Algae-based Renewable Fuel Promotion Act of 2010

Madam Speaker, I am an oil man. I always have been and always will be. When I was 9 years old, we moved from Caddo County, Oklahoma, to Hobbs, New Mexico, so my daddy could get a job in the oil patch. A few years later, at age 17, with my parents sick and the bills still needing to get paid, I went to work in the oil fields to earn a paycheck and support the family. Eventually, I built a small business from the ground up; and we employed 250 people, drilling oil and gas wells for other people and fixing them when they were broke.

Most every hamburger that I have ever had has come somehow from American oil and gas. The industry employs almost 20,000 people in New Mexico. It's a critical source of wealth, jobs, energy, and education funding in my State; and I've been proud to fight for New Mexico oil and gas in Congress.

While New Mexico has been successful developing its oil and gas resources, we have failed to develop the diverse alternative energy resources that my State also possesses in great abundance. And, unfortunately for thousands of New Mexicans looking for work today, we have failed to create those alternative energy jobs.

Madam Speaker, if we want to create our energy jobs here in America and stop sending a billion dollars to countries like Saudi Arabia and Venezuela every day, we need a ``Do it all, do it in America'' energy policy. We need to drill for more oil and natural gas. We need to build new nuclear facilities. We need to capture the wind, the sun, and the Earth's geothermal heat for electricity. We need to produce billions of gallons of liquid biofuels to burn in cars, trucks, and airplane engines, and we need to do it right here in America.

Madam Speaker, a pillar of a ``Do it all, do it in America'' approach to energy is producing biofuels from algae. Algal biofuels have high energy density and the near-term potential to produce more energy in a small footprint than earlier generation biofuels. They can be grown using brackish water not suitable for human consumption and on land not suitable for agriculture. And all the algae needs is ample sunlight and a source of nutrition, like cow manure, to grow and get fat with oil.

Although the companies and researchers that are now producing algal biofuels have intensively experimented with various techniques and algae breeds over many years, when it comes down to it, getting oil out of algae is pretty simple: You dig a pond, line it, and fill it with water. You fill the pond with algae, keep them fed. When the algae are good and fat, you squeeze the oil out of the organisms. And depending on your technology, you put it right to use or refine it into gasoline, diesel, or jet fuel. Additionally, many algal biofuels are designed to function on a drop-in basis, so you can pour green crude right into the pipeline or tanker truck coming out of the oil patch. This means we can replace imported oil with homegrown fuel without costly investments in new refining and transportation infrastructure.

My district of southern New Mexico is among the many areas across the country primed to become a center for algal biofuel production and job creation. Our wide open spaces, ample sunlight, and brackish water make us the perfect place to produce our Nation's next generation of biofuels. We already have algal biofuel facilities in Dona Ana County and Eddy County. Luna County will soon be home to another facility which will create 700 jobs when it breaks ground this fall. The potential, though, is so much greater. Algal biofuels are poised to power America with homegrown energy on a large scale.

However, algal biofuels face an uneven playing field within our Nation's energy policy framework, most notably in our tax code. Under current law, algal biofuels do not qualify for tax incentives that currently benefit other biofuels, like cellulosic biofuels.

When these tax laws were written, cellulosic biofuels and biodiesel were the only renewable fuels on the lawmakers' radars and considered capable of actually reducing America's dependence on foreign oil. Since these laws were written, however, significant advances in the algae- based fuel industry have readied algae for prime time. Now, because algae has many advantages over cellulosic feedstocks and is operating on a near-term commercialization timeline similar to cellulosic fuels, algae-based fuel producers should receive tax incentives on par with those currently received by cellulosic biofuel producers.

H.R. 4168, the Algae-based Renewable Fuel Promotion Act, simply gives algal biofuels tax parity with cellulosic

biofuels. The legislation contains a limitation on the products that will qualify for the tax incentives. They must be derived solely from qualifying feedstocks. Qualifying feedstocks include, in addition to cellulosic materials, cultivated algae, cyanobacteria, and lemna. Beyond that, the bill does not distinguish among these feedstocks with regard to the manner of cultivation, including nutrients or other inputs used to develop the feedstock and the biofuel. It is the intent of this provision to encompass all technologies using qualified feedstocks such as algae.

Bottom line, tax parity will help algal biofuel producers attract needed capital to produce energy right here at home and create hundreds of thousands of jobs for new energy in New Mexico and across this great country.

Madam Speaker, when Americans go to the pump to fill up their tanks today, they are sending 70 cents of every dollar to other countries, many of which don't like us very much, and are creating jobs in places like Saudi Arabia and Venezuela. I don't want Americans to be creating jobs for the supporters of Hugo Chavez when they use energy. We should be creating energy jobs right here at home, employing American workers to produce the energy our economy and military needs.

Passing this bill today is a step toward a ``Do it all, do it in America'' energy policy. We can create American jobs and make our country more secure by producing our energy right here at home. This is a commonsense bipartisan bill that will create jobs and move America toward energy independence.

I would like to thank Chairman Levin, Ranking Member Camp, and members of the Ways and Means Committee for their support.

I thank the ranking member. I appreciate the fact of this bill being brought forward.

Madam Speaker, I know there is very little being brought forward, but at least we have something to discuss today. And I have to agree with my colleague that we wish the general tax cut, something that we hear all around, the American people want us to talk about.

But this is an item that hasn't been talked about enough anywhere. And I want to thank my colleague from New Mexico for cosponsoring this with me. And I want to congratulate the gentleman's State of New Mexico because, I tell you something, as a Californian, I am sort of envious. California spent lots of money on our universities, lots of money on our research. We have some of the best scientists in the world. And as the gentleman from New Mexico knows, our scientists in San Diego developed the ability to create this algae fuel, but, sadly, because of California's regulations and the lack of reform and its government oversight, the scientists in San Diego had to pack up and go to New Mexico to be able to produce this product. And the jobs will be created in New Mexico in the production because California hasn't reformed its government regulatory oversight.

And I think that is a challenge for all of us to look at that, hopefully, as the Federal Government will set an example that jobs aren't being taken overseas, because we are quick to write checks and maybe do research, but we are not quick at making the private sector viable to be able to create the jobs that all of us know the American people are desperate for.

You know, the algae-based fuel is one of the most promising fuels, Madam Speaker, when we talk about the next generation, second or third generation biofuels. We all know, any reasonable person knows, that the mandates of adding renewable fuels in our fuel stream, the mandate that you cannot sell legally gasoline in the United States unless it has a 10 or 8 percent by volume content of renewable fuels, that mandate never, ever meant to leave us with first generation renewable fuels. We all knew that first generation was a necessity, something we had to get through, something that was expensive, maybe not as environmentally friendly as we like, but a transition we hoped would come eventually.

Algae fuel has the capability of building that bridge to the future to lead the first generation renewables behind and move forward. The fact is that algae fuel is not only highly effective; algae fuel equals the fossil fuel one-to-one in energy capabilities.

The fact is that algae fuel, as it gets developed, is capable of not just driving our cars, but flying our airplanes, of actually replacing diesel. Algae fuel has the capability of total compatibility with the existing infrastructure. Unlike other fuels, you do not have to ship algae fuel by truck from one location to the other, thus creating a whole new group of environmental and air pollution problems. You can transport it within the pipe systems that exist today. You can refine it in the refineries that exist today.

Algae fuel has the capability of being 1, 2 percent, or 90 percent of the fuel stream within the existing infrastructure. It is totally compatible to be phased in, a huge benefit that does not exist with the first generation.

Algae fuel has the ability to consume and sequester massive amounts of CO2, something that other fuels do not have the capability of doing along the line at the capability that they have here. And the drop-in capability and the capability is something we do not talk enough about.

Algae fuels have been tested. We have had one aircraft that flew with algae fuel and not only was compatible, but was 4 percent more efficient than fossil fuels of comparable weight and volume.

And the fact is, Madam Speaker, that we have the ability now to even the playing field when it comes to taxes. Why should Washington continue to choose winners and have alternatives that should be allowed to win hamstrung and punished because they weren't here with their lobbyists years ago when these laws were passed?

This bill helps to correct the mistakes made in the past in our tax laws where Washington was choosing some to be winners and cutting out other people from participating in the system. We should allow winners to earn the right to be called winners and not be anointed by Washington or the legislators here in Washington. We should allow the technology and the products to compete on an open market, but equal tax benefits for everyone to be able to prove that America allows people to be innovative, to be creative, and we will not punish them just because they went down one technological road rather than the other.

Our Tax Code should be equal. It should be neutral, and it should be outcome-based, not profit-based and, most importantly, not Washington lobbying-based. This bill now equalizes that to some degree; and that degree, I think is appropriate at this time.

So it may not be doing everything we would like to do this week. It is not going to accomplish what I know we all know the American people want us to get accomplished before January 1 of 2011, but it does take a step in the right direction, helps to correct the mistake.

And yes, Congressman, I will go back to talk to Arnold Schwarzenegger and say, damn it, we have got to change our regulation so we can produce this algae in California so you don't get all the jobs from this great technology breakthrough.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 4168) 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, as amended.

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include any extraneous material in the Congressional Record.

Madam Speaker, Americans across the Nation are increasingly interested in the contribution that clean, homegrown fuels can make to our environment, economic development, and energy security. Additionally, I hear from many of my constituents that they believe Federal policy should move toward the development of biofuels that do not compete with food and otherwise operate on a feedstock and technology-neutral basis.

Today's legislation advances those goals by including algae as a qualified feedstock under the existing cellulosic biofuel credit. It is forward-looking legislation that recognizes the rapidly evolving nature of the advanced biofuels industry and the demonstrated potential of biofuels made from algae.

With that, I yield 5 minutes to my colleague Congressman Harry Teague of New Mexico and thank him for his extraordinary leadership on this bipartisan initiative.

Madam Speaker, I yield the gentleman another 2 minutes.

Madam Speaker, again, I want to thank the gentleman from New Mexico (Mr. Teague) for this initiative and just respond to a couple of the points raised by Mr. Camp, the ranking member of the Ways and Means Committee.

First, this piece of the energy bill was brought to the floor for two reasons. Number one, it has strong bipartisan support, as you heard. In addition to Mr. Bilbray, Mrs. Bono Mack and Mr. Dreier are cosponsors of the legislation.

And, secondly, this piece has no cost associated with it. And so those two aspects of the bill made it a good candidate for coming forward.

Secondly, given the other comments made by the gentleman with respect to the importance of moving forward on tax relief for small businesses and others around the country, I would just remind the gentleman that just last Thursday, on the floor of this House, we had a vote on a bill for small business lending to make sure that we increased credit to struggling small businesses around the country to make sure that they could make payroll, to make sure that they could take on the costs that they needed to expand. And part of that bill also contained significant tax relief for small businesses.

And it was ironic that many of our Republican colleagues were off- site at a small business venture, and then came back to the Hill to vote against that bill, a bill that the Republican Senator, retiring Republican Senator from Ohio, Senator Voinovich said was important to small businesses, and has said it is time to put aside politics and get this done.

I am very pleased that the result of the action taken in this House and the Senate was the President signed that bill yesterday so that small businesses can have access to credit and small businesses will get the tax relief they need.

We look forward in this body to being able to move on to make sure that middle class taxpayers, 98 percent of the American people, can get tax relief without being held hostage to the demand of the Senate Republican leader that we also provide budget-busting tax breaks to the folks at the very top, adding $700 billion to the deficit over the next 10 years, which is fiscally reckless and which, in the long term, will crimp economic and job growth.

Madam Speaker, I yield back the balance of my time.

Madam Speaker, I yield myself such time as I may consume.

(Mr. CAMP asked and was given permission to revise and extend his remarks.)

Madam Speaker, this bill seeks to expand the eligibility for certain current law tax benefits to algae-based fuels. Specifically, it would make algae or algae plant property eligible for both the cellulosic biofuel producer credit and for 50 percent bonus depreciation.

Regardless of whether Members believe these enhanced tax benefits for algae are appropriate, I think it's important to make a few observations about this bill, about the process under which we are considering it, and about the majority's decision to make this the centerpiece of its tax agenda during this, the final week of session. With respect to the bill itself, I would note that these same algae- related benefits, along with many other energy-related tax provisions, were included as a part of Chairman Levin's much broader green jobs discussion draft which had been expected to be formally considered by the Ways and Means Committee as a package. It's worth asking why only the algae-related provisions of that broader energy bill merit special consideration in stand-alone legislation, which is quite unusual for tax legislation from the committee, while the other provisions in that broader bill languish without so much as a committee markup.

If Ways and Means had actually held a mark-up on these algae-related provisions, Members could have fully explored whether it is advisable to expand the cellulosic biofuel producer credit, a credit that has proved controversial over the past several years.

Indeed, Members of both parties supported efforts to close a major potential loophole in that credit that could have permitted ``black liquor,'' an alternative fuel created as a byproduct of the paper- making process to qualify. Given such recent, high-profile alarm about potential abuse of the cellulosic biofuel producer credit, one would think that efforts to further expand the credit would be pursued only after consideration and a formal Ways and Means Committee mark-up under regular order. I think we do the best work when we proceed under regular order. But, instead, these provisions have been rushed directly to the floor.

But what is most disturbing about the tax debate we are having here today is what we are not debating. Rather than using this last week of session prior to the election to prevent a massive $3.8 trillion tax increase from taking effect at the end of the year, the majority's tax agenda for this final week, instead centers on a bill that provides tax benefits for algae. And let me repeat: instead of protecting American families, seniors and investors and small businesses from a job- killing, $3.8 trillion tax hike, we are here debating tax benefits for algae.

Madam Speaker, governing is about setting priorities, and the majority's tax agenda for the week shows just how out of line the majority's priorities are with those of the American people.

Madam Speaker, I yield such time as he may consume to the gentleman from California (Mr. Bilbray).

I yield back the balance of my time.

Madam Speaker, yesterday the House of Representatives passed H.R. 4168, the Algae-based Renewable Fuel Promotion Act of 2009, a bill I am pleased to support. I would like to thank Mr. Teague for his efforts to incentivize the production of environmentally-friendly biofuels. Mr. Teague worked across party lines to advance bipartisan legislation, and he deserves recognition for his leadership.

H.R. 4168 is a significant step forward, but I believe that additional refinements could help incentivize a broader array of environmentally friendly, economically viable biofuels. As we continue working to fine tune this legislation and related proposals, we should seek to ensure that federal tax policy treats all viable technologies fairly and equitably. I look forward to working with Mr. Teague, Mr. Bilbray, and other interested members to make sure that algal biofuels produced in Northern California fully benefit from this bill.

Developing new sources of cellulosic biofuels is beneficial to the environment, the economy, and national security. I thank the authors of H.R. 4168 for their efforts.