H.R. 8137: To amend the Internal Revenue Code of 1986 to establish tax credits for the production of, and investment in, certain renewable materials.

This bill, known as H.R. 8137, proposes changes to the Internal Revenue Code to introduce tax credits aimed at promoting the production and investment in renewable materials. Below is an overview of the key provisions of the bill.

1. Renewable Materials Production Credit

The bill establishes a tax credit for producing certain renewable materials. Key points include:

• The credit amounts to 10 cents for each pound of qualified renewable material produced by a taxpayer at a certified facility.
• These materials must be sold to an unrelated entity or used in the taxpayer's business.

Definitions

• Qualified Renewable Material: Refers to biobased products resulting from biological, thermal, or chemical processes using biomass, excluding materials that:
• Can be used as vehicle fuels or for generating heat/electricity.
• Are suitable as food or feed.
• Are derived from biomass not significantly produced within the U.S.
• Renewable Material Production Facility: A facility located in the U.S. that produces qualified renewable materials.
• Credit Period: The tax credit can be claimed for a period of up to 10 years based on when the facility was placed in service or modified to produce these materials.

2. Renewable Materials Investment Credit

Alongside the production credit, the bill introduces an investment credit. Key features include:

• The investment credit allows taxpayers to claim 30% of their qualified investment in facilities that produce renewable materials.
• Qualified Investment: This refers to the basis of property placed in service for the production of qualified renewable materials.
• The term "qualified facility" mirrors the definition within the production credit framework.

Coordination and Transfers

The bill includes provisions for:

• Coordination between the renewable materials credits and existing tax credits related to clean fuels and rehabilitation.
• The ability to transfer these credits, allowing taxpayers to sell them to others under certain rules, providing flexibility in how businesses manage their tax liabilities.

Implementation and Effective Date

The Secretary of the Treasury, in collaboration with the Secretary of Agriculture, will establish the necessary regulations for these credits within 180 days of the bill's enactment. The tax credits will be effective for qualified renewable materials produced or property placed in service after the legislation is enacted.

Relevant Companies

• BIO - Companies that specialize in biobased materials may see increased business due to the benefits of the production credit.
• DOW - Manufacturers in renewable materials may benefit from expanded production capabilities and investment credits.