For tax periods beginning on or after January 1, 2009 and ending on or before December 31, 2017, the Act allows a gasoline tax exemption for that portion of petroleum-based fuel that consists of eligible cellulosic biofuel. St. 2008, c. 206, § 8; M.G.L. c. 64A, §1A. The exemption consists of a reduction in the tax per gallon of gasoline in proportion to the percentage of the fuel content consisting of eligible cellulosic biofuel.
II. Eligible Cellulosic Biofuel
A. Definitions and Determination of Eligible Cellulosic Biofuels
The determination of what fuels qualify as eligible cellulosic biofuels will be made by the Massachusetts Department of Energy Resources ("DOER") in consultation with the Massachusetts Department of Environmental Protection ("DEP") and the Massachusetts Executive Office of Energy and Environmental Affairs ("EEA"). M.G.L. c. 64A, §§ 1, 1A.
1. Definition of Cellulosic Biofuel
Generally, cellulosic biofuel is derived from cellulose, hemicellulose or lignin  derived from renewable biomass. M.G.L. c. 64A, § 1.
2. Definition of Eligible Cellulosic Biofuel
Under the Act, cellulosic biofuel eligible for the gasoline exemption is defined as a cellulosic biofuel that yields at least a 60 per cent reduction in lifecycle greenhouse gas emissions relative to average lifecycle greenhouse gas emissions for petroleum-based fuel sold in 2005, as determined by DOER in consultation with DEP and EEA.
3. Definition and Determination of Renewable Biomass
Under the Act, renewable biomass is defined as non-fossil fuel based material including:
- planted crops, crop residues, planted trees, tree residues from sustainably managed forests;
- waste materials including animal waste and animal by-products;
- organic portions of municipal solid waste, grease trap waste;
- construction and demolition debris; and
In addition, DOER may determine that other materials are qualified renewable biomass, in consultation with the DEP and EEA. M.G.L. c. 64A, §1.
B. Definitions and Determination of Lifecycle Greenhouse Gas Emissions
Under the Act, lifecycle greenhouse gas emissions are defined as:
- the aggregate quantity of greenhouse gas emissions, including direct emissions and significant indirect emissions such as significant emissions from and use changes, as determined by DOER in consultation with DEP and EEA,
- the full fuel cycle including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential. M.G.L. c. 64A, §1.
- Feedstock is further defined as raw material used to produce fuel.
III. Gasoline Tax Exemption Implementation
A. Application for Classification of Eligible Cellulosic Biofuel; Statement of Qualification
DOER is responsible for determining what cellulosic biofuels qualify as "eligible cellulosic biofuels." Manufacturers and wholesale distributors of cellulosic biofuel who seek to have their fuel classified as eligible cellulosic biofuel shall provide documentation satisfactory to DOER that such fuel yields at least a 60 per cent reduction in lifecycle greenhouse gas emissions per unit of delivered energy, in comparison to the petroleum-based fuel displaced. M.G.L. c. 64A, §1A.
If DOER finds that a cellulosic biofuel meets all the eligibility criteria of an eligible cellulosic biofuel, DOER will provide the manufacturer or wholesale distributor of such cellulosic biofuel with a statement of qualification, including any applicable restrictions and conditions. For further details and information regarding the classification of eligible cellulosic biofuels and the statement of qualification, see regulation 22 CMR 17.00, Advanced Biofuels Qualification and Minimum Content Requirements.
B. Determination of Reduction in Lifecycle Greenhouse Gas Emissions
Under the Act, DOER in consultation with DEP and EEA determines the percentage reduction in lifecycle greenhouse gas emissions relative to petroleum-based fuel achieved by particular supplies of cellulosic biofuel. In making such determination, DOER shall use information and best practices available from other sources, including other states, the federal government, foreign governments, academic research and private and non-private organizations. M.G.L. c. 64A, §1A.
1. Waste Feedstock; Exemption from Full Lifecycle Analysis
DOER may exempt fuel produced from waste feedstock from a full lifecycle greenhouse gas emissions analysis.  In considering such exemption, DOER will determine through an initial review that a waste feedstock will yield at least a 60 per cent lifecycle greenhouse gas reduction, is free of hazardous materials and hazardous waste, and meets any other conditions established by DOER. M.G.L. c. 64A, §1A.
2. Definition of Waste Feedstock
Waste feedstock is defined under the Act as previously used or discarded solid, liquid or contained gaseous material with heating value resulting from industrial, commercial or household food service activities that would otherwise be stored, treated, transferred or disposed. Waste feedstock includes, but is not limited to, waste vegetable oils, waste animal fats, substances derived from wastewater and the treatment of wastewater or grease trap waste. Waste feedstock shall not include petroleum-based waste or waste that otherwise meets the definition of hazardous waste, unless otherwise determined by DEP. M.G.L. c. 64A, §1.
C. Administration of Exemption
The production of cellulosic biofuels, worldwide and in the Commonwealth, is in early development and experimental stages. As described in this TIR and in regulation 225 CMR 17.00, DOER, in consultation with DEP and EEA, will determine which cellulosic biofuels are in commercial production, available in the Commonwealth, and eligible for the exemption. Upon receipt of a statement of qualification issued by DOER, and on a form to be provided by the Department of Revenue ("DOR"), a manufacturer or wholesale distributor may obtain the benefit of the exemption by applying for a refund of gasoline taxes paid on eligible cellulosic biofuels to the extent that an exemption is authorized by the Act. St. 2008, c. 206, § 4. At this time, DOR anticipates that such refund application will be filed with the monthly gasoline tax return.
/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue
February 24, 2009
Cellulose, hemicellulose and lignin are integral parts of the cell walls of plants.
Generally, under the Act, lifecycle greenhouse gas emissions are defined as the aggregate quantity of greenhouse gas emissions related to the full fuel lifecycle, including all stages of fuel and feedstock production. See Section II. B. above for a complete definition.