Draft bill reduces VEETC to 1 year, 36 cents

By Holly Jessen | July 15, 2010
Posted July 28, 2010

The good news for the ethanol industry is that the draft version of an energy jobs bill coming out of the House of Representatives Committee on Ways and Means includes an extension of the Volumetric Ethanol Excise Tax Incentive. As expected, however, the bill has been scaled back to a one-year extension at 36 cents per gallon. It also extends the 54-cent tariff on imported ethanol for one year. The proposal is estimated to cost taxpayers $3.7 billion over 10 years.

The Domestic Manufacturing and Energy Jobs Act of 2010 would also extend the $1 per gallon biodiesel tax incentive. Other clean energy highlights of the bill are $6.5 billion in tax credits for advanced energy equipment manufacturing facilities and tax incentives for natural gas and electric/hybrid vehicles. "With the U.S. government as a full, active and effective partner, the private sector can expand our green manufacturing capacity," said committee Chairman Sander M. Levin, D-Mich., "ensuring that these jobs and products will be created in the U.S., competing globally and protecting our environment. The governments of other countries are racing ahead to dominate in this area."

Reps. Earl Pomeroy, D-N.D., and John Shimkus, R-Ill., first introduced a proposal in the House to extend VEETC for five years for the full 46 cents per gallon. They also hoped to tack on three years to the Cellulosic Ethanol Production Tax Credit, which expires at the end of 2012 and was not included in the current draft form. Although Pomeroy was quoted in the press saying that the one-year, 36-cent extension was a start, he is disappointed in the reductions. "Let make it clear," he told EPM, "I want to hit the mark as close to my bill as possible."

Not getting the biodiesel tax incentive extended this year has had a negative impact on that industry, Pomeroy said. And, if the same thing happens to the ethanol tax incentives, it would be bad for the ethanol industry as well. "The tax credit is a bridge to a future where renewable fuels standards create the market without requiring the tax credit drawing on the federal treasury," he said. "However, we aren't there yet."