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AGRIBUSINESS: California Legislators Fight Over Ethanol

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Last week California Senator Dianne Feinstein introduced a bill in the Senate that would strip the corn ethanol mandate out of the Renewable Fuel Standard, but leave requirements for next generation biofuels intact.

Now California congressman Scott Peters has introduced a bill extending both the Second Generation Biofuel Producer Credit and the Special Allowance for Second Generation Biofuel Plant Property

The second generation biofuel producer tax credit applies against a producer's income tax liability, and can range between $0.41 to $1.01 per gallon of biofuel sold or used in the course of business.

If a plant produces only second generation biofuels, the Second Generation Biofuel Plant Depreciation Deduction Allowance could make it eligible for an additional tax deduction of up to 50 percent of the plant's adjusted value, but only in the first year.

Both credits expire on December 31 without Congressional intervention.

Representative Peters and Senator Feinstein both serve the state of California. While corn ethanol may mean less on the West Coast than it does in the Midwest, analysis from Environmental Entrepreneurs suggests California represents fully 18 advanced biofuel companies, compared to Iowa's ten.

"You've got Diane Feinstein who wants to rip the RFS apart." Iowa Renewable Fuels Association Executive Director Monte Shaw says.  He compares the conflict between California Legislators. "But her collegue Senator Barbara Boxer says 'No, over my dead chairmanship.'"

Shaw says corn ethanol has made it easier for advanced biofuels, such as cellulosic ethanol, to enter the fuel supply, following consumer adoption of corn-based ethanol.