Ethanol bill introduced to phase out blenders’ tax credit

Senators Chuck Grassley and Kent Conrad introduced legislation on Wednesday that would modify subsidies for the ethanol industry instead of abruptly ending them. The bill would extend for two years the tax credit for ethanol makers, which is set to expire at the end of the year.

The measure would reduce the current 45-cents a gallon credit, more commonly known as the blenders’ credit or VEETC, to 20-cents per gallon in 2012 and to 15-cents per gallon in 2013. After 2013, the credit would be linked to the price of oil.

On Tuesday a bipartisan group of senators led by Dianne Feinstein and Tom Coburn, introduced a bill to immediately end the tax incentive.

The National Corn Growers Association (NCGA), the American Coalition for Ethanol (ACE), Growth Energy and the Renewable Fuels Association (RFA) support the legislation put forth by their Congressmen to transition the current ethanol tax policy.

The groups issued a joint statement saying that “this legislations would also improve upon current tax credits for the installation of blender pumps and ethanol fueling infrastructure. Additionally, the bill would extend tax credits for small ethanol producers as well as for advanced and cellulosic ethanol.”

RFA president and CEO Bob Dinneen talks about their support for the bill, saying it makes sense to protect ethanol in times when oil is lower, but when it is higher the marketplace already provides that incentive to use ethanol.

Bob Dinneen