By Sara Wyant
© Copyright Agri-Pulse Communications, Inc
Washington, Dec. 9 –The tax agreement negotiated between congressional leaders and the White House contains an extension of the ethanol and biodiesel tax credits and an extension of the ethanol tariff at current rates, according to Sen. Chuck Grassley (R-IA). The Senate and House next will need to vote on the tax agreement to advance the provisions.
“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.”
Under the tax agreement, the ethanol tax credit – known as the volumetric ethanol excise tax credit, or VEETC, also known as the blenders’ credit – will continue at its current level of 45 cents through Dec. 31, 2011. The tariff on imported ethanol will continue at its current level of 54 cents.
“The United States already provides generous duty-free access to ethanol from Brazil and other countries imported under the Caribbean Basin Initiative, but the CBI cap has never once been fulfilled. In fact, in 2009, only 25% of it was even used by Brazil and other countries, and for this year, the figure is projected to be less than 1 percent,” Grassley said.
The current congressional majority allowed the tax credit for biodiesel production to expire at the end of 2009, causing the loss of nearly 23,000 jobs. The tax agreement would extend the biodiesel credit retroactively to cover all of 2010 and through the end of 2011.
“It’s tragic to lose nearly 23,000 jobs in this economy,” Grassley said. “We can’t risk a repeat performance with ethanol, where 112,000 jobs are at stake. Getting these tax provisions extended will boost jobs and investment in the alternative energy sector, exactly when the economy needs a real shot in the arm.”
The Renewable Fuels Association said the extension is a “common-sense” approach.
“Continuing to invest in our domestic ethanol industry is a proven method to create jobs and spur innovation and economic opportunity all across America,” said Renewable Fuels Association President and CEO Bob Dinneen. “While this legislation is not as long as we had hoped, it is a common sense approach that will ensure American ethanol production continues to evolve and new technologies commercialized. We urge Congress to move expeditiously to pass the legislation. Then, honest and good faith discussions about how we reform all energy tax policy – including for all oil and ethanol technologies – can occur.”
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