(Photo by Sandia Labs via Creative Commons)

(Photo by Sandia Labs via Creative Commons)

Algae fuel producers hope tax bill helps legitimize industry

Algae biofuels could bloom into a $1.6 billion industry by 2015, according to a recent report by energy research firm SBI.

As pondscum fuels make the jump from test tube to tanker trucks, the growing industry is lobbying Congress to make sure it has a level playing field when it arrives at commercial scale.

The Algae Biomass Organization (ABO) is celebrating a small victory earlier this month, when the Senate Finance Committee approved a bill that would extend a cellulosic biofuel tax credit to include algae fuels.

“When you start putting language into tax code legislation, it really legitimizes the feedstock and it legitimizes the technology,” said Mary Rosenthal, ABO’s executive director.

Congress created the $1.01 per gallon production tax credit for cellulosic biofuels in 2005, when algae biofuels were still in a “very nascent stage,” Rosenthal said. The ABO has been lobbying Congress for the past few years to extend the credit to include algae.

“Our position is for legislation to be written so that it’s technology-neutral and feedstock-agnostic,” she said.

Algae’s exclusion from the original bill hasn’t hurt the algae industry yet because it hasn’t reached the stage of commercial-scale production. But researchers are getting closer. Rosenthal estimated that up to 200 companies would benefit from the expanded tax credit.

The Senate isn’t expected to take up the bill until it reconvenes next month, and with election-year politics in play, it’s anyone’s guess whether the full Senate or House will back the provision. Rosenthal said the White House supports it.

Even if it doesn’t become law this year, it’s passage in the Senate committee is still an important milestone that sends a positive signal to the financial world, Rosenthal said.

The SBI report, issued July 30, said algae biofuel investment is shifting from government grants to private investment, with major companies such as ExxonMobil, Chevron, BP, and Dow Chemical backing algae projects or research.

Thomas Byrne, CEO and president of Algaedyne in Preston, Minnesota, said the bill’s potential impact on investor attitude will probably outweigh the tax benefit for his company.

“If the government comes and shows its support long-term for it, it’s easier for us to get investors,” Byrne said. Algaedyne is on track to commercialize its product in about a year, he said.

Algaedyne is working closely with St. Cloud State University, which will host an ABO event today as part of the trade group’s “Summer of Algae” campaign.

3 thoughts on “Algae fuel producers hope tax bill helps legitimize industry

  1. This is a good sign for the US concerning support of algae biofuels. I hope Europe will also take a closer look at such options to grow a algae biotech industry…

  2. DOE BIOMASS PROGRAM AND ALGAE RESEARCHER GRNATS ARE BEING INVESTIGATED BY IG’s DEPT.

    Solydra story is opening a huge can of worms at the DOE GRANT AND LOAN GURANTEE LOAN PROGRAM. Its not just about the Solar loan guarantee program. Look at all the millions in fees collected by the DOE GRANT AND LOAN GUARANTEE PROGRAM with algae projects less than 20% completed. An audit needs to be done on all DOE Biomass Program Grants to algae researchers.

    The US taxpayer has spent over $2.5 billion dollars over the last 50 years on algae research. To date, nothing has been commercialized by any algae researcher. European Algae Researchers are next!

    The REAL question is: Does the DOE BIOMASS PROGRAM really want the US off of foreign oil or do they want to continue funding more grants for algae research to keep algae researchers employed at universities for another 50 years?

    In business, you are not given 50 years to research anything. The problem is in the Congressional Mandate that says the DOE can only use taxpayer monies on algae research, NOT algae production in the US. So far, algae research has not got the US off of foreign oil for the last 50 years!

    A Concerned Taxpayer