A bill introduced in the US House last week would extend ethanol tax credits for another five years, to 2015. This
tax credit is set to expire on December 31, 2010. If extended, the tax
credits will provide the conventional ethanol industry with $30 billion
over five years.
The Renewable Fuels Reinvestment Act (RFRA), introduced by Congressman Earl Pomeroy (D-ND) and and John Shimkus (R-IL), has reignited the fuel versus food debate and intesified scrutiny on the EPA's regulations on the environmental impact of corn-based ethanol.
The bill would extend the $0.45 Volumetric Ethanol Excise Tax Credit (VEETC), commonly called the blenders’ credit, and a secondary tariff on imported ethanol from countries like Brazil. It would also extend the Small Producers Tax Credit and the Cellulosic Ethanol Production Tax Credit to January 1, 2016.
A group of organizations representing environmental, hunger, industry and taxpayer interests denounced the proposed extension of ethanol tax credits.
“Continuing to subsidize dirty corn ethanol is outrageous. Congress already mandates a market for ethanol use," said Kate McMahon, Energy Policy Campaigner at Friends of the Earth. "The oil and ethanol industries need no further help from the American people. This money should be invested in more cutting-edge, clean, and renewable energy that won’t cause environmental degradation and increase food prices.”
Franz Matzner, Climate Center Legislative Director at the Natural Resources Defense Council, said: “Taxpayers should no longer throw good money after bad when it comes to subsidizing corn ethanol. The public should get something in return for its hard earned money, and that means demanding real environmental performance. It’s time to invest in the future, not the past.”
The Renewable Fuels Association (RFA) praised the bill. “Allowing the tax incentives for ethanol to expire is simply not an option,” said Renewable Fuels Association President Bob Dinneen. “Failure to extend these incentives would force 112,000 Americans out of their jobs and shutter nearly 2 out of every 5 ethanol plants operating today. Long term extensions of these important incentives are good policy that encourages investment in current and next generation ethanol technologies."
RFA recently released a report detailing the damaged that would be inflicted upon the domestic ethanol industry if the tax credits were allowed to expire.
New research published this month in BioScience finds that the lifecycle carbon footpring of corn-based ethanol breaks even with gasoline--at best.
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