July 15, 2010
Growth Energy proposes phase out of ethanol tax credits
Published in Feedstuffs
The biggest complaint about the ethanol industry centers on its need for government support. Today, Growth Energy formally announced its desire to move the industry away from government support by shifting funds from the current blender's tax credit to pay for the expansion of ethanol infrastructure including flex-fuel vehicles and blender pumps.
Growth Energy CEO Tom Buis said the Fueling Freedom plan would shift government programs to reduce barriers the ethanol industry faces in competing. Producing ethanol is no longer a barrier, with the domestic industry producing over the currently mandated levels.
But the challenge is the infrastructure. The argument of auto retailers not building more flex-fuel vehicles because there aren't enough pumps and retailers not installing blender pumps because there aren't enough FFVs, stops with this plan, Buis said.
The primary elements of the plan include redirecting funds currently going to the oil industry as an incentive for blending ethanol into gasoline (the Volume Excise Ethanol Tax Credit) to provide backing for the build out of distribution infrastructure for ethanol – such as tax credits for retailers to install 200,000 blender pumps and federal backing of ethanol pipelines. A second component of the plan requires that all automobiles sold in the U.S. be flex-fuel vehicles – as many as 120 million. This requires no additional cost to taxpayers and a minimal cost (about $120 per vehicle) to vehicle manufacturers.
The group said it hopes for a multi-year extension of the ethanol tax credit, with some of those funds redirected as proposed, to give the market certainty. Jeff Broin, chairman of Growth Energy and president of POET, said due to the complexity of the process and the infancy of the cellulosic industry, policymakers need to approve a long-term extension of the cellulosic tax credit. "Over time, as the technology matures, it is our hope that cellulosic ethanol will be able to compete with gasoline as well," Broin said.
In the words of former congressman Jim Nussle and Growth Energy Advisory Board Member, the plan offers a creative solution for lawmakers who are looking for new ways to address the nation's energy policy. "As someone who was a former ball carrier for ethanol in Congress, policymakers are begging us for creativity," Nussle said. He warned that a typical energy debate could find industry members hunkering down and fighting to keep the status quo but that will only prolong providing what the industry really needs.
The Senate is expected to begin debate on an energy bill as early as July 19. Buis said there is no bill in Congress that provides this approach, but he hopes Growth Energy's plan helps kick start the debate. In the upcoming days, Growth Energy will continue to share the concept with other industry members and farm groups as well as though on Capitol Hill.
The National Farmers Union has already come out in support of the plan. However, a joint statement from the American Coalition for Ethanol, the National Corn Growers Assn, the National Sorghum Producers, and the Renewable Fuels Assn reaffirmed their support for two identical pieces of .....
