Production Tax Credit for Open- and Closed-Loop Biomass

Renewable electricity production tax credits (PTC) provide a per-kilowatt-hour (kWh) tax credit for electricity generated from certain renewable sources for the first 10 years of a project under Section 45 of the tax code. Open-loop biomass refers to facilities that produce electricity by burning organic waste that is a byproduct of agriculture, construction or timber-related activities, such as livestock waste and tree trimmings. Closed-loop biomass refers to facilities that produce electricity from plants grown specifically as a feedstock for electricity production, such as switchgrass or fast-growing trees. For 2021, the closed-loop biomass PTC is 2.5 cents per kWh with the open-loop biomass PTC at 1.3 cents per kWh.