House votes to extend ethanol, biodiesel, renewable diesel tax credits; Senate drops biofuels-slashing omnibus bill

In Washington, the US House of Representatives voted by a 277 to 148 margin to approve the Obama tax deal, which extends the ethanol tax credit through 2011, and retroactively extends the biodiesel tax incentive and the renewable diesel incentive through 2011. The bill also renewed the 54-cent tariff on Brazilian ethanol through 2011. The bill will now be sent to the President for signature.

Joy from US ethanol and biodiesel interests was tempered by a call by UNICA for Brazil to lodge a complaint with the World Trade Organization over the ethanol tariff.

At the same time, Senate Democrats abandoned a plan for a $1.3 trillion omnibus spending bill that would have slashed funds for USDA loan guarantees and would have zeroed out funds for the Biomass Crop Assistance Program established under the 2008 Farm Bill. According to the Associated Press, “The 1,924-page bill collapsed of its own weight after an outcry from conservatives who complained it was stuffed with more than $8 billion in homestate pet projects known as earmarks.”

In our report today, we have included a round-up of reaction from the National Biodiesel Board, the Renewable Fuels Association, Renewable Energy Group, Growth Energy, UNICA, and 13 environmental NGOs, taxpayer groups and trade associations that were bitterly opposed to the extension of the ethanol tax credit.

Mary Rosenthal, Executive Director, Algal Biomass Organization

“Congress’s decision to extend the incentives for the production and use of domestic renewable fuels is an essential step for the development of America’s biofuels industry. While long overdue, the extension of these important programs sends a strong signal of support for the importance of renewable, domestic fuels to our energy security, economy and environment.

“Representing the next generation of biofuels derived from algae, the Algal Biomass Organization and its members understand the importance of ensuring strong demand for first generation fuels like corn-based ethanol and biodiesel. We hope this bipartisan show of support for domestic fuels will continue through 2011 and beyond, providing a crucial platform for continued American leadership in the development of next-generation biofuels, especially those based on algae.”

Manning Feraci, National Biodiesel Board Vice President of Federal Affairs

“Reinstatement of the biodiesel tax credit is welcome news for the U.S. biodiesel industry and good news for the nation as a whole. This will undoubtedly help kick-start the domestic biodiesel industry, lessen our dependence on foreign oil, and create thousands of new jobs across the country. The U.S. biodiesel industry is poised for a strong 2011, and stands ready to meet the nation’s Advanced Biofuel goals.”

Bob Dinneen, President and CEO, Renewable Fuels Association

“In passing this bill, the Congress has struck a blow to the oil status quo and extended important tax policies that will allow America’s ethanol industry to grow and evolve. Domestic ethanol production helps create jobs and economic opportunity in often overlooked rural communities. Domestic ethanol production reduces America’s tab to petro-dictators across the globe. There is no alternative to gasoline available today that can match ethanol’s energy security and economic benefits. Extending VEETC and other tax incentives is good policy and will provide the breathing room necessary to fully vet all the ideas on responsible reform of ethanol tax policy, including ideas on how to accelerate commercialization of advanced and cellulosic ethanol technologies.  Members of the RFA are committed to responsible reform of ethanol tax policy, but urge Congress to take this opportunity to reform all energy tax policy and the hundreds of billions of dollars still subsidizing very mature and profitable fossil fuel companies.”

John Plaza, CEO, Imperium Renewables

“Today marks a tremendous event for the biodiesel industry. With both the Senate and House including the biodiesel tax credit in the President’s Tax Package, we can get back to the job of supplying our Nation with renewable fuels made in America. We are thrilled that Congress has extended the biodiesel blender’s tax credit and we must thank U.S. Senator Maria Cantwell, U.S. Senator Patty Murray, and U.S. Congressman Dicks along with many others for their tireless support of our industry, and Imperium Renewables in particular. We greatly appreciate the leadership of President Obama and his administration’s efforts to ensure that these job-creating investments in the U.S. biofuels industry were part of the overall bill.

“This credit, combined with the Federal Renewable Fuel Standard will help Imperium ramp up production, add as many as 30 new jobs and contribute up to $50 million in revenue to the state of Washington in 2011.”

Daniel J. Oh, President and COO,  Renewable Energy Group

“The reinstatement and retroactivity of the biodiesel blenders’ tax credit provides a more predictable and stable market for our company and our customers. We believe reinstatement for 2011 will allow petroleum distributors and obligated parties to make biodiesel purchasing decisions which will increase demand for REG-9000TM biodiesel. With the combination of blending requirements under RFS2 and the competitive pricing model offered by the tax credit, REG expects a significant increase in biodiesel demand for our five facilities in Iowa, Illinois and Texas. During the next year, REG looks forward to working with our elected officials in a bi-partisan effort to develop a long-term tax program.”

Tom Buis 
, CEO, Growth Energy

“This vote today, which includes an extension of ethanol tax policy, will provide certainty in the market and give us a chance to work with Congress and the Administration to enact longer term tax policy reforms that will level the playing field in the fuels market. The infrastructure build out proposed in our Fueling Freedom proposal will help open the market to reduce our dependence on foreign oil, improve our environment, create U.S. jobs that can’t be outsourced and strengthen our national security.”

Matt Horton, CEO, Propel Fuels

“We applaud Congress for its extension of these tax credits. They will further develop America’s renewable fuel economy, and are critical to paving the way for the next-generation of fuels to come to market and ultimately to drivers’ tanks. Existing tax credits have already allowed millions of Americans to enjoy true choice at the pump and the feeling of pride that comes from buying American-made fuels. With hundreds of thousands more Flex Fuel and diesel vehicles coming into service next year, these extended credits will further encourage the use of clean, domestic fuels.”

Scott Johnson, President, Sustainable Oils

The extension of the tax credits is a welcome recognition of the proven ability of the US biofuels industry to help create jobs, increase national security and create a new and renewable source of domestic energy. Sustainable Oils continues to develop high quality, renewable jet fuel for the U.S. military from biomass grown in Montana, Washington and the Dakotas. The innovation behind our advanced biofuels would not have been possible without the success of first generation fuels like biodiesel and ethanol – so we support continued investments in all forms of domestic, renewable fuels.

Tom Todaro, CEO, Targeted Growth

While the biodiesel and ethanol industries rightfully applaud and celebrate the passage of the biofuels tax credits and incentives, it is the bioscience companies like Targeted Growth that should really be raising a toast.  A healthy and thriving first generation biofuels industry is key to the transition to a second generation biofuels industry. Many investors, strategic partners and customers are waiting on the sidelines to determine how committed our state and federal governments are to long-term, domestic alternatives to petroleum fuels. The passage of the tax credits is a good first step.

Marcos Jank, President, Brazilian Sugarcane Industry Association (UNICA)

“We know that the days of ethanol subsidies and trade protection are near the end, either because they will expire at the end of 2011 or as a result of litigation at the World Trade Organization. The Brazilian government [should] initiate dispute settlement proceedings at the World Trade Organization.  We will have exhausted all options to resolve our differences through informal dialogue and the U.S. legislative process. It will then be time for the WTO to resolve this matter in accordance with applicable international rights and obligations.”

Marie Brill, Senior Policy Analyst, ActionAid USA

“With predictions of another food price crisis on the horizon in 2011, Congress should be re-evaluating the costs and benefits of converting food to fuel, instead of approving a $6 billion giveaway to the biofuel industry through VEETC. Adding an ethanol subsidy to the tax package will help break the budget, and it won’t give hungry people the break they need. We cannot afford to spend billions fueling hunger by throwing good taxpayer money after bad biofuels.”

Bill Wilson, President, Americans for Limited Government

“The government’s $6 billion annual subsidy of ethanol needs to be ended once and for all.  It is inhumane, inefficient, and too costly for American taxpayers in a time when the national debt has already soared past $13.8 trillion.”

J. Patrick Boyle, President and CEO, American Meat Institute

“For 30 years, the American taxpayer has been subsidizing corn-based ethanol and unfortunately the Senate has failed to break that dependency relationship once again, even as this country teeters on the brink of a budgetary abyss.  For yet another year, $6 billion U.S. taxpayer dollars will be diverted from hardworking families to the pocketbooks of the ethanol industry for production that is mandated by the federal government despite the fact that the American people are crying out for fiscal responsibility.  Corn-based ethanol is not a long term, sustainable solution to end our dependence on foreign oil.  What it is, however, is grossly irresponsible fiscal, food and energy policy.”

Craig Cox, Senior Vice-President, Environmental Working Group

“Members of Congress from the very same farm states and districts that with Tea Party help just ousted lawmakers engaged in wasteful spending have now pushed to extend a costly handout to the corn ethanol industry that does little to reduce America’s oil use. The next thing poured into Boston Harbor may very well be barrels of corn ethanol.”

Kate McMahon, Biofuels Campaign Coordinator, Friends of the Earth

“Shoveling out billions of dollars for oil companies to blend dirty corn ethanol into gasoline – if even for just another year – is a waste of taxpayer dollars.  Extending these subsidies is simply bad policy hidden within the political mess of a trillion dollar tax package.”

Geoff Moody, Manager of Federal Affairs, Grocery Manufacturers Association

“We are extremely disappointed that the Senate decided to subsidize the corn ethanol industry with yet another $6 billion next year.  At a time when Congress cannot find funding for other priorities, now is not the time to continue paying an industry for following the law.  We look forward to working with the House and the 112th Congress to promote truly sustainable advanced biofuels that can meet our energy, environmental and food security needs.”

Rob Vandenheuvel, General Manager, Milk Producers Council

“It’s truly a shame that the Senate has decided to approve an extension of the outdated ethanol blender’s credit.  This generous tax credit, which was created before the current Renewable Fuel ,Standard provided a guaranteed demand for ethanol, is merely padding the pockets of the ethanol industry to the tune of $6 billion per year.  Our nation’s consumers and livestock farmers that must compete with these ethanol plants for our corn supply deserve better from our elected officials.”

George Watts, President, National Chicken Council

“The vote is a triumph of politics over common sense and fiscal responsibility. The taxpayers will spend billions of dollars on a totally unnecessary subsidy to a mature industry. We continue to hope that the Congress will derail the ethanol gravy train.”

Barry Carpenter, CEO, National Meat Association

“Today’s action by the Senate to extend the Volumetric Ethanol Excise Tax Credit further undermines U.S. food security to pad the pockets of oil companies, which are already required to blend ethanol into their products by the Renewable Fuel Standard.  There is no benefit to extending this law, it’s purely a waste of taxpayer dollars.”

Nathanael Greene, Director of Renewable Energy Policy, Natural Resources Defense Council

“When we’re all working to make every penny count, sending 70 cents of every federal dollar for renewables to bribe oil companies to use on an old, dirty fuel doesn’t make sense. Now the Senate has proposed to only extend the main corn ethanol tax credit for 1 year instead of the five that the industry wanted. But when you’re in a hole, you got to stop digging. Reducing the tax credit by 20% would save $1.25 billion and ending it altogether would save $6 billion. Those dollars could be far better spent delivering clean energy and real jobs.”

Pete Sepp, Executive Vice President, National Taxpayers Union

“When it came to letting the VEETC expire, this Senate apparently couldn’t take ‘yes’ for an answer. Once the corn-ethanol industry itself signaled that it could learn to live without favorable tax treatment, lawmakers should have been able to do the same thing. Extending this refundable credit will not only boost deficit spending, it will also complicate a badly-needed overhaul of our tax system.”

Joel Brandenberger, President, National Turkey Federation

“While it is disappointing that Congress appears set to renew the ethanol tax credit and import tariff for one year at their current rates, the debate clearly shows there are growing doubts on Capitol Hill about the wisdom of spending billions of taxpayers’ dollars to support an industry that is now more than 30 years old.  The fact that Congress renewed the credit for only one year means legislators intend to revisit this issue soon, and we are confident that 2011 will be the year when the credit and tariff are eliminated or significantly reduced.”

Steve Ellis, Vice President, Taxpayers for Common Sense

“Senators snatched defeat from the jaws of taxpayer victory today, setting the stage for a one-year extension of ethanol subsidies. This $6 billion lump of coal should cut from the bill and end the decades long subsidy for the mature ethanol industry.”