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Washington State Bioenergy Policy Framework

(Summary of Legislative Actions, 2003-2009 -- updated June 29, 2009)

Quick look at Washington Biofuels Laws and Incentives

Production

Tax Incentives

  • Reduced B&O rate is provided for manufacture of wood biomass or alcohol fuels. (RCW 82.04.260(1)f)
  • A B&O tax credit is provided for each green ton of forest-derived biomass sold or used for production of power, steam, heat or biofuel. The credit is valued at $3/ton from July 2010 through June 2013, then $5/ton through June 2015. Expires June 30, 2015. (RCW 82.04 -- section to be codified)
  • Cogeneration equipment integrated into a manufacturing site is exempt from retail sales and use taxes. (RCW 82.08.02565, 82.12.02565)
  • Equipment, labor and associated services for power production of at least 1 kW from various renewable energy sources, including biomass energy, anaerobic digestion and landfill gas, are exempt from retail sales and use taxes. During 2011-13 biennia, exemption rate drops to 75% and is claimed through remittance. Expires July 1, 2013. (RCW 82.08.02567, 82.12.02567)
  • Anaerobic digester construction and operation, and related services or components, are exempt from retail sales and use taxes. More than half of digester feedstock must be livestock manure. (RCW 82.08.900, 82.12.900)
  • Land, buildings and equipment used for anaerobic digestion, manufacturing alcohol, biodiesel and wood biomass fuels, or biodiesel feedstock are exempt from property and leasehold taxes for six years following date facility becomes operational. Exemption is not renewable. No claims may be filed after December 31, 2009 for biofuels; December 31, 2012 for digesters. (RCW 82.29A.135, 84.36.635, 84.36.640)
  • Sale and use of hog fuel or forest-derived biomass for production of power, steam, heat or biofuel is exempt from retail sales and use taxes. Expires June 30, 2013. (RCW 82.08, 82.12 – sections to be codified)
  • Sale and use of waste vegetable oil for production of biodiesel for personal use is exempt from retail sales and use taxes. (RCW 82.08.0205, 82.12.0205)

Public Sector Production

  • Conservation districts and public development authorities may contract for crops, produce, sell and distribute biodiesel produced from instate feedstocks, and cellulosic ethanol. Municipal utilities and public utility districts may do the same, and use these fuels to generate power. (RCW 35.21.465, 35.92.440, 54.04.190, 89.08.570)
  • Counties may construct and own biopower facilities so long as there is a Public Utility District with an electrical system in the county. Most feedstocks are allowed, except for biosolids, yard and food waste, and demolition and construction debris. (RCW 36 -- section to be codified)
  • Counties may enact "energy overlay zones" to facilitate siting of renewable energy project based on feedstock availability, infrastructure and environmental impacts. Eligible technologies include biomass energy, mill waste, and landfill and wastewater treatment gas. (RCW 36.70C.020, 36.70C.130)

Financial Assistance

  • Energy Freedom Account under Energy Freedom Program provides financial support for projects converting farm products, wastes, cellulose, or biogas directly into electricity or biofuel or other coproducts. No appropriation for the 2009-11 biennia. Expires June 30, 2016. (RCW 43.325.020)
  • Energy Recovery Act Account under Energy Freedom Program directs federal funds to a wide range of renewable energy projects, including any bioenergy project except those based on municipal solid waste. Unlike other Energy Freedom Program accounts, state agencies, nonprofit corporations and for-profit business are eligible to apply. Some $38.5 million will be distributed during 2009. (RCW 43.325.020)
  • Producers of grid intertied power from anaerobic digesters are eligible for .15¢/ kWh incentive payments of up to $2,000/yr. Expires June 30, 2014. (RCW 82.16.110) Expedited Permitting
  • Anaerobic digesters are exempt from solid waste permitting if feedstocks are at least 50% livestock manure and no more than 30% organic waste, including yard waste and pre-consumer food waste, but not material collected through municipal solid waste programs. Certain design and operational standards must also be met. (RCW 70.95 – section to be codified)

Distribution & Use

Tax Incentives

  • New passenger cars, light duty trucks, and medium duty passenger vehicles powered by a clean alternative fuel (natural gas, propane, hydrogen or electricity) are exempt from retail sales tax. Effective January 1, 2009 until January 1, 2011. (RCW 82.08.809)
  • Sales to and use of non-highway biodiesel and biodiesel blends by farm fuel users are exempt from retail sales and use taxes. Fuel used for space or water heating for human habitation not included. (RCW 82.08.865, 82.12.865)
  • Sales and use of equipment, and related services or components, used for retail sale of E85 and biodiesel blends of B20 or higher are exempt from retail sales and use taxes. Sales of fuel delivery vehicles, and related services or components, are exempt if at least 75% of the fuel is E85 or biodiesel blend of B20 or higher. Expires July 1, 2015. (RCW 82.08.955, 82.12.955)
  • Retailers of biodiesel and E85 are eligible for a B&O tax deduction. Expires July 1, 2015. (RCW 82.04.4334)

Financial Assistance

  • Green Energy Incentive Account under Energy Freedom Program provides financial support for development of biofuels refueling infrastructure along interstate corridors. No appropriation for the 2009-11 biennia. Expires June 30, 2016. (RCW 43.325.040)
  • Energy Recovery Act Account under Energy Freedom Program directs federal funds to a wide range of renewable energy projects, including any bioenergy project except those based on municipal solid waste. Unlike other Energy Freedom Program accounts, state agencies, nonprofit corporations and for-profit business are eligible to apply. Some $38.5 million will be distributed during 2009. (RCW 43.325.020)

Public Sector

  • Effective June 1, 2006, agencies complying with EPA’s ultra-low sulfur diesel mandate must use at least 2% biodiesel as a lubricity additive, provided the use is warranted and biodiesel is comparable in performance and cost with other additives. (RCW 43.19.642)
  • Beginning July 1, 2006, all state agencies using biodiesel shall file biannual reports with GA documenting their fuel use and describing how any problems encountered were resolved. (RCW 43.19.642)
  • Effective June 1, 2009, state agencies as a whole are required to use a minimum of 20% biodiesel to operate diesel-powered vessels, vehicles, and construction equipment. (RCW 43.19.642) This regulation was amended during the 2009 legislative session (SB 5352, section 716, 2009-2011 Transportation Appropriations). The amendment eliminates the 20% biodiesel use requirement for the Washington State Ferries (WSF). Instead, WSF is required to use a minimum of 5% biodiesel (B5) in its ferry fleet provided the per gallon price of B5 is no more than 5% higher than the price of diesel.
  • GA may combine the needs of local governments, including ports, special districts, school districts, and municipal corporations, and contract in advance with public or private producers, suppliers, or other parties for the purchase of biofuels and biofuel blends. (RCW 43.19.647)
  • Effective June 1, 2013, all state agencies and local governments are required to satisfy 40% of their fuel usage for publicly owned vessels, vehicles, and construction equipment with electricity or biofuel. By June 1, 2015, 100% these fuel needs are to be met by electricity or biofuel, to the extent practicable. (RCW 43.19.648)
  • At least 30% of all new vehicles purchased by state contract must be clean-fuel vehicles; this percentage shall increase 5% each year. Dedicated clean-fuel vehicles are preferred; if they are not available or would not meet operational needs, conventional vehicles may be converted to clean-fuel or dual-fuel use. (RCW 43.19.637)

Fuel Content Requirements

  • At least 2% of the total annual diesel sales must be biodiesel or renewable diesel by November 30, 2008. At least 5% must be biodiesel or renewable diesel when Agriculture determines instate oil seed crushing capacity and feedstocks can satisfy a 3% requirement. (RCW 19.112.110)
  • At least 2% of total gasoline sales, measured on a quarterly basis, must be ethanol by December 1, 2008. Ethanol content between 2% and at least 10% may be required if Ecology determines it will not jeopardize air quality standards for ozone pollution, and Agriculture determines instate raw materials are available to support economical production. (RCW 19.112.120)
  • Content requirements will be repealed when the diesel supply is at least 10% biodiesel made predominantly from instate feedstocks, and the gasoline supply is at least 20% ethanol made predominantly from instate feedstocks, without jeopardizing air quality standards for ozone pollution.

The Energy Freedom Program

The Energy Freedom Program was established in 2006 under E3SHB 2939 to, “promote public research and development in bioenergy, and to stimulate the construction of facilities in Washington to generate energy from farm sources or convert organic matter into fuels. In 2006, the Legislature provided a Capital Budget appropriation of $23 million, including $17 million to WSDA for a low-interest loan program, and $6 million to the Washington State Department of Community, Trade & Economic Development (CTED) for a designated grant. WSDA’s loan program offered eligible public entities a ten-year term and 1% interest rate. Eight projects were designated by the Legislature and/or selected through WSDA’s competitive process to receive loan awards.

In 2007, the Legislature amended the original awards in response to the changing needs of the Program. Two of the projects chose not to proceed, two projects had their awards adjusted, and one project changed their public partner. The remaining $2.5 million was designated for a bioenergy project outside the Energy Freedom account, reducing overall revolving funds from $17 million to $14.5 million. In late 2007, one of the loan recipients opted to use other funds and withdrew from the program. Their award was subsequently designated by the Legislature in 2008 as grants for two new bioenergy projects, further reducing the total funds circulating through the Energy Freedom account from $14.5 million to $13 million.

In 2008, a fourth loan recipient chose not to move forward and returned their award. These funds remain in the account subject to appropriation. By the end of 2008, all four remaining loan recipients will have begun to make regular repayments. Over the course of the 2010-11 biennium, an estimated $6.3 million will be returned to the account in the form of recaptured loans, loan repayments and interest. Program highlights can be found at (get URL from Peter M on status report) while details of the Energy Freedom Fund legislation is contained in RCW 15.110. The Energy Freedom Program is currently set to expire June 30, 2016



U.S. Laws and Incentives

There are a number of US laws and incentives that promote the use of bioenergy. A summary of these laws and incentives can be found at the Department of Energy website- Alternative Fuels and Advanced Vehicle Data Center. The major federal provisions effecting biofuel use are presented below.

Federal BioEnergy Resources

Energy Improvement and Extension Act of 2008

The Energy Improvement and Extension Act of 2008 was signed into law on October 3, 2008 and can be viewed at the Library of Congress website. A summary of the relevant biofuels provisions includes:

  • Section 202 amends the existing biodiesel mixture and agri-biodiesel production tax credits by:
    • extending the tax credits for one year through December 31, 2009;
    • allowing all biodiesel, regardless of feedstock, to qualify for the $1.00 per gallon mixture incentive (with the exception of co-processed renewable diesel); and
    • adding camelina as a qualified feedstock for agri-biodiesel production.

Section 207 amends the existing alternative fuel infrastructure tax credit by extending the incentive for one year through December 31, 2010.

Energy Independence and Security Act of 2007

The Energy Independence and Security Act (EISA) of 2007 aims to improve vehicle fuel economy and help reduce U.S. dependence on petroleum. EISA includes provisions to increase the supply of renewable alternative fuel sources by setting a mandatory Renewable Fuel Standard, which requires transportation fuel sold in the U.S. to be a minimum of 36 billion gallons of renewable fuels by 2022 including advanced and cellulosic biofuels as well as biomass-based diesel. In addition, EISA includes grant programs to encourage the development of cellulosic biofuels. The law is projected to reduce greenhouse gas emissions by 9% by 2030. For more information, see the EISA summary table.

Energy Policy Act of 2005

(Enacted August 8, 2005)
The Energy Policy Act (EPAct) of 2005 called for the development of grant programs, demonstration and testing initiatives, and tax incentives that promote the production and use of alternative fuels and advanced vehicles. EPAct 2005 also amended existing regulations, including fuel economy testing procedures and EPAct 1992 requirements for federal and state and alternative fuel provider fleets. For more information, see the EPAct 2005 summary table

2008 Farmbill

The Food, Conservation, and Energy Act of 2008, was enacted into law in June 2008 and will govern the bulk of Federal agriculture and related programs for the next 5 years. Title IX contains the energy provisions of the bill which continues and expands funding for Federal agency procurement of biobased products, construction and development of advanced biofuel refineries, biomass research and development, and biodiesel education. New programs encourage renewable energy use by biorefineries, renewable energy systems and energy efficiency improvements, rural energy self sufficiency, development of next generation feedstocks, and use of forest and woody biomass for energy production. A summary of the bill’s key provisions can be found at the USDA Farm Bill website..



Additional Resources

Department of Community Trade and Economic Development Energy Policy Division
WSDA website
US Department of Energy State Laws and Incentives.
Washington State Permit Handbook

  
  
     
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