Governor Signs Massachusetts Advanced Biofuels Bill

Governor Deval Patrick signed legislation today that would make Massachusetts the first state in the nation to exempt cellulosic ethanol from state gasoline taxes. The bill also requires diesel fuel and oil heat distributors to start adding biodiesel or renewable diesel to their fuel blends in 2010.

“The world is waiting for the next generation of clean, renewable alternatives to petroleum fuels, and Massachusetts is poised to deliver,” said Patrick.

The legislation exempts cellulosic ethanol from the state’s gasoline excise tax based on the percentage of renewable fuel used. For example, the gasoline tax for a blend of E10 (10 percent cellulosic ethanol/90 percent petroleum) would be reduced by about 2.3 cents. The bill also requires that by July, 2010, all diesel transportation fuels and distillate heating oil blends contain 2 percent biodiesel, or other qualifying renewable diesel. It then increases the requirement by 1 percent a year to a cap in 2013, when all diesel transport and heating oil blends will contain 5 percent of the renewable fuel by volume.

“With all-time high crude oil prices, this new law solidifies our position as a leading producer of fuel alternatives and firmly sets Massachusetts on the transitional course from fossil fuels to clean-energy products,” said Senate President Therese Murray (D-Plymouth).

“The Legislature has taken another meaningful step toward comprehensive energy reform; one that will preserve our environment, ultimately drive down consumer energy costs and bolster the growing clean energy sector in Massachusetts. This bold piece of legislation represents the hard work of many diverse stakeholders and the future of energy consumption in the Commonwealth," said House Speaker Salvatore F. DiMasi (D-Boston).

Last November, Patrick, Senate President Murray, Speaker DiMasi and Congressman Bill Delahunt unveiled a legislative package to accelerate the emerging advanced biofuels industry in Massachusetts.

“New England is addicted to oil. In Massachusetts alone, we spend more than $10 billion a year on petroleum, and it is very clear where most of those dollars are going,” said Congressman Delahunt (D-10th MA), noting that Saudi Arabia alone made $160 billion in 2005 exporting oil. “I applaud the Massachusetts Legislature and Governor for taking steps that will both reduce our dependence on foreign oil and help boost the emerging clean energy industry in the Commonwealth.”

Significant environmental and consumer protection safeguards were built into the legislation. For example, all qualifying fuels must achieve at least a 50 percent reduction of lifecycle greenhouse gas emissions (GHG) over petroleum. Moreover, all fuels will be required to undergo a full lifecycle analysis, which includes “significant indirect emissions” and land use changes. Also, the bill allows state regulators to delay or scale back the blending requirement if there are issues associated with supply or cost.

“Biofuels can significantly reduce the state’s petroleum deficit, thereby increasing employment and tax revenue, hedging against disruptions in world oil markets, and reducing air pollution and GHG emissions,” said Andrew Schuyler, director of the Northeast Biofuels Collaborative. “The bill will address some of the challenges associated with the heavily consolidated fuel markets that fail to provide consumers with any choice. We expect that the legislation will jumpstart the advanced biofuels industry here in Massachusetts and across the region.”

Massachusetts is home to a cluster of cellulosic ethanol companies that are members of the Northeast Biofuels Collaborative, some of which are world leaders in the development of advanced biofuels.

“Advanced biofuels development promises to be a major 21st century global industry,” said Carlos Riva, CEO of Verenium Corporation. “This action positions Massachusetts to emerge as a clear policy leader in this arena, and sets an excellent model for other states to follow.”

“Passage of this historic legislation will help fast track cellulosic biofuels for relief at the pump, and demonstrates the political and technological leadership in Massachusetts toward weening us from foreign oil for energy security, climate change and clean energy job growth,” said Corinne Young, Director of Government Affairs at BioEnergy International.

“We are excited that Massachusetts has further demonstrated its leadership in the development of renewable fuels,” said Bruce Jamerson, CEO of Mascoma Corporation. “The legislation will have significant benefits to our industry growth and our ability to bring environmentally friendly, affordable cellulosic ethanol to market quickly and efficiently.”

“We congratulate the Legislature and Governor for their leadership in passing this landmark biofuels bill. The nation is desperate for such leadership, and we’re proud it’s coming from Massachusetts,” said Lee Harrison, Berkshire Biodiesel Executive Vice President. “By establishing a market for biodiesel, this bill creates an entire new industry in the Commonwealth, one that promises new jobs and investment along with profound environmental, health, and national security benefits.”

“We applaud the Massachusetts' leadership and think the legislation will pave the way for other states to follow in developing legislation that reduces our reliance on foreign oil and improves our environment,” said R. Michael Raab, President of Agrivida. “It's an important step forward that we hope other states will adopt in the near future.”

According to Brooke Coleman, Executive Director of the New Fuels Alliance who advised the state’s Advanced Biofuels Task Force, the bill will encourage further investment in these and other technologies and make Massachusetts one of the national leaders in the commercialization of advanced biofuels.

“We are uniquely positioned in Massachusetts to draw upon our financial and intellectual capital to move us beyond petroleum,” Coleman said. “This bill will provide biofuel producers, researchers and investors with a critical degree of market certainty that will alleviate some of the risk inherent in a petroleum-dominated fuel sector.”.”

The bill also transitions the gasoline tax exemption and the biodiesel blending requirement into a Low Carbon Fuel Standard (LCFS), should such a system be adopted in Massachusetts or by the federal government. Additionally, the bill establishes a joint legislative commission to study regional transit opportunities for biofuels and the feasibility of production tax credits for advanced biofuel producers or farmers who grow sustainable feedstocks.