Ethanol industry looks to tack tax credits onto extension of Bush tax cuts

The ethanol industry is eying the likely extension of the Bush tax cuts as a potential vehicle for extending key ethanol tax credits.

Matt Hartwig, a spokesman for the Renewable Fuels Association, a major ethanol industry trade group, said in an interview that, “One opportunity will be if/when they move Bush tax cut legislation. That would be a natural place to add tax extenders. We will look for any other vehicle that will get to the president’s desk.”

The Renewable Fuels Association and a number of other ethanol and agriculture industry groups sent a letter today to congressional leaders ahead of their Thursday meeting with President Obama to discuss tax cuts and other key issues. In the letter, the groups — which include the American Coalition for Ethanol, Growth Energy and the National Corn Growers Association — call for the following:

• Extension of the Volumetric Ethanol Excise Tax Credit, a tax credit of 45 cents cents per gallon of ethanol blended into gasoline. The tax credit is set to expire at the end of the year. “Without VEETC, ethanol blending will become less economically attractive to refiners, resulting in a substantial decline in discretionary blending, and upward pressure on consumer gasoline prices.  As a consequence of reduced demand, ethanol plants will close,” the letter says.
• Extension of the Alternative Fuel Infrastructure Tax Credit, which allows business owners to write off 50 percent of the cost of the necessary infrastructure upgrades to install ethanol pumps at gas stations. “Today, there are approximately 160,000 retail fuel outlets around the nation; however, only 2,300 are fitted with equipment able to dispense E85, and just a few hundred that can offer mid-level blends,” the letter says. “It is essential that there continue to be incentives to develop the infrastructure needed to make the ethanol blended fuels available to consumers.
• The letter also calls on the leaders to expand a tax credit for biofuels producers to include biofuels made from algae.

The letter comes as Sen. Tom Harkin (D-Iowa) took to the Senate floor Monday to call for adding provisions that encourage ethanol use to an electric and natural gas vehicles bill set to come up for a procedural vote tomorrow. While he said he’d vote to allow the bill to move forward for debate, he warned that he would vote against the bill on final passage if it does not include the provisions.