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Algae Perspectives by Mary Rosenthal

The 2013 Playing Field Levels for Algae

January 11, 2013
AlgaeIndustryMagazine.com

What a great start to 2013! On the third day of the New Year ABO achieved one of its long-standing and most important legislative goals when President Obama signed the “fiscal cliff” legislation.

As part of that legislation, algae became a “qualified feedstock” under section 40 of the United States Code, meaning that algae-based fuels are now eligible for a $1.01 per gallon tax credit that previously only applied to cellulosic fuels.

The bill also includes language that extends a special depreciation allowance on biofuel plants that use algae. Now, facilities producing biofuel can expense 50 percent of their eligible capital costs in the first year for facilities placed in service before the end of 2013.

These changes level the playing field for algae-related technologies and will help foster more of the investments needed to accelerate the commercial production of algae-based fuels. If there is any doubt that a simple change like this can spur confidence, just look to the announcement, just days after the tax credit passed by Algae.Tec that the company will be raising $200 million on the European bond market to build algae fuel production facilities in Texas and Brazil.

Since ABO’s founding in 2008, achieving tax parity with other biofuels has been a key legislative priority for the organization. This new designation is the culmination of years of hard work, outreach and advocacy by ABO and our members as well as others in the algae industry. It is also a reflection of the increased enthusiasm for algae-based fuels among members of Congress and the Obama administration.

I believe the benefits of this tax credit go far beyond fuels.

Investors in algae will now be in a better position to reap returns from the often lower volume, but higher-value, algal co-products – from foods to specialty feeds to chemicals to cosmetics and pharmaceuticals.

Pharmaceutical powders with active carotenoids derived from algae, for example, can be valued at $300 to $3000/kg. Think of the boost to research a robust algae industry can bring; we’ll be able to see more breakthroughs such as those demonstrating how algae can be used to produce anti-cancer drugs with significantly lower production costs.

Other markets that will be keeping a sharp eye on the algae industry include those for plastics, chemicals, fertilizers and even some services like wastewater treatment and the mitigation of greenhouse gas emissions.

A big thanks goes to all those that made this first step of 2013 possible. It was a long-term effort by ABO members, industry advocates, and dedicated members of Congress and their staff.

We can’t take our foot off the gas, however. We must continue to make the case to a new and still very budget-conscious Congress about the benefits of investing in algae technology. We must work with the states that are going to be directly impacted by our industry’s ability to provide new economic development. We must showcase our victories and accomplishments across the ecosystem – from fuels, to food, to feed to disease.

The job is not done, but I’m energized and ready to roll in 2013. Looking forward to working with you to build on our success from 2012!

(excerpted from ABO’s Algae Insight)

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