1. Government Incentives Joel Schumacher Montana State University

2. Biofuels Policy Current federal policy for biofuels: A mix of policies Farm and Energy Policy comprise most of the biodiesel policy Other entities matter Dept. of Transportation Environmental Protection Agency Internal Revenue Service Department of Labor

3. Federal Policy Farm Policy: Biodiesel Related CCC program paid $1.43/gallon in 2004, $0.50 in 2005, and was discontinued in mid-2006 USDA Renewable Energy Systems and Energy Efficiency Improvement Program NRCS Conservation Innovation Grant Program USDA Value-Added Producer Grant Program

4. Federal Policy Farm Policy: Biodiesel Related USDA Renewable Energy Systems and Energy Efficiency Improvements Program Bio-Based Products Preferred Procurement Program Traditional Farm Policy: Crop insurance, ….

5. Federal Policy Energy Policy Biodiesel Blenders Tax Credit $1.00 per gallon for virgin oils $0.50 per gallon for recycled oils Volumetric Ethanol Excise Tax Credit $0.51 per gallon Small Producer Tax Credit $0.10 per gallon of Ethanol or Biodiesel Alternative Fuel Infrastructure Tax Credit

6. Federal Policy Energy Policy EPACT of 1992 Goal of replacing 30% of petroleum fuels with alternative fuels by 2010 Renewable Fuels Standard mandates an increasing amount of fuel be from renewable sources

7. Federal Policy Other Federal Programs Clean Cites Program (Dept. of Energy) Clean Fuels Program (Dept. of Trans.) Clean School Bus USA Program (EPA) Petroleum Violation Escrow Account

8. Montana Policy Production Incentives Tax Refund for Biodiesel Sold $0.02 per gallon to the distributor $0.01 per gallon to the retailer Biodiesel Production Incentive $0.10 per gallon of increased production for the first three years

9. Montana Policy Distribution and Infrastructure Incentives Oilseed Crushing Facility Tax Credit 15% of cost of depreciable property (up to $500,000) Biodiesel Production Facility Tax Credit 15% of the cost of depreciable Property Biodiesel Blending and Storage Tax Credit 15% of the cost of blending and storage equipment Maximum of $7,500 per retailer and $52,500 per distributor

10. Montana Policy Other Incentives State Road Tax Reduction 15% reduction in state road tax for “gasohol” Alternative Fuel Conversion Tax Credit Alternative Energy Revolving Loan Account Value-Added Loan Package E10 Fuel Mandate Effective when Montana ethanol production reaches 40 million gallons per year Growth Through Agriculture Program

11. Policy Summary The future of both state and federal policies toward renewable fuels are uncertain A continued overlap of energy policy, farm policy and environmental policy is likely

12. Questions