What’s next?

Reform on the table after 1-year extension of VEETC
By Holly Jessen | January 17, 2011

At the 11th hour, U.S. Congress approved a 45-cent-per-gallon, one-year extension of the Volumetric Ethanol Excise Tax Credit, commonly known as the blenders’ credit. That’s great news for the ethanol industry in the short term, but what’s going to happen at the end of the year, when it expires again?
Groups such as the Renewable Fuels Association and Growth Energy started gearing up for that fight even as the 2010 extension was signed into law by President Obama. The next step for 2011 and beyond, both groups say, is reform.

RFA has long maintained that extending VEETC for a year provides the industry the time it needs to start the discussion on reforming ethanol tax policy. That discussion must include reform to the tax credits and subsidies provided to the oil industry, however, stresses Bob Dinneen, president and CEO of RFA. “American ethanol producers are committed to responsible reform of ethanol tax policy, but urge Congress to take this opportunity to reform all energy tax policy,” he says. “Oil producers and other fossil fuel industries still receive hundreds of billions of dollars in taxpayer support despite decades of subsidies and high profits.”

Growth Energy has emphasized reform in terms of its Fueling Freedom plan, which it first unveiled this summer. Ethanol needs an open market to complete, the group says. “Our plan to reform the market would encourage the installation of blender pumps and make every auto sold in the U.S. a flex-fuel vehicle, ultimately giving American consumers the power to choose their fuel at the pump, instead of having that choice made for them,” says Tom Buis, CEO of Growth Energy.

During meetings this fall, RFA, Growth Energy, the National Corn Growers Association and the American Coalition for Ethanol reportedly agreed on a draft long-term policy road map, which closely mirrors the Fueling Freedom plan. The next question is whether those ideas can transform from words on paper into reality.