Biomass/Biofuels

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General Information
Incentives
Useful Links

General Information
Biofuels are alternative fuels made from agricultural crops or their byproducts.  Oilseed crops can be crushed for their oil and converted into biodiesel whereas corn is mainly used for Ethanol production. 

Biomass is organic material such as wood, agricultural waste, and crop residues.  In Central Oregon much of the woody materials from juniper thinning are used to power boilers to generate heat.

Agricultural operations can use and produce both biomass and biofuels in many different methods.  Some producers are purchasing and manufacturing biodiesel for their farm equipment while others are selling oil to biodiesel manufacturers.  Producing and selling these materials can make you eligible for certain incentives.  Incentives are available for those who produce and/or collect the following products: oil seed crops, grain crops, virgin oil or alcohol, cooking oil, wastewater biosolids, woody and/or agricultural biomass, yard debris, municipally generated food waste, animal manure or rendering, and biodiesel

Permitting
Permit requirements for biofuel or bioenergy production vary depending on the type of project.  Generally, fuel and energy generation facilities on agricultural lands require a land use permit from your county planning department.

If you are interested in growing canola for biofuels, consult the Oregon Department of Agriculture to find out if you are in a rapeseed control area.

Incentives
Oregon farmers who grow crops that are processed into transportation fuel may be eligible for tax credits. The tax credit is a dollar-for dollar credit against State of Oregon income taxes owed. Below is a summary of three incentive credits currently offered by the State of Oregon.

Oregon Income Tax Credits for Biomass Producers and Collectors
House Bill 2210 provides a package of measures to encourage development, distribution and use of agricultural and forest material for biofuel. Producers or collectors of Oregon sourced biomass or energy crops, used for energy production in Oregon, are eligible for tax credit incentives based upon volume of production or collection. Producers of neat ethanol or pure bio-oils, from Oregon feedstock, are also eligible for tax credits.

The credits provided for under HB 2210 are:

• Oil seed crops, $0.05/lb.
• Grain crops, including but not limited to wheat, barley and triticale, $0.90/bushel. Grains do not include corn; wheat is eligible after January 1, 2009.
• Virgin oil or alcohol from Oregon-based feedstock, $0.10/gallon.
• Used cooking oil or waste grease, $0.10/gallon.
• Wastewater biosolids, $10.00/wet ton.
• Woody biomass collected from nursery, orchard, agricultural, forest or rangeland property in Oregon, $10.00/green ton.
• Grass, straw or other vegetative biomass from agricultural crops, $10.00/green ton.
• Yard debris and municipally generated food waste, $5.00/wet ton.
• Animal manure or rendering offal, $5.00/wet ton.

Business Energy Tax Credit Program
Biofuel Producers and Biofuel Feedstock Producers and Collectors
Capital costs of equipment necessary to plant, grow, harvest, collect, store, produce, crush or concentrate and transport biofuel crops, feedstocks or materials are eligible for the credit. The tax credit is a dollar-for-dollar credit against State of Oregon income taxes owed. These projects are considered to be renewable energy projects and are therefore eligible for a 50 percent credit based on eligible capital costs with a maximum of $20 million per project per year. The applicant must apply before a financial commitment is made to the project. If the project is over $20,000 in eligible costs the credit is taken over a five-year period; if under the credit may be claimed in one year. A pass-through option allows the project owner to transfer the credit to a third party in exchange for a one-time payment of 33.5 percent for projects more than $20,000 and 43.5 percent for projects $20,000 and less.

Biofuels Crop Production Credit
Oregon farmers who grow crops specifically for biofuel production may be eligible for a tax credit based on eligible capital cost. New, used or existing equipment that is dedicated to production of biofuel crops could be eligible. For equipment used only a portion of the time towards production of biofuel crops the eligible costs will be prorated. The current appraised value of existing equipment, re-dedicated to produce a biofuel crop may be eligible for the tax credit. Under Oregon statute, you must provide proof of the capital cost or expense to be eligible for tax credits. The remaining appraised value of equipment, newly dedicated to biofuel crop production, can be transferred to a limited liability corporation or transferred from one farm business entity to another for the purpose of defining and proving eligible cost under Oregon tax law.

All remaining appraised value of the equipment may be eligible for the tax credit if the equipment is fully dedicated to biofuel crop production. The cost would have to be pro-rated if the equipment is expected to be used only a portion of the time for biofuel crops. Additionally the capital cost of seed and materials necessary for production during the growth season may be eligible.  (Limited time only and will not be offered after December 31, 2008.)

Useful links
Northwest Biofuels Association

Reference

Renewable Energy and Energy Efficiency:  Opportunities for Oregon’s Agricultural Producers.  Oregon Department of Agriculture