U.S. Senator Chuck Grassley today introduced bi-partisan legislation to reform the current Volumetric Ethanol Excise Tax Credit (VEETC) while still supporting the domestic ethanol industry.
Introducing the bill, Grassley said the Domestic Energy Promotion Act of 2011 would reduce the VEETC for a two year period before transitioning to a tax credit that would adjust based on the price of oil. “When crude oil is more than $90 a barrel, there will be no blenders’ credit. When crude oil is $50 and below, the blenders’ credit will be 30 cents,” Grassley said. “When oil prices are high, a natural incentive should exist in the market to drive ethanol use.”
The bill would also improve upon current tax credits for the installation of blender pumps and ethanol fueling infrastructure as well as extend tax credits for small ethanol producers, advanced and cellulosic ethanol.
The American Coalition for Ethanol (ACE), Growth Energy, the National Corn Growers Association (NCGA), and the Renewable Fuels Association (RFA) issued a joint statement praising the legislation:
“This legislation rightfully recognizes budget constraints by reforming the ethanol tax credit and significantly reducing its cost. 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.”
The bill contrasts sharply with legislation introduced yesterday by Sens. Tom Coburn (R-OK) and Dianne Feinstein (D-CA) that would eliminate the U.S. tax credit for ethanol and the tariff on ethanol imports, a move that, based on a new report, the industry contends would result in significantly higher gasoline prices.