Pascrell Introduces Legislation to Promote American Manufacturing
By Mel Fabrikant Thursday, September 12, 2013, 04:01 PM EDT
Bipartisan bill levels the playing field for domestic companies producing renewable, biological based chemicals
Washington, DC – In his continued effort to promote American manufacturing, U.S. Rep. Bill Pascrell, Jr. (D-NJ) today introduced the Qualifying Renewable Chemical Production Tax Credit Act of 2013, H.R. 3084, bipartisan legislation which provides renewable chemical producers access to a production tax credit when they create American jobs and reduce our dependence on foreign oil. The legislation, co-sponsored by Rep. Steve Stockman (R-TX), will provide a targeted tax credit for U.S. producers of qualifying renewable chemicals, helping them to commercialize homegrown technology and build new biorefineries in the United States.
"By leveling the playing field for the biochemical sector, we are strengthening America's role as the leader in developing this groundbreaking industry," said Rep. Pascrell. "Creating good jobs right here in America is the best way to bolster our economy, and this legislation does just that while reducing our reliance on foreign oil and ensuring a more sustainable future."
Renewable chemical companies are a part of a new and growing industry that uses renewable 'feedstocks' to replace oil when making various chemicals. The chemicals that they produce are used in many everyday products, including car parts, stain resistant rugs and computer screens.
Given that this technology is new, the cost of their product is higher than those manufactured using traditional, petroleum based inputs. Due to the lack of U.S. federal support, many companies are being bought by foreign entities, who then export the jobs producing these chemicals.
The Qualifying Renewable Chemical Production Tax Credit Act of 2013 creates a targeted, short term tax credit for production of eligible renewable chemicals, with priority given to companies that create jobs in the United States.
This legislation would also have a significant impact in reducing America's dependence on foreign oil. Currently, 10% of each barrel of imported petroleum goes to making chemicals and products, rather than transportation fuels. Substitution of renewable feedstock for petroleum is not only more environmentally sustainable, but would increase the petroleum supply available for fuel products and help lower gas prices.
In the 112th Congress, Rep. Pascrell introduced a bipartisan bill, H.R. 4953, with Reps. Brian Bilbray and Richard Neal that proposed a production tax credit to accelerate commercialization of the renewable chemicals and biobased products industry. A companion bill, S. 1267, was introduced in the Senate by Sen. Debbie Stabenow (D-MI).
Original co-sponsors of the Qualifying Renewable Chemical Production Tax Credit Act of 2013 include Reps. Allyson Schwartz (D-PA), Linda Sanchez (D-CA) and Richard Neal (D-MA).
A summary of the legislation follows.
Qualifying Renewable Chemical Production Tax Credit Act of 2013
1. Job creation / revitalization of U.S. manufacturing regions
o Building the biobased economy will generate additional jobs in manufacturing, agricultural production and forestry, transportation and distribution, and construction.
o Today, nearly 2,000 companies in the United States either manufacture or distribute nearly 20,000 biobased products.
o The bio-based products industry creates a minimum of 100,000 jobs annually, according to an Iowa State CIRAS voluntary survey.
• This represents tremendous growth since a 2007 U.S. International Trade Commission study counted 5,700 U.S. workers at 159 facilities.
• A 2010 report from BIO projected that the renewable chemical industry has created or saved 40,000 jobs.
o Biorefineries that process sustainable biomass can produce 700,000 jobs and $88.5 billion in economic activity, primarily in rural areas where economic development is greatly needed, according to USDA projections.
2. Oil displacement / energy independence
o Because biotechnology enables solutions to a broader range of energy challenges, building the biobased economy is the key to reducing reliance on foreign oil.
o While less than 20 percent of the volume of each barrel of oil, the chemicals and other products represent about half the value.
o Renewable chemicals and biobased products can already compete on cost with fossil fuels.
3. Balance of trade
o The biobased economy has the potential to generate upwards of $230 billion to the global economy by 2020, according to the World Economic Forum. The U.S. can capture its share of that value by leveraging its biotechnology innovation.
o The biobased economy includes a projected $89 billion for biomass production and $30 billion for biomass trading.
o Before 2003, the traditional U.S. chemicals and plastics industry was a driver of export earnings for the United States; today, the United States carries an overall deficit.
o The global sustainable chemical industry will grow to $1 trillion dollars by 2020, according to the OECD; this creates a significant opportunity for job growth and export growth
• The current global sustainable chemical industry is only about 7% of its projected future size.
• If U.S. companies can capture 19% of this new $1 trillion market, the U.S. will create about 237,000 direct U.S. jobs in the sustainable chemicals sector, while shifting the balance of trade in the chemical sector to a trade surplus.
4. Ensuring U.S. innovation is deployed at home
o The United States can use its leadership in biotechnology, agricultural productivity and manufacturing innovation to build a biobased economy.
o The emergence of renewable chemicals and biobased products represents a historic opportunity to reverse job losses in the U.S. chemicals and plastics sectors while simultaneously improving energy security and the environment.
o The U.S. faces the challenge of reducing its costly dependence on foreign oil and competing in a $2.4 trillion worldwide clean energy market and a $3.5 trillion global chemicals market.
o Production tax credits are currently offered to incumbent fossil energy industries. As such, the renewable chemicals and biobased allowance are critical to attract capital.
o It will be much more difficult for U.S. companies and home grown technologies to develop projects in the United States if other nations offer attractive investment incentives.
o A 2007 US International Trade Commission study found that the EU, Canada, Brazil, China and Japan had competitive tax incentives for biobased products, while U.S. incentives for biofuels did not extend to renewable chemicals.