CFDC Urges More Dialogue on Biofuels Tax Incentives

Joanna Schroeder

Recent Department of Commerce figures are showing that despite an effort for America to curb its imports of foreign oil, they are actually increasing. This at the cost of billions of dollars flowing to foreign companies, governments and citizens. For this reason, Clean Fuels Development Coalition (CFDC) is urging Congress to be mindful of the significant contributions from ethanol. They also applauded Growth Energy’s call for new thinking about ethanol tax incentives and the need to improve market access.

Douglas A. Durante, CFDC Executive Director, in a call with reporters this week, said that disjointed policies regarding tax incentives and market initiatives needed to be reconciled if first generation ethanol is going to lead to 2nd and 3rd generation biofuels. Durante noted that the incentives to blend have certainly been effective but with the E10 blend wall facing the industry, such an incentive has little or no value when there is nowhere to put the product.

To support his claims, Durante cited a report released by the Congressional Budget Office last week and commissioned by U.S. Senate Energy Committee Chairman Jeff Bingaman (D-MN). The report suggested the current lower tax rate for biofuels actually might not be the most effective method of incenting new production.

Senator Bingaman acknowledged the important role of ethanol, saying, “Corn-based ethanol plays an important role in our nation’s transportation fuel mix. Thanks in part to corn-based ethanol, U.S. oil import dependence peaked in 2007, and is expected to decline further until 2035.”

Durante on behalf of CFDC said that in order to continue to stop the flow of consumer dollars overseas and to create wealth here at home, biofuels like ethanol need help in getting to market and the federal government can provide that help. Reallocating the incentive to refueling infrastructure, they say, at a time when there simply is no room in the pool for ethanol makes much more sense, as well as taking a good look at getting the tax credits to the actual producers of the ethanol.

“The Growth Energy message is a good one, and we encourage all ethanol stakeholders to be part of the effort to move forward rather than seeking to run in place. We have millions upon millions of flex-fuel vehicles capable of consuming high-level ethanol blends, with millions more coming to market. We simply need to be able to refuel these vehicles and gradually change the dynamic in terms of giving consumers choice–both in their fuel and in the vehicles they choose,” said Durante.

However, despite CFDC’s support of Growth Energy’s Fueling Freedom Plan, Durante rejected calls by some in Congress and other opponents to eliminate ethanol incentives entirely, and said that CFDC officials have been stressing for the past year that as the industry changes, the programs need to be more flexible, and change with it.

“We do not look at the RFS as a ceiling — there is no limit as to what we can do with biofuels when we look at the combination of corn, sorghum, barley, cellulose, and other forms of biomass. While ethanol is the only alternative fuel of any consequence in the market today and has replaced 10% of the nation’s gasoline, we can so much more. Using the lower tax rate ethanol enjoys to provide blender pumps and flexfuel vehicles is the next step in the evolution of our industry, and the time to move forward is now.”

biofuels, Ethanol, News