Midwestern Senators rally behind new effort to transform ethanol subsidies

By Sara Wyant
© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, May 5 - Under fire from critics who want to eliminate ethanol subsidies altogether, a bipartisan group of Midwestern Senators introduced the Domestic Energy Promotion Act of 2011. The bill would reduce the current 45-cent per gallon blender's credit, also known as the volumetric ethanol excise tax credit, or VEETC, to 20 cents a gallon next year and to 15 cents a gallon in 2013.

 

From 2013 to 2016, the credit would be based on a variable rate, based on the price of oil, ranging from 30 cents a gallon if oil averaged $50 a barrel and zeroing out when oil is $90 a barrel. It also would extend, through 2016, the alternative fuel refueling property credit; the cellulosic producers' tax credit; and the special depreciation allowance for cellulosic biofuel plant property.

The bill, introduced by Senators Chuck Grassley, R-Iowa and Kent Conrad, D-N.D, also has the original co-sponsorship of Senators Mike Johanns, R-Neb., Ben Nelson, D-Neb., Amy Klobuchar, D-Minn,  Al Franken, D-Minn, Tom Harkin of Iowa, and Tim Johnson, D-S.D.

"Affordable energy is a major concern for Americans, and Congress needs to keep energy security on the front burner.  Now more than ever, it's time to ramp up production of traditional energy sources here at home and to expand alternative fuels and renewable energy sources.  We've seen what ethanol can do, and the sky is the limit as we move to the next generation and cellulosic ethanol,” said Grassley.

"Our nation is spending more than $850 million every day on imported energy," Conrad said.  "Imagine what it would be like if we spent that money on energy from the Midwest instead of the Middle East?  We need to do more to boost domestic energy production, especially from alternative fuels such as ethanol."

The American Coalition for Ethanol (ACE), Growth Energy, the National Corn Growers Association (NCGA), and the Renewable Fuels Association (RFA) praised the legislation.

“This legislation rightfully recognizes budget constraints by reforming the ethanol tax credit and significantly reducing its cost,” they wrote in a statement. “Additionally, this bill would improve current tax credits for the installation of blender pumps offering higher level ethanol blends and provide Americans more choice when they fill up. Critically, this legislation would also ensure progress made to commercialize advanced ethanol technologies utilizing new feedstocks such as grasses and municipal solid waste is accelerated. We thank these senators for their leadership in introducing this bill and look forward to working with them through the legislative process that ultimately ends with the President's signature.”

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