Senators push VEETC extension

By Luke Geiver | April 15, 2010
Posted April 20, 2010

Almost a month after Reps. Earl Pomeroy, D-N.D., and John Shimkus, R-Ill., presented legislation to extend ethanol tax credits and the ethanol tariff, Sens. Kent Conrad, D-N.D., and Chuck Grassley, R-Iowa have proposed a Senate version of the ethanol tax credit extension. Like the House bill, Conrad and Grassley's companion bill to HR 4940, the "Renewable Fuels Reinvestment Act," proposes an extension of the credits through 2015. In a statement issued regarding the reasoning for the bill, Conrad noted the importance of providing an alternative to foreign oil, pushing economic growth in the U.S. and boosting rural economies.

"Our country is in serious danger because of skyrocketing energy costs," Conrad said. "This growing crisis demands urgent action. We must be committed to coming together in a bipartisan way to lessen our dependence on foreign oil, while aggressively pursuing alternative sources of energy such as biofuels."

In a statement of his own, Grassley pointed out the consequences associated without a renewal of the tax credits by citing the lapse of the biodiesel tax credit, which expired at the end of 2009. "We can't risk a repeat performance with ethanol, where 112,000 jobs are at stake," Grassley said.

Joined on the legislation by Sens. John Thune, R-S.D., Tim Johnson, D-S.D., Ben Nelson, D-Neb. and Mike Johanns, R-Neb., Grassley also said, "the U.S. already provides generous duty-free access to imported ethanol under the Caribbean Basin Initiative, but the CBI cap has never once been fulfilled. In fact, last year, only 25 percent of it was even used by Brazil and other countries."

The Renewable Fuels Association President Bob Dinneen said the leadership by Conrad, Grassley and the other co-sponsors of the bill shows a keen understanding of the importance for a domestic ethanol industry. "Tax incentives aiding the expansion of America's ethanol industry are sound public policies by any economic, environmental or energy measures," Dinneen said, adding, "Passage of their bill would ensure that the evolution of American ethanol technologies continues."

Citing the need for foreign oil independence and the economic impact of the extension, Growth Energy also commended the Senate bill. "Extending these measures will ensure job growth and economic development across the entire country," Tom Buis, CEO of Growth Energy said. "All while reducing our dependence on foreign oil and clearing our skies." Buis added, "We commend Senators Grassley and Conrad for recognizing the need for this vital extension. Extending the tariff and the tax credit will ensure a cleaner, more secure future for America."

The GREEN Jobs Act of 2010 will extend the current $.45 per gallon VEETC and the $.10 per gallon small ethanol producer's tax credit for five years, through the end of 2015. The bill will also extend the $1.01 per gallon Cellulosic Biofuel Producer Tax Credit for three years while also pushing the ethanol tariff further, through the end of 2015.

The end of the "blender's" credit and the ethanol tariffs is also something that would hurt consumers, according to Brian Jennings, executive vice president for the American Coalition for Ethanol. "The American people directly benefit from ethanol through the creation of hundreds of thousands of jobs and by saving money on a clean, renewable product at the pump," Jennings said. "American's deserve relief for their pocketbooks in these tough economic times, and there is no tax credit that gets to the consumer level more directly than the ethanol tax credit."

UNICA, The Brazilian Sugarcane Industry Association, also released their own comments on the legislation. "Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs," said Joel Velasco, UNICA's chief representative. "The same principal holds true for the renewable fuels market. Competition will create a race to the future and generate better options for American consumers."

Earlier in the month, Brazil dropped its tariff on imported ethanol until the end of 2011, and now hopes the U.S. will follow suit. UNICA also plans to petition the Brazilian government to permanently drop the tariff if the U.S. does the same.

NOTE: Additional information added from UNICA's response to the proposed legislation