April 28, 2012

Florida energy bill becomes law, includes biofuel tax exemptions

New energy legislation in the state of Florida became law April 14 despite Florida Gov. Rick Scott’s failure to sign the bill. The legislation, HB 7117, contains several measures aimed to encourage the development and expansion of the renewable energy sector within the state, including biofuels production and distribution. The bill also addresses policies and restrictions for growing certain strains of algae and cyanobacteria.

The bill specifically addresses biodiesel, ethanol and renewable fuel, which is defined as a fuel produced from biomass that is used to displace fossil transportation fuels. Under the legislation, a sales tax exemption is established for materials used in the distribution of B10-B100, E10-E100 and other renewables. 

According to a copy of the bill published by the state legislature, this includes fueling infrastructure, transportation and storage materials. A limit of $1 million per year on a statewide basis is set on the tax exemption. The state’s Department of Agriculture and Consumer Services is tasked with ensuring the $1 million cap is not surpassed. Bill language also specifies that approval of the tax exemptions will be made on a first-come, first-serve basis, and that only complete applications will be considered. The department is also directed to publish the amount of sales tax funds remaining on its website on a regular basis. The tax exemption is scheduled to expire on July 1, 2016.

The legislation also establishes an investment tax credit related to biofuels production. Under the bill, the credit can apply to up to 75 percent of all capital costs, operation and maintenance costs, and research and development costs that are incurred between July 1, 2012, and June 30, 2016. The credit cannot exceed $1 million per fiscal year for each taxpayer. A limit of $10 million is made per fiscal year for all tax payers. The credit can be claimed for activities related to the investment in production, storage and distribution of B10-B100, E10-E100 and other renewable fuel within the state. This includes costs related to construction, installation and equipment.

In addition, the legislation included provisions related to the cultivation of some algae species. Under the legislation, a personal may not cultivate a nonnative plant, algae, or blue-green algae—including genetically engineered plants, algae and blue-green algae—in plantings greater in size than two contiguous acres, except under a special permit. According to the text of the legislation, a permit is not required to cultivate plants that, based on experience or research data, do not pose the risk of becoming an invasive species. Plants commonly grown in the state for the purpose of human food, commercial feed, feedstock, or forage are not covered by the provision. Additional exemptions could be made to the permitting requirements based on consultations with the Institute of Food and Agricultural Sciences at the University of Florida.

The bill also directs the Florida Department of Agriculture and Consumer Services to conduct a comprehensive statewide forest inventory analysis and study in order to identify where available biomass sources are located, determine the availability of biomass resources, and ensure forest sustainability. The results of the study are to be presented to the state House of Representatives and governor by July 1, 2013.

In an letter issued to Florida Secretary of State Ken Detzner, Scott addressed his reasoning for electing to allow the legislation to become law under Article III of the Florida Constitution rather than signing it into law.

“While I support many of the provisions of CS/CS/HB 7117, I am concerned whether the taxpayers of Florida will receive a return on the targeted tax credits in the bill,” Scott said in the letter. “In deference to the support for those tax credits voiced by Florida Commissioner of Agriculture Adam Putnam and the Legislators who have worked on this legislation, CS/CS/HB 7117 will become law without my signature. I look forward to reviewing the analysis of returns to the taxpayers as a result of these tax credits. In considering this analysis, it is my goal to ensure that any investment on behalf of Florida taxpayers in renewable energy would afford them the kind of return they would expect of their tax dollars. Absent clear documentation that the proposed tax credits have produced a sufficient return or provided significant cost savings for the state’s taxpayers, I will request their repeal.”

A full copy of the bill can be downloaded from the Florida House of Representatives website.


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