VEETC waiting game continues

By Holly Jessen | October 14, 2010
The ethanol industry has been playing the waiting game for months, with very little news about the Volumetric Ethanol Excise Tax Credit. Set to expire at the end of the year, VEETC, or as it is commonly known, the blender's credit, has yet to be renewed.

That's a scary prospect for many in the ethanol industry, especially considering what has happened to the biodiesel industry after its tax incentive expired at the end of 2009 and attempts to get it extended have failed repeatedly. Many biodiesel plants have been idled or slowed production, and many jobs were lost.

The Renewable Fuels Association told EPM the organization is continuing to work with lawmakers in an effort to get the extension passed before it expires at the end of the year. "We remain hopeful that an extension of VEETC will occur in the lame duck session of Congress in November," said Matt Hartwig, communications director. "We are also realistic that it's an uphill battle."

On the other hand, Growth Energy would like to see a change in the way VEETC funds are passed out. The group's Fueling Freedom Plan proposes to get ethanol the same market access as Big Oil enjoys. "That is why we have proposed our Fueling Freedom Plan which will eliminate the barriers to the transportation fuels market by building out ethanol dispensing infrastructure in the form of 200,000 blender pumps, a federal loan guarantee for construction of ethanol pipelines and production of flex fuel vehicles," said Stephanie Dreyer, public affairs associate.

Since the plan was introduced, Growth Energy has been reaching out to energy, commerce and national security groups, Dreyer said. If Congress does have an energy debate, the group wants the Fueling Freedom Plan to be part of that discussion. In addition, in early September, Growth Energy held its first legislative conference, at which 90 of its members met with members of Congress. "According to many of our members, our message was well-received on the Hill," she said.

Still, as it has said since summer, Growth Energy does support a multi-year extension of VEETC. The group feels strongly that its plan is the best way to go, but if that isn't implemented it doesn't want to see the tax credit lapse. "Because the VEETC plays such a crucial role in our energy independence, Growth Energy believes that the tax credit will pass in some form by the end of the year," Dreyer told EPM.
RFA heard the Obama administration's view on VEETC at its Sept. 30 annual meeting. Heather Zichal, the president's deputy assistant for energy and climate change policy, spoke to the group about the administration's commitment to clean energy, and specifically, ethanol. "As you know, we support the extension of the ethanol tax credit and recognize how important the industry is," she said. President Obama says the U.S. has a choice when it comes to energy policyaction or inaction, she pointed out. It's a choice between the old ways or the new and between leading the global race or falling behind other countries. She also pointed out that about 95 percent of the fuel powering cars, trucks, planes and trains comes from oil. More than half of that oil comes from overseas, accounting for more than one-third of the carbon emissions in the U.S. "With statistics like that, there's no question that biofuels will continue to be a critical component of our energy policyand along the way, it's going to reduce our dependence on foreign oil, create jobs, protect the environment and invigorate rural economies," she said.

She also brought up the subject of tax credit reform. Zichal said the White House does want to work with the ethanol industry and Congress on options for reform. "We want to make sure that it's guided by a recognition that the existing program does workwe're certainly not looking to upend a program that works, as occasionally happens in Washington," she said. "We want to make sure that we are all on the same page as we move forward and have these discussions."

Another high-level individual that has been vocal in supporting the extension of VEETC is Secretary of Agriculture Tom Vilsack. This spring he told EPM he was in favor of long-term extensions of the ethanol financial incentives. Without incentives such as the blender's credit and the Cellulosic Biofuel Producer Tax Credit, it will be difficult to get investors interested, he said. Since then he's expressed the same support repeatedly in various news reports.

Along with VEETC, the small producers tax incentive and the tariff on imported ethanol are set to expire at the end of the year. The cellulosic tax incentive expires at the end of 2012.