July 15, 2010
Growth Energy proposes shift in fuel policy
Published in Ethanol Producer Magazine
With the Volumetric Ethanol Excise Tax Credit, set to expire at the end of the year, Growth Energy is calling for a change in the way ethanol tax incentives are used and an eventual phase out of governmental support of ethanol.
In a conference call on July 15, CEO Tom Buis revealed Growth Energy’s Fueling Freedom Plan. The organization calls it a creative option that it hopes policymakers will make part of upcoming energy legislation. Recent news stories suggest that lawmakers will proceed with the energy debate, Buis said, but only time will tell if legislation will get passed. If progress isn’t made on that, the goal is to move forward as soon as possible on legislation incorporating the Growth Energy plan.
The Fueling Freedom Plan calls for, ideally, a five-year extension to VEETC. However, rather than provide the all incentive money to blenders, the oil industry, Growth Energy is advocating that some of that tax money go to installing 200,000 blender pumps and ethanol pipelines. This would give the consumer a choice at the pump and create a level playing field for ethanol. “Oil has a 90 percent monopoly,” Buis said. “We need to break the monopoly.”
Another part of the plan would require that all automobiles sold in the U.S. be flex-fuel vehicles (FFVs). As many as 120 million FFVs would require no additional cost to taxpayers and only about $120 per vehicle, Growth Energy said.
Jeff Broin, CEO of Poet LLC, said it was about getting a blender pump in every neighborhood and a FFV in every garage. If investments in infrastructure are made, that tax credit could be phased out. “I believe the time has come to transition to an open market,” he said. On the other hand, he added that the cellulosic ethanol industry is still in its infancy and will continue to need tax incentives to grow.
The U.S. has a long history of government support of infrastructure projects, Buis said. That includes projects to build roads, railroads, airports and electrical lines, to name a few. If there were enough blender pumps, pipelines and FFVs, the ethanol industry could function without government assistance. “We think that building out the infrastructure to reducing our dependence on foreign oil is long overdue,” he said.
Currently, the ethanol industry is supplying about 10 percent of the U.S. fuel needs. And, Broin pointed out, that ethanol is saving consumers money at the pump. For most of the year, the price of ethanol has been 50 to 80 cents below the price of gas. “We can do more, much more,” Buis said. “Open up the market and let us compete. Let American consumers choose.”
Ethanol tax incentives cost the U.S. about $5 to $7 billion a year, said Growth Energy co-chair Ret. Gen. Wesley Clark. However, compare that to the $300 billion spent yearly, importing oil from foreign countries—including from some countries hostile to the U.S.
Rep. Jim Nussle, a Growth Energy advisory board member, also spoke on behalf of the Fueling Freedom Plan. He said the proposal is asking policymakers to do something a bit different. “If you always do what you always did you’ll always get what you always got,” he said.
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