The Governors’ Biofuels Coalition is urging the Senate Finance and House Ways and Means Committees to include E85 in the definition of the Alternative Fuel Tax Credit and recommending that the provision be extended as part of the pending “Extenders Bill.”

In a letter sent to the leadership of both committees last week, the governors noted that E85 was considered an alternative fuel for federal energy policy purposes under the Energy Policy Act of 1992, but Congress wrote E85 out of the alternative fuels credit in order to avoid a double tax benefit with both the ethanol tax credit and the alternative fuels tax credit in effect. “Now that Congress has ended the ethanol credit, E85 could continue to benefit from the alternative fuels incentive,” they said.

The coalition, which is made up of the governors of 33 states, say that if E85 is not included in the alternative fuel tax credit, flex fuel vehicle drivers will pay as much as 38 cents more per gallon, significantly reducing the demand for the fuel. “On the other hand, extending the credit with E85 would only cost the Treasury approximately 0.8% of the full, expired ethanol subsidy. We believe this small, short-­‐term investment will make a significant difference in the success of petroleum fuel alternatives,” they added.

Defining E85 as an alternative fuel in the tax code is one of the main goals of the Coalition for E85, a group of retailers, producers, equipment manufacturers, automobile manufacturers and other supporters of E85 fuel.