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Report shows importance of ethanol incentive

The Renewable Fuels Association (RFA) has released a new report on the economic importance of the ethanol blenders tax incentive.

The incentive—officially called the Volumetric Ethanol Excise Tax Credit (VEETC)—is set to expire at the end of this year.  VEETC encourages blenders to use ethanol in gasoline and RFA president and CEO Bob Dineen says if Congress fails to extend, it would be devastating to the ethanol industry.

“If you do not extend the tax incentive, we’re going to lose 112-thousand jobs across all sectors of the economy,” says Dineen. “Just as the ethanol industry is beginning to evolve into new feedstocks, you remove the underpinnings of support that has allowed that to happen—and actually shutter some 38 percent of the industry.”

The report says that allowing the tax credit to expire would also cause an eight percent decrease in corn prices.

Dineen says the offsetting tariff on ethanol imports, which allows only domestically produced ethanol to benefit from the tax credit, also needs to be extended. “So that we are certain that the markets that are created and the ethanol that’s being used—and the incentives that are there for that product—is encouraging domestic production.  It makes no sense to just be transferring a dependence on imported oil to a dependence on imported biofuels.”

Dineen says getting the ethanol incentive extended won’t be easy, especially in an election year with a crowded Congressional agenda.