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An Act To Encourage the Production of Liquid Biofuels
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 36 MRSA §5219-X, sub-§2,  as enacted by PL 2003, c. 698, §1, is amended to read:
 
2. Credit allowed.   A taxpayer engaged in the production of biofuels in the State who has received certification under subsection 4 is allowed a credit against the tax imposed by this Part on income derived during the taxable year from the production of biofuel in the amount of 5¢15¢ per gallon of liquid biofuel or gaseous biofuel with a BTU equivalent to that of one gallon of gasoline that replaces the use of petroleum or liquid fuels derived from other fossil carbon sources. In blends with petroleum or other nonbiofuels, the credit is allowed only on the portion of that blend that the biofuel constitutes. Biofuel for which the credit is allowed must meet state and federal regulatory requirements applicable to the nature and intended use of the fuel produced.
Sec. 2. 36 MRSA §5219-DD  is enacted to read:
§ 5219-DD.  Biofuel production conversion credit
 
1.  Definitions.     As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
 
A.  "Wood mass-derived biofuel" means biofuel as defined under section 5219-X, subsection 1 that is derived from forest products.
 
B.  "Wood mass production facility" means a facility that uses forest products in the process of production and manufacturing of other products.
 
2.  Credit allowed.     A taxpayer is allowed a credit equal to 25% of the capital costs of converting an existing wood mass production facility to a facility for the production of wood mass-derived biofuel that is certified by the Commissioner of Environmental Protection as eligible for the credit under section 5219-X.
 
3.  Limitations.     A person entitled to a credit under this section for any taxable year may carry over and apply the portion of any unused credits for any one or more of the next succeeding 4 taxable years. The credit allowed, including carry-overs, may not reduce the tax otherwise due under this Part to less than zero.
Sec. 3. Application. Those sections of this Act that amend the Maine Revised Statutes, Title 36, section 5219-X, subsection 2 and enact Title 36, section 5219-DD apply to tax years beginning on or after January 1, 2009.
Sec. 4. Appropriations and allocations. The following appropriations and allocations are made.
 
ECONOMIC AND COMMUNITY DEVELOPMENT, DEPARTMENT OF
 
Office of Innovation
 
Initiative: Provides funds to the Maine Technology Institute to fund research into cost-effective technology to convert forest resources to biofuels.

GENERAL FUND	2009-10	2010-11	
All Other	$500,000	$0	
 	  	  	
GENERAL FUND TOTAL	$500,000	$0	

SUMMARY
This bill increases the income tax credit for the production of biofuels from 5¢ per gallon to 15¢ per gallon, enacts an income tax credit equal to 25% of the capital costs of converting an existing wood mass production facility to a facility for the production of wood mass-derived biofuel and appropriates $500,000 in fiscal year 2009-10 for the Maine Technology Institute to fund research into cost-effective technology to convert forest resources to biofuels.