Examine VEETC Impact, Extend Blends Now

By Mike Bryan | August 27, 2010
The issues currently on the table for review by Congress are critically important to the future of the domestic ethanol industry. The weeks and months ahead could prove to be a dramatic turning point in the history of ethanol.

Some of the major decisions include whether to:
4Extend the present Volumetric Ethanol Tax Credit or terminate it over time and possibly introduce other options.

4Increase the blend levels from 10 percent to 15 percent or an interim step of 12 percent.

4Eliminate or continue the tariff on imported Brazilian ethanol.

These are, indeed, game changing decisions that will either secure the future of ethanol or call its future into question. It's no secret that there is division within the ethanol industry on some of these issues. Unfortunately, divisiveness at this critical time is the worst of all possible scenarios.

On the issue of whether to extend the current excise tax credits, I believe we need time to make sure that all the various alternatives have been thoroughly vetted before calling for it to be rescinded. We need time to come together and discuss the options and ramifications such actions may have on both current and future producers. We need to examine the impact that these policy changes would have on established plants that are carrying low or no debt versus plants that are newer and are still carrying a high debt load. If this means extending the current VEETC program for a shorter than desired period, to allow for these discussions to take place, then so be it.

Increasing the blend levels to 15 percent is virtually a no-brainer. The reason the 10 percent blend level was set in the first place had little to do with technical issues, and much more to do with the ease of calculating the blend ratio. This, of course, was before inline blending was common place. Going to a 12 percent blend may seem like a good interim step, but may end up being a level that we stay at for years to come. There simply is no technical reason why we could not go directly to 15 percent, in fact, there seems little reason why we couldn't go to a 20 percent blend, but that battle can be saved for another day. Even if we have to hold tight for a little longer in order to get to a full 15 percent, in my opinion, that's what we should do.

Before any decision on the reduction or lifting of tariffs for imported ethanol takes place, the legislative and tax related future of the domestic industry needs to be thoroughly sorted out. To even consider doing so prior to these matters being settled would be premature at best and at its worst, could be disastrous to the ethanol industry.

These are challenging times, times that will set the course for the domestic ethanol industry for years to come. Together, as a united coalition, we have built an industry that has withstood the test of time and together, in that same united spirit, we now need to come together to build our future.

That's the way I see it.