developers of the ASTM D6866 method. The lab currently has two services – standard (results reported in 5-7 business days) and priority (results in 4 business days).

For inquiries, please email the lab using this form or call (+1) 305-662-7760. We respond to inquiries promptly during business hours (8 AM-5 PM EST, Monday-Friday).

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Note: Beta Analytic is not affiliated with any government agencies responsible for these programs. We can advise on ASTM D6866 testing but not on how to apply in these programs or claim tax credits.

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Page last updated: October 2020

This entry was posted on Tuesday, April 7th, 2020 and is filed under Biobased Products, Biobased Regulations, Renewable Carbon .