House, Senate pass $900B COVID-19 relief package, tax extenders

The U.S. House of Representatives and U.S. Senate each voted to approve a $900 billion COVID-19 relief package on Monday night. The legislation, which includes ag relief that could benefit biofuel producers, is expected to be signed by President Trump.

The nearly 5,600-page package includes a wide variety of COVID-19 relief and funding measures, including $11.2 billion in agriculture relief. The legislation gives the USDA discretion provide support to producers of advanced biofuel, biomass-based diesel, cellulosic biofuel, conventional biofuel or renewable fuels that experienced market losses due to the COVID-19 pandemic. While current Agriculture Secretary Sonny Perdue has not allowed previous COVID-19 ag relief funds to provide relief to biofuel producers, incoming nominee Tom Vilsack is seen as more likely provide aid to the biofuel industry.

The legislation also provides for direct payments of up to $600 per person and $600 per child for most individuals and families, allows for a second round of Paycheck Protection Program loans, and provides an extension of unemployment benefits. In addition, it includes extensions of a variety of tax credits, including a one-year extension of the second-generation biofuel producer tax credit and two-year extension of the Section 45Q credit for carbon dioxide sequestration.

The American Coalition for Ethanol has spoken out in support of the relief package’s ag provisions. “Securing relief for ethanol producers suffering historic economic losses from the coronavirus pandemic has been our most urgent priority in 2020,” said Brian Jennings, CEO of ACE. “While we have been urging Congress to include specific authority requiring USDA to make relief payments to biofuel producers, we are nevertheless grateful this package gives USDA the discretion to provide economic assistance to our industry.

“Congress gave USDA flexibility to provide relief for biofuel producers in the last stimulus package, but USDA declined to exercise it,” he continued. “That is why job one in 2021 will be to work with incoming USDA Secretary Vilsack, upon his confirmation in the U.S. Senate, to get assistance to the industry in rapid fashion.

“We long sought to create momentum in Congress for the fuel and fuel feedstock reimbursement programs proposed earlier this year by Senators Grassley and Klobuchar, and Congressman Peterson, which would have made direct assistance certain, but we anticipate Secretary Vilsack will be receptive to working with us on relief payments. Given the fact oil companies received relief from the Trump administration outside of Congress, we expect the Biden administration to step up and help biofuel producers.

“Ethanol producers have acted as an economic bridge for U.S. farmers when they purchased corn before the extent of the pandemic was known,” Jennings added. “Ethanol plants have also played a crucial role in fighting COVID-19 by producing a higher grade of alcohol for hand sanitizer and disinfectants, as well as capturing the CO2 needed to make the dry ice which has recently helped distribute vaccines to combat the coronavirus. In the first week of December, consumption of both gasoline and ethanol fell to their lowest points since May, according to data from the Energy Information Administration. Gasoline and ethanol consumption will likely be down from pre-pandemic levels for some time and the decrease in ethanol demand has caused plants to idle or permanently close across rural communities. These plants cannot continue the multifaceted work they do shuttered — we urge USDA to recognize this and help keep their doors open.”

Growth Energy also applauded passage of the aid package. “We’re grateful to Congress for stepping up and preventing needless uncertainty from holding back the rural recovery,” said Emily Skor, CEO of Growth Energy. “In 2020, ethanol production is down about 13 percent compared to the previous year, and 2021 is also projecting to be lower than 2019 levels. Ensuring stability is imperative as we head into the new year, and we urge Secretary Perdue to move quickly on providing relief to the biofuels industry.

“We are also glad to see long-term investment in innovation that helps protect our climate, our health, and our economy through the extension of several key biofuels tax credits,” she continued. “Getting these updates signed into law will jumpstart growth in these innovative technologies at a time when revitalizing rural communities has never been more important.”

The Renewable Fuels Association has spoken out in support of the bill. “Today’s passage of this landmark legislation is great news for America’s ethanol producers, who have struggled through the most difficult and trying year in the industry’s history,” said Geoff Cooper, president and CEO of the RFA. “More than half of the ethanol industry shut down during the extraordinary demand collapse in the spring, and producers across the country still have not fully recovered from that market shock. The pandemic has cost the industry nearly $4 billion in lost revenue to date, with losses expected to continue well into 2021. The legislation passed today provides a ray of hope for the industry and provides decisive direction to the Secretary regarding the eligibility of renewable fuel producers to receive assistance from USDA.”

“While the industry would prefer multi-year certainty for key tax provisions, we are pleased to see these important credits extended for another year,” Cooper said. “These measures are critical to the future of the renewable fuels industry. They help stimulate the commercialization of new feedstocks and fuels, while at the same time encouraging the build-out of the infrastructure needed to distribute low-carbon renewable fuels more broadly across the nation.”