Senate bill calls for 1-year extension of VEETC

By Holly Jessen | November 15, 2010
Posted Dec. 10, 2010

A U.S. Senate bill released the night of Dec. 9 includes key ethanol provisions. The "Reid Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010" extends the Volumetric Ethanol Excise Tax Credit, the Small Ethanol Producer Tax Credit and the Secondary Tariff on ethanol imports at their current levels through 2011. That breaks down to:

• 45 cents per gallon for VEETC, otherwise known as the blender's credit
• 10 cents per gallon for small producers
• 54 cents per gallon tariff on imported ethanol

Growth Energy issued a statement thanking President Barack Obama and "our Congressional champions" for recognizing the importance of creating jobs, improving the environment and strengthening national security by helping the U.S. be less dependent on foreign oil. "An extension of the credit will give the industry certainty, and Congress the opportunity, to move forward with reforms that will remove the infrastructure barriers to the fuels market, such as our Fueling Freedom plan, next year," said Growth Energy CEO Tom Buis.

The fact that ethanol provisions were in the bill shows that bipartisan support for ethanol remains strong in Washington, said Brian Jennings, executive vice president of the American Coalition for Ethanol. "Congress and the White House recognize ethanol reduces pump prices for all American motorists and creates domestic jobs," he said. "This one-year extension, if enacted, will provide the ethanol industry the opportunity we asked for to continue identifying the best long-term roadmap for the tax credit and overall ethanol policy reforms."

While the one-year extension wasn't as long as hoped, investing in the ethanol industry is a "proven method" to create jobs and economic opportunities in the U.S., said Bob Dinneen, president and CEO of the Renewable Fuels Association. "We urge Congress to move expeditiously to pass the legislation," he said. "Then, honest and good faith discussions about how we reform all energy tax policy-including for all oil and ethanol technologies-can occur."

The bill also includes an extension through 2011, retroactive for 2010, of the biodiesel tax incentive that expired at the end of last year. Sen. Chuck Grassley had fought "tooth and nail" to get ethanol and biodiesel provisions included in the bill, according to a statement. Ethanol and biodiesel are the most effective way to reduce imports of foreign oil and are the source of hundreds of thousands of U.S. jobs. "Ethanol has proven its value as a homegrown, renewable fuel and, in light of the hundreds of billions of dollars shipped abroad as a result of foreign oil dependence, ethanol is a relative bargain," Grassley said. "Biodiesel also builds energy independence. Our country spends more than $730 million a day on imported petroleum. Letting these items lapse would be a textbook case of penny-wise, pound-foolish legislating."

The next step is for the Senate and U.S. House of Representatives to vote on whether to advance the bill. The Senate is expected to vote for cloture on Dec. 13. With enough votes for cloture the Senate can limit consideration of a bill to 30 additional hours of debate.