ACE, NCGA, RFA praise ethanol legislation


Bipartisan negotiations behind the scenes have resulted in a legislative compromise in the Senate that reforms the existing Volumetric Ethanol Excise Tax Credit (VEETC) or the “blenders’ credit.”  The compromise would end a 45 cent VEETC on a gallon on July 31, invest over $1 billion in deficit reduction, and provide modest incentives for blender pumps, cellulosic biofuel, and small ethanol producers.

The agreement, reached between Senators Dianne Feinstein of California, Amy Klobuchar of Minnesota and John Thune of South Dakota, also calls for the tax of 54 cents a gallon on imported ethanol to expire at the end of the month.

The estimated 1.33 billion dollars in savings would be used to reduce the deficit, while about one-third of the savings, an estimated 668 million dollars, would be used to extend tax credits, such as credits for alternative-fueling infrastructure such as ethanol pipelines that some ethanol producers hope to build.

Not long after the decision was announced, the National Corn Growers, American Coalition for Ethanol and Renewable Fuels Association voiced their thanks and praises to the Senators for this proposed legislation.

Brian Jennings, Executive Vice President of the American Coalition for Ethanol, National Corn Growers Association President Bart Schott and Bob Dinneen, President and CEO of the Renewable Fuels Association (RFA) all said the legislation is a great move forward, despite its shortcomings.

Jennings said, “ACE is pleased with the three-year blender pump tax credit, a modest but important down-payment on consumer fuel choice.  We’ll work with marketers to take full advantage of the improved incentives to convert to blender pumps.  ACE is also grateful that the Small Ethanol Producer Tax Credit, which is crucial for many of our independent and farmer-owned members, was extended for one year.”

Each leader also thanked Senators Klobuchar and Thune for their hard work in composing this legislation concerning the compromises that were seemingly inevitable.

Schott said, “The final compromise reflects both the importance of the ethanol industry to achieve energy independence and the need for fiscal responsibility. The ethanol industry continues to have a positive impact on all parts of America, and we are committed to working with Congress in the future on steps that can move the ethanol industry and the nation’s economy forward.

“At the same time, we call on Congress to level the playing field when it comes to energy policy. Unlike the oil and gas industries, ethanol has been proactively working to reform tax policy affecting the industry and secure a safety net while reducing the overall cost to the federal government.”

Each leader still remained disappointed concerning some decisions in the legislation, but acknowledged that not every gain would be possible to move forward with it.

Dineen said, “This is not the perfect compromise, but it does demonstrate the willingness of American ethanol producers and advocates doing their part to address budget concerns while not sacrificing the progress and evolution of the industry. I would challenge other industries to step up to the plate in the same manner. The status quo of American energy and tax policy simply won’t work.”

Jennings says, “We are disappointed that the variable incentive, a key and low-cost safety net for independent and farmer-owned plants facing market volatility that Senators Klobuchar and Thune included in their original legislation, did not make it into this compromise.  And, we know that there is much more work to be done with regards to deployment of Flexible Fuel Vehicles and supporting the sale of midlevel ethanol blends and E85.  Finally, unnecessary limitations placed on the cellulosic biofuel incentives need to be fixed in order to meaningfully help spur the commercialization of these promising fuels.  ACE will continue working with the Administration and Congress on these unfinished priorities.”

“Regardless of how some will try to characterize eliminating VEETC, doing so will raise gas taxes on ethanol blended fuel.  Moreover, it is an outrage that some elected officials continue to protect billions in subsidies for the oil industry, including a very recent vote against cutting $4 billion in Big Oil tax subsidies.  It is time for Congress to repeal oil tax subsidies.”

Sources: ACE, NCGA, RFA