The U.S. Senate has reached a bipartisan agreement on ethanol that includes phasing out the 45-cent federal tax credit at the end of this month instead of December 31st.
Nebraska is the nation’s number-two ethanol producer and a leading renewable fuels advocate, Monte Shaw, says he’s concerned about the measure in Congress.
“What’s frustrating is that this is really happening in a vacuum,” Shaw says. He says there’s been no discussion of the oil subsidies and no discussion of an environmental waiver for E-15 that he says is needed to sell E-15 in the summertime.
Shaw says while the ethanol credit would go away, the proposal would make changes in the incentive for pumps used to blend ethanol into gas.
He says it has been an E-85 pump program, and this switches it to a blender pump program that can blend different ethanol mixes at the pump. Shaw says that is positive, but it also reduces the amount given for the pumps by 10%, so they aren’t sure of the total impact.
The bill includes other things such as a credit for small ethanol producers and for ethanol produced from sources other than corn. Shaw can’t say if the bill would be better in the long-term for ethanol.
Shaw says in the short-term the compromise bill “is a tax increase, it will raise the price of gasoline, and it will absolutely makes us more dependent on foreign oil.”
He says that may change in the long-term, but that’s what it looks like short term. Shaw is not sure if the bill would pass the full Senate.
Shaw says it’s hard to tell because there’s not an identified way to bring the bill forward and it could be part of the debt reduction negotiations. But he says the House has said they don’t want any tax increases in the debt reduction package, so it might not get approval there.
Shaw is the executive director of the Iowa Renewable Fuels Association. Iowa is the nation’s top ethanol producer.