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Bill calls for VEETC on amount above mandate

By Holly Jessen | July 15, 2010
Posted July 26, 2010

Rep. Jeff Fortenberry, R-Neb., believes it's improbable that the Volumetric Ethanol Excise Tax Credit, or blender's credit, will get extended as it stands today. That's why he introduced a bill to only pay the credit for blending of biofuels over and above the amounts mandated by the Renewable Fuels Standard. "If we are going to promote biofuels we need to incentivize beyond the mandated amounts," he told EPM. "If we don't, we're simply paying for what is already mandated by law."

The Renewable Fuels for America's Future Act, would save an estimated $5.67 billion in the first year, Fortenberry said. If passed, it would also extend the current ethanol tariff, the Small Producers Tax Credit, the Cellulosic Ethanol Production Tax Credit and provide incentives for ethanol fuel infrastructure. "It's going to save the taxpayer money, it's going to continue the development of biofuels, and it's also good for agriculture," he said.

Tax incentives were necessary in the beginning, and Fortenberry supported them, he said. Now, however, he feels a simple extension of VEETC probably isn't the best public policy.

Growth Energy's Fueling Freedom Plan, which proposes using the 45-cent VEETC payment to build out infrastructure, was introduced July 15, just a few days before Fortenberry proposed his bill. He called the two events an "important coincidence" and added that the proposal was consistent with what he had proposed on the infrastructure side. "The climate is ripe for that kind of idea in Washington," he said.

Economists Ernie Goss of Creighton University and Bruce Babcock of Iowa State University analyzed the bill. Fortenberry is a member of the House Agriculture Committee.
 

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