US Senators agree to end ethanol subsidy, tariff
By Ben DuBose
Online Editor
Three US senators struck a deal on Thursday to repeal the $6 billion/year ethanol tax credit by the end of July, according to California Democrat Dianne Feinstein.
Feinstein crafted the deal with ethanol advocates Amy Klobuchar (Democrat-Minnesota) and John Thune (Republican-South Dakota).
For their part, Klobuchar and Thune won multi-year extensions of tax credits for cellulosic ethanol and for installing ethanol blender pumps at gas stations.
“After productive discussions with industry stakeholders over the past several weeks, we have reached a bipartisan solution that reduces the federal deficit and modifies current biofuels policy without pulling the rug out from under American renewable energy producers,” Thune said in a statement.
The agreement will reduce the federal deficit by $1.33 billion and invest $668 million in technologies that could help get biofuels to market, the lawmakers said.
The bill still needs to be passed by Congress.
In addition, the long-standing tariff on imported ethanol will be cut, assuming the deal is passed.
That could make sugarcane-based ethanol from sources such as Brazil competitive in the US market.
Details of the deal, according to Feinstein, are as follows:
· The 45-cent/gal ethanol blender credit (VEETC) will be repealed on July 31, saving $2 billion through the remainder of 2011.
· The 54-cent/gal tariff on ethanol imports will also expire on July 31.
· The tax credit for cellulosic biofuel production, currently set to expire at the end of 2012, will be extended for three years, with annual caps on gallons, and will be expanded to include promising fuels from algae. This will allow the non-corn advanced biofuels industry- the cleanest form of vehicle fuel -to emerge and develop.
· Reduced tax credits for alternative fueling infrastructure, including electricity charging stations and natural gas fueling stations, will be extended through 2014. The small-producer tax credit will expire at the end of 2012, with a reduction in the per-gallon credit.
For more information, full text of the letter sent to Senate leaders can be read here.
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