US Senate passes ethanol tax incentive – looks to slash advanced biofuels fudning

December 16, 2010 |

In Washington, the US Senate passed a tax policy package by a vote of 81-19, that includes a one-year extension of the Volumetric Ethanol Excise Tax Credit (VEETC) at its current level of $.45 per gallon.  In addition, the package contained a one-year extension of the renewable diesel credit and a two-year extension of the biodiesel tax credit, one of which will be retroactive. The legislation now moves to the House where, at this time, observers expect the bill to pass despite loud opposition from liberal members of the Democratic Party. All 177 Republican House members are expected to vote for the bill, plus 31 Blue Dog Democrats who sent a letter of support for the tax bill to House Speaker Nancy Pelosi, leaving the bill needing only 10 votes from other Democrats, including members of the House leadership who are expected to side with the President in the compromise tax package. The House is expected to vote this afternoon, and the Digest will have a round-up of industry reaction following the vote.

More on the story.

At the same time, Senate FY2011 omnibus legislation is expected to propose significant reductions in funding for the Farm Bill Energy Title. The latest from the Congressional Budget Office and other sources is that the Biomass Crop Assistance Program (sec. 9011) will be zeroed out, the Bioenergy Program for Advanced Biofuels (sec. 9005) will be reduced by $28,042,000, the Biorefinery Assistance Program (sec. 9003) will be reduced by $56,084,000, and the Rural Energy for America Program (REAP) loan guarantees will be reduced by $39 million to $60 million.  These cuts would come just as the rules for these programs are being finalized, preventing them from getting off the ground, and potentially put into danger up to four loan guarantees for bioenergy projects that had been expected to be released within the next two weeks.

Background on the current funding for each program is here.

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Category: Policy

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