LANSING – Acting unanimously, the Michigan House Agriculture Committee on Wednesday gave its approval to Senate-passed bills providing incentives to bio-fuel development and use, including tax incentives to service stations installing equipment for E-85 and other vehicle fuels made with biomass material.

Most discussion centered on SB 1196 , with the Department of Treasury and some Democratic members of the committee favoring a grant program over the bill’s provisions for tax credits for stations installing the alternative fuel equipment. Other bills approved by the committee, SB 1121 and SB 1127 , provide incentives to grow cellulosic crops that can be used for fuel.

Larry Steckelberg said the tax credit, particularly if paired with a cap on how much the state will provide in incentives in any given year, is an inefficient way of reaching the result the state wants. A grant could also speed the process, he noted, because it could be provided to help with the initial expenses rather than having businesses incur the costs and then taking the credit on a subsequent year’s tax form.

Other advantages with grants, he said, are that the state could target the aid to areas around the state, to make sure alternative fuel stations are not concentrated in limited geographic areas and it avoids potential delays in printing the Michigan Business Tax forms.

Backers of the credits approach argued that they are a better mechanism to allow the marketplace to determine how many pumps to install around the state.

Agriculture Chair Rep. Jeff Mayes (D-Bay City) said he would continue conversations on disputed aspects of the bill, including extending the credits back two years to stations which have already installed the special fuel pumps.

The bill, which would have cost the state $1.5 million in 2008 and $3.5 million in 2009, was amended to cap credits at $1 million a year with any individual taxpayer allowed up to $20,000.

Stations would be able to claim a credit against the MBT of up to 30 percent of the cost of the pumps.

The committee also approved SB 1195 , which provides for a new program in the Michigan Strategic Fund to accelerate the transfer of technology developed by research universities to the private sector for commercialization, particularly those in the Bioeconomy arena.

Also approved by unanimous votes of the committee were:

SB 1121 providing a tax incentive for use of equipment needed to harvest grain and biomass intended for use in fuels (Treasury urged it be amended to identify specific machinery).

SB 1126 providing for the Michigan Strategic Fund to identify, publish and market an inventory of sites for renewable fuel plants.

SB 1130 establishing a special alternative fuels fund

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