Bill extends ethanol tax credit
In the US the federal tax credit for ethanol is set to expire on 31 December. Now producers look to have a new lease of life following the introduction of a bill on 20 April to extend the ethanol credit for five years.
The extension will remain at the current level of $0.45 (€0.33) per gallon. This is a companion bill to HR 4940, the Renewable Fuels Reinvestment Act, introduced on 25 March in the U.S. House by Congressmen Earl Pomeroy and John Shimkus.
Similar to the House version, the new bill introduced by US Senators Charles Grassley and Kent Conrad also includes a five-year extension of the ethanol Small Producer Credit, the cellulosic ethanol tax credit, and the secondary tariff of $0.54 per gallon.
The Volumetric Ethanol Excise Tax Credit (VEETC) is known as the blender’s credit because it goes not to ethanol producers, but to entities that blend ethanol with petrol as an economic incentive to get renewable fuel to the retail marketplace. This economic incentive is usually passed on to consumers in the form of lower prices at the pump. The American Coalition for Ethanol (ACE) points to the tax credit’s benefits to consumers and to the jobs created by the ethanol industry as key reasons the credit should be extended.
A recent study found that in 2009 that the US ethanol industry supported nearly 400,000 jobs in all sectors of the economy, including the ongoing production of ethanol, construction of new facilities, and research and development activities.
In addition ethanol benefits petrol prices in two ways: by creating a larger domestic supply of fuel which exerts downward pressure on overall gas prices, and through the $0.45 tax credit which is passed along to consumers at the pump. In many areas of the country, motorists can choose the E10 blend at the pump and save $0.5-10 per gallon compared to standard petrol.
The extension will remain at the current level of $0.45 (€0.33) per gallon. This is a companion bill to HR 4940, the Renewable Fuels Reinvestment Act, introduced on 25 March in the U.S. House by Congressmen Earl Pomeroy and John Shimkus.
Similar to the House version, the new bill introduced by US Senators Charles Grassley and Kent Conrad also includes a five-year extension of the ethanol Small Producer Credit, the cellulosic ethanol tax credit, and the secondary tariff of $0.54 per gallon.
The Volumetric Ethanol Excise Tax Credit (VEETC) is known as the blender’s credit because it goes not to ethanol producers, but to entities that blend ethanol with petrol as an economic incentive to get renewable fuel to the retail marketplace. This economic incentive is usually passed on to consumers in the form of lower prices at the pump. The American Coalition for Ethanol (ACE) points to the tax credit’s benefits to consumers and to the jobs created by the ethanol industry as key reasons the credit should be extended.
A recent study found that in 2009 that the US ethanol industry supported nearly 400,000 jobs in all sectors of the economy, including the ongoing production of ethanol, construction of new facilities, and research and development activities.
In addition ethanol benefits petrol prices in two ways: by creating a larger domestic supply of fuel which exerts downward pressure on overall gas prices, and through the $0.45 tax credit which is passed along to consumers at the pump. In many areas of the country, motorists can choose the E10 blend at the pump and save $0.5-10 per gallon compared to standard petrol.
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