Biodiesel and Ethanol

Legislation to End U.S. Ethanol Tax Credit Fails to Advance

June 14, 2011

WASHINGTON – Legislation aimed at halting U.S. ethanol subsidies failed to draw a key vote in the U.S. Senate on Tuesday, March 14, Reuters reported.

The proposal, introduced by Senator Tom Coburn (R-Okla.), sought to end the federal ethanol tax credit and the tariff on ethanol imports. But the measure failed to attract the 60 votes needed to move to a final vote in the Senate.

The decision to preserve the Volumetric Ethanol Tax Credit (VEETC) drew praise from the ethanol industry.

"The ethanol tax credit has been responsible for building America's most successful renewable fuel into 10 percent of our gasoline supply,” said POET CEO Jeff Broin in a released statement. “The decision of Congress to preserve this credit as a bridge to meaningful reform shows that America recognizes the importance of domestic, renewable fuels.”

The Renewable Fuels Association also released a statement commending “those Senators that voted to stop the political gamesmanship of Sen. Tom Coburn (R-OK) over federal investment in ethanol.”

Moreover, the RFA expressed support for the Ethanol Reform and Deficit Reduction Act introduced by senators John Thune (R-SD) and Amy Klobuchar (D-MN). Under this proposal, VEETC would transition to a variable tax incentive tied to the price of oil. Additionally, the bill would make available funds saved by the transformation of VEETC to expand ethanol fueling infrastructure by revising tax policies currently available for blender pumps and other ethanol-related infrastructure.

Specifically, the bill calls for 53,000 blender pumps to help achieve the goals of the Renewable Fuels Standard. The bill would also extend current tax incentives for the next generation of ethanol technologies using cellulosic and other feedstocks. If passed, the bill would take effect July 1 of this year. This bill is similar to legislation introduced by senators Chuck Grassley (R-IA), who is a cosponsor of this bill, and Kent Conrad (D-ND).

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