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HR 8137

To amend the Internal Revenue Code of 1986 to establish tax credits for the production of, and investment in, certain renewable materials.

119th Congress Introduced by Jim Baird and 2 co-sponsors

Creates two federal tax credits to spur domestic production and investment in biomass-derived renewable materials: a 10-cent per pound production credit and a 30% investment credit

Introduced in House
0
WeVote Research Nonpartisan
Bill Summary · HR 8137

Summary of HR 8137 (119th Congress) — Renewable Materials Production and Investment Credits

Notes: This bill aims to create federal tax credits to incentivize the production of and investment in certain renewable materials. It adds two new credits to the Internal Revenue Code: a production credit (Section 45BB) and an investment credit (Section 48F). Both credits are designed to support facilities in the United States that produce materials derived from biomass with biobased carbon content.

1) Purpose and Intent

  • Encourage domestic production of renewable materials derived from biomass.
  • Promote investment in facilities that convert biomass into qualified renewable materials using various conversion methods (biological, thermal, catalytic, chemical, or combinations).
  • Complement existing clean energy credits by focusing specifically on renewable materials rather than fuels or electricity.

2) Key Provisions and Changes

A. Renewable Materials Production Credit (Section 45BB)

  • Credit Type: A new nonrefundable production credit for qualified renewable materials produced at a qualifying facility.
  • Credit Amount: 10 cents per pound of qualified renewable material produced and sold to an unrelated party, or used by the taxpayer in its trade or business (for the year).
  • Definitions:
    • Qualified Renewable Material: The biobased carbon content portion of a product produced from biomass via various conversion processes. Excludes fuels for vehicles, heat/ electricity generation, foods, or feeds, and certain biomass sourced from outside the United States or coprocessing with non-biomass feedstocks.
    • Biobased Carbon Content Portion: Determined per ASTM D6866.
    • Biomass: As defined in Section 45K(c)(3), with an exclusion that qualified renewable material is not itself considered biomass for purposes of the Section 45K definition.
    • Renewable Material Production Facility: A facility producing qualified renewable material during a qualifying credit period and located in the United States or a U.S. possession.
    • Qualifying Credit Period: A 10-year period starting on the later of: facility placed in service, date of eligible modifications, or enactment date.
  • Special Rules:
    • Credit generally attributable to the seller/recipient, with an election to make it attributable to the purchaser (the first party in the supply chain that meets criteria).
    • Coordination: Facility cannot be the same as a facility claiming the Renewable Materials Investment Credit under Section 48F or any prior year.
    • Credit cap: $10,000,000 per facility per taxable year.
    • Regulation: Secretary to issue implementing regulations within 180 days.
  • Effective Date: Applies to qualified renewable material produced on or after enactment.

B. Renewable Materials Investment Credit (Section 48F)

  • Credit Type: A new investment credit (30% of qualified investment) for properties placed in service in a qualified facility that produce qualified renewable material.
  • Qualified Investment:
    • Basis of qualified property placed in service that is used in the production of qualified renewable material and is part of a qualified facility.
    • Qualified Property: Tangible personal or other tangible property (excluding building structure), used as an integral part of the facility, eligible for depreciation or amortization, and with the original use starting with the taxpayer.
    • Qualified Facility: As defined similarly to Section 45BB, excluding facilities that have already claimed the Section 45BB credit for the year or prior years.
    • Rehabilitation Expenditures: Excludes portions of basis funded by qualified rehabilitation expenditures (per Section 47(c)(2)).
  • Special Rules:
    • Progress expenditures rules analogous to pre-1990 rules apply.
    • Credit is reduced for tax-exempt bond financing, similar to Section 45(b)(3).
  • Coordination with Other Credits:
    • The 48F credit interacts with the Section 45Z clean fuel production credit, including a provision that the 46/48F interaction is recognized for coordination purposes.
  • Transferability: The renewable materials investment credit is made transferable under amended Sections 6418(f)(1) and related cross-references.
  • Conforming Amendments: Adds 48F to the list of credits, updates related definitions, and ties into the general business credit (Section 38) to allow the 48F credit as part of the overall credit framework.
  • Regulations: Regulations or guidance to implement the credit within 180 days of enactment.
  • Effective Date: Applies to property placed in service after enactment.

C. Administrative and Miscellaneous

  • The bill references amendments to align with the Clean Fuel Production Credit (Section 45Z) and general business credit (Section 38).
  • Adds new table entries and formats the Internal Revenue Code to accommodate these credits.
  • If implemented, tax forms and IRS guidance would reflect the new credits and their interaction with other incentives.

3) Who Would Be Affected

  • Domestic producers of qualified renewable materials, particularly biomass-based materials with biobased carbon content.
  • Taxpayers that invest in qualified facilities or property used to produce renewable materials (including manufacturers and related businesses).
  • Investors and financiers of qualified facilities, due to the credits being transferable (allowed to be sold or transferred to another taxpayer under 6418 rules).
  • Taxpayers in industries using biomass conversions for non-fuel products (chemicals, bioplastics, biobased materials) that meet the defined criteria.
  • Regions with biomass resources, given the domestic emphasis and location requirements.

4) Procedural and Timeline Highlights

  • Regulations or guidance must be issued within 180 days of enactment.
  • Qualifying credit period spans 10 years starting on the later of facility in-service date, modifications in-service date, or enactment date.
  • Coordination provisions ensure no double-dipping with existing 48F and other credits; credits cannot be claimed for the same facility under multiple credits for the same activity.
  • The 10-year cap per facility and the $10 million per-year credit limit set stage-based incentives.
  • Effective date: credits apply to property placed in service after enactment.

Overall Assessment

HR 8137 introduces two complementary federal tax incentives aimed at boosting the production and capital investment in renewable materials derived from biomass. The production credit (45BB) targets ongoing output and sales/use of qualified renewable materials, with a per-pound rate and a 10-year credit window. The investment credit (48F) incentivizes the upfront investment in qualified property and facilities, with a 30% credit rate and transferability to encourage financing. The bill includes defined exclusions to ensure the credits support non-fuel, non-food, domestically sourced renewable materials and coordinates with existing clean-fuel and general business credits. Regulations are required within 180 days, and the program emphasizes domestic production and supply-chain origin.

Compiled from official sources — confirm details with the bill’s official record.

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