Senate biofuels proposal gets support, but future uncertain
July 07, 2011 | 06:39 PM
By JERRY HAGSTROM
A bipartisan Senate agreement to end the ethanol tax break and the protective tariff but extend the tax credit for cellulosic biofuels production and infrastructure development won praise from producer groups today, but the agreement’s path to becoming law is unclear.
Sen. Dianne Feinstein, D-Calif., who last month convinced the Senate to pass a bill to end the ethanol tax credit by July 31, announced today that she, Sen. Amy Klobuchar, D-Minn., and Sen. John Thune, R-S.D., had reached agreement on the proposal.
Feinstein said the proposal would repeal the nearly $6-billion-a-year ethanol subsidy and end the tariff on foreign ethanol by the end of July. The agreement would reduce the federal deficit by $1.33 billion and invest $668 million in new technologies to reduce U.S. dependence on oil, Feinstein said.
The measure that earlier passed the Senate was part of a larger bill that failed, and the Obama administration has said it is opposed to ending the tax break without other provisions.
“This agreement is the best chance to repeal the ethanol subsidy, and it's the best chance to achieve real deficit reduction,” Feinstein said. “Absent this agreement, taxpayers stand to lose $1.33 billion — that was the bottom line for me. Every month that passes without repeal costs taxpayers $400 million. After years of fighting, there is simply no guarantee a full repeal would be signed into law.”
Feinstein said the agreement should be included in the deficit reduction package that will likely accompany a vote on raising the debt limit, and said she hopes President Obama will consider this approach. Revenue measures must originate in the House of Representatives, however, and there has been no similar legislation so far in that body.
An ethanol industry spokesman said, however, that Rep. Kristi Noem, R-S.D., is working on a bill and that the measure could become part of the debt bill package through complicated legislative maneuvering.
According to a letter that Feinstein, Klobuchar and Thune sent today to Senate Majority Leader Harry Reid, D-Nev. and Minority Leader Mitch McConnell, R-Ky., the measure would:
The National Corn Growers Association, the Renewable Fuels Association and Growth Energy, which represents ethanol plants, endorsed the plan, although RFA and Growth Energy expressed some concern about a cap on cellulosic tax credits.
In a statement, NCGA President Bart Schott thanked Thune and Klobucar “for the hard work and dedication they have put in to reaching a final deal,” but did not mention Feinstein.
“There are many positive components of this compromise that are important to the ethanol industry and rural America,” Schott said. “The final compromise reflects both the importance of the ethanol industry to achieve energy independence and the need for fiscal responsibility.
“At the same time, we call on Congress to level the playing field when it comes to energy policy,” Schott continued. “Unlike the oil and gas industries, ethanol has been proactively working to reform tax policy affecting the industry and secure a safety net while reducing the overall cost to the federal government.”
The Renewable Fuels Association and the Advanced Ethanol Council also praised the deal, but expressed concern about capping the cellulosic tax credit.
“We are pleased the agreement recognizes the importance of cellulosic ethanol by committing $305 million to this effort,” RFA President Bob Dinneen said in a news release. “However, we are concerned that capping cellulosic ethanol development sends the wrong signal and we will continue to work with the Congress and the Obama administration to address this anomaly in as this process continues.
“This is not the perfect compromise, but it does demonstrate the willingness of American ethanol producers and advocates to do their part to address budget concerns while not sacrificing the progress and evolution of the industry,” Dinneen continued. “I would challenge other industries to step up to the plate in the same manner. The status quo of American energy and tax policy simply won’t work.”
Brooke Coleman, executive director of the Advanced Ethanol Council, said the agreement “has enough of the right ingredients to move the conversation forward,” but that “the last-minute switch from a yearly credit to a gallon-based, capped credit adds artificial and unnecessary layers of uncertainty and risk for the financing community.”
Growth Energy CEO Tom Buis said, “This proposal will benefit consumers at the pump, reduce our dependence on foreign oil by investing in next-generation biofuels, and make a significant contribution to reducing our nation’s budget deficit." Buis did not mention the issue of the cap on the cellulosic tax credit, but later told reporters Growth Energy opposes it.
The Brazilian Sugarcane Industry Association, also known as UNICA, praised the proposal to end of the import tariff.
“Ending the 30-year-old tariff on imported ethanol will help lower fuel prices and provide Americans with greater access to clean and affordable renewable fuels like sugarcane ethanol,” said Leticia Phillips, UNICA’s Washington representative. “Allowing other alternative fuels like sugarcane ethanol to compete fairly in the U.S. will save Americans money, cut dependence on Middle East oil and improve the environment.”
A coalition of livestock and poultry groups said in a news release that they appreciated Feinstein’s work to end the tax break and the tariff, but that “the resulting compromise still provides new federal funds for corn-based ethanol, money that would be better spent reducing the deficit or encouraging the development of energy sources that do not compete with feed needs.” Groups signing the statement were the American Meat Institute, California Dairies, Inc., National Cattlemen's Beef Association, National Chicken Council, National Meat Association, National Pork Producers Council, and National Turkey Federation.
A bipartisan Senate agreement to end the ethanol tax break and the protective tariff but extend the tax credit for cellulosic biofuels production and infrastructure development won praise from producer groups today, but the agreement’s path to becoming law is unclear.
Sen. Dianne Feinstein, D-Calif., who last month convinced the Senate to pass a bill to end the ethanol tax credit by July 31, announced today that she, Sen. Amy Klobuchar, D-Minn., and Sen. John Thune, R-S.D., had reached agreement on the proposal.
Feinstein said the proposal would repeal the nearly $6-billion-a-year ethanol subsidy and end the tariff on foreign ethanol by the end of July. The agreement would reduce the federal deficit by $1.33 billion and invest $668 million in new technologies to reduce U.S. dependence on oil, Feinstein said.
The measure that earlier passed the Senate was part of a larger bill that failed, and the Obama administration has said it is opposed to ending the tax break without other provisions.
“This agreement is the best chance to repeal the ethanol subsidy, and it's the best chance to achieve real deficit reduction,” Feinstein said. “Absent this agreement, taxpayers stand to lose $1.33 billion — that was the bottom line for me. Every month that passes without repeal costs taxpayers $400 million. After years of fighting, there is simply no guarantee a full repeal would be signed into law.”
Feinstein said the agreement should be included in the deficit reduction package that will likely accompany a vote on raising the debt limit, and said she hopes President Obama will consider this approach. Revenue measures must originate in the House of Representatives, however, and there has been no similar legislation so far in that body.
An ethanol industry spokesman said, however, that Rep. Kristi Noem, R-S.D., is working on a bill and that the measure could become part of the debt bill package through complicated legislative maneuvering.
According to a letter that Feinstein, Klobuchar and Thune sent today to Senate Majority Leader Harry Reid, D-Nev. and Minority Leader Mitch McConnell, R-Ky., the measure would:
- Repeal the 45-cent-per-gallon ethanol blender credit (VEETC) on July 31, saving $2 billion through the remainder of 2011.
- Allow the 54-cent-per-gallon tariff on ethanol imports to expire on July 31.
- Extend the tax credit for cellulosic biofuel production, currently set to expire at the end of 2012, for three years, with annual caps on gallons, and expand it to include promising fuels from algae.
- Reduce tax credits for alternative fueling infrastructure, including electricity charging stations and natural gas fueling stations, but extend them through 2014.
- Allow the small-producer tax credit to expire at the end of 2012, with a reduction in the per-gallon credit.
The National Corn Growers Association, the Renewable Fuels Association and Growth Energy, which represents ethanol plants, endorsed the plan, although RFA and Growth Energy expressed some concern about a cap on cellulosic tax credits.
In a statement, NCGA President Bart Schott thanked Thune and Klobucar “for the hard work and dedication they have put in to reaching a final deal,” but did not mention Feinstein.
“There are many positive components of this compromise that are important to the ethanol industry and rural America,” Schott said. “The final compromise reflects both the importance of the ethanol industry to achieve energy independence and the need for fiscal responsibility.
“At the same time, we call on Congress to level the playing field when it comes to energy policy,” Schott continued. “Unlike the oil and gas industries, ethanol has been proactively working to reform tax policy affecting the industry and secure a safety net while reducing the overall cost to the federal government.”
The Renewable Fuels Association and the Advanced Ethanol Council also praised the deal, but expressed concern about capping the cellulosic tax credit.
“We are pleased the agreement recognizes the importance of cellulosic ethanol by committing $305 million to this effort,” RFA President Bob Dinneen said in a news release. “However, we are concerned that capping cellulosic ethanol development sends the wrong signal and we will continue to work with the Congress and the Obama administration to address this anomaly in as this process continues.
“This is not the perfect compromise, but it does demonstrate the willingness of American ethanol producers and advocates to do their part to address budget concerns while not sacrificing the progress and evolution of the industry,” Dinneen continued. “I would challenge other industries to step up to the plate in the same manner. The status quo of American energy and tax policy simply won’t work.”
Brooke Coleman, executive director of the Advanced Ethanol Council, said the agreement “has enough of the right ingredients to move the conversation forward,” but that “the last-minute switch from a yearly credit to a gallon-based, capped credit adds artificial and unnecessary layers of uncertainty and risk for the financing community.”
Growth Energy CEO Tom Buis said, “This proposal will benefit consumers at the pump, reduce our dependence on foreign oil by investing in next-generation biofuels, and make a significant contribution to reducing our nation’s budget deficit." Buis did not mention the issue of the cap on the cellulosic tax credit, but later told reporters Growth Energy opposes it.
The Brazilian Sugarcane Industry Association, also known as UNICA, praised the proposal to end of the import tariff.
“Ending the 30-year-old tariff on imported ethanol will help lower fuel prices and provide Americans with greater access to clean and affordable renewable fuels like sugarcane ethanol,” said Leticia Phillips, UNICA’s Washington representative. “Allowing other alternative fuels like sugarcane ethanol to compete fairly in the U.S. will save Americans money, cut dependence on Middle East oil and improve the environment.”
A coalition of livestock and poultry groups said in a news release that they appreciated Feinstein’s work to end the tax break and the tariff, but that “the resulting compromise still provides new federal funds for corn-based ethanol, money that would be better spent reducing the deficit or encouraging the development of energy sources that do not compete with feed needs.” Groups signing the statement were the American Meat Institute, California Dairies, Inc., National Cattlemen's Beef Association, National Chicken Council, National Meat Association, National Pork Producers Council, and National Turkey Federation.
