Legislation has been introduced that would reduce the Volumetric Ethanol Excise Tax Credit - or VEETC - for a two year period; then transition to a credit that is adjusted based on the price of oil. The bill would also improve existing credits for blender pump installation and ethanol fueling infrastructure.
It's called the Domestic Energy Promotion Act of 2011 and it has the support of the American Coalition for Ethanol, Growth Energy, National Corn Growers Association and Renewable Fuels Association. Senator Chuck Grassley, R-Iowa, a long-time ethanol supporter and co-sponsor of the legislation, explains why this idea has been put forward.
"It's always been in the back of our mind, if you've been for ethanol, that an infant industry ought to be able to live on its own," Grassley said. "It's also a recognition that within the ethanol industry there's been a feeling that we ought to get the market place working better and that this is one way to advance the dissemination of ethanol and maybe encourage flex-fuel vehicles, so it's a reflection of what thinking has been going on within the ethanol industry."
Grassley says it's a logical step forward. Brooke Coleman, Executive Director of the Advanced Ethanol Council, agrees and praised Grassley for introducing the legislation.
"The proposal strikes the right balance between providing savings to the taxpayer, developing the infrastructure necessary to incorporate growing volumes of ethanol from all feedstocks, and extending the incentives that are critical to the development of next generation ethanol fuels," Coleman said. "The tax incentives for advanced and cellulosic ethanol contained in Senator Grassley's proposal will help our industry put steel in the ground and create jobs and economic activity that cannot be exported. They are the type of tax incentives already provided for the fossil fuels industry, and extending these incentives helps begin the process of leveling an uneven playing field with gasoline and other petroleum fuels."
Other legislation exists that would eliminate the tax credit for ethanol and the tariff on ethanol imports. That was introduced by Senator Tom Coburn, R-Okla., and Senator Dianne Feinstein, D-Calif.