VEETC continues to spark heated policy debates

By Kris Bevill | March 28, 2011

The future of the Volumetric Ethanol Excise Tax Credit and the ethanol import tariff continue to be major topics of debate as Congress works to reduce the federal budget. Several Congressional amendments have been introduced this year that would either immediately repeal VEETC and the import tariff or allow the programs to expire as scheduled at the end of the year.

Ethanol groups devoted efforts during last week’s Congressional recess to convincing legislators to defeat an amendment authored by Sen. Tom Coburn, R-Okla., that would immediately repeal VEETC. The measure was first introduced as a bill in early March by Coburn and Sen. Ben Cardin, D-Md. On March 15, Coburn offered the repeal as an amendment to the Small Business Reauthorization Act. A spokesperson for Coburn said the amendment has not yet been allowed to come for a vote.

Sen. Chuck Grassley, D-Iowa, continues to make his case for the continued support of ethanol subsidies, stating that ethanol critics including “Big Oil and Big Food Manufacturers” are bad-mouthing ethanol in an effort to protect their own interests over the American public. “They’d like to make ethanol a scapegoat for bigger grocery bills and higher prices at the pump,” he said. “It’s rather incredulous to consider they are playing into the hands of the likes of Hugo Chavez and Moammar Kadafi.”

The Environmental Working Group countered Grassley’s support for ethanol in a March 25 opinion piece published in the Des Moines Register. Craig Cox, the group’s senior vice president and manager of EWG’s agriculture programs, wrote that ethanol consumption amounted to 12.8 billion gallons in 2010, equaling 8.7 billion gasoline-equivalent gallons. This reduction is a negligible amount, according to Cox. “We could achieve the same degree of ‘security’ at no cost to taxpayers by increasing average fuel efficiency by just 1.5 miles per gallon,” he wrote. “Simply keeping tires properly inflated would do that. The $5.8 billion a year that taxpayers give oil companies to blend ethanol with gasoline buys no real security gains.”

Growth Energy, the Renewable Fuels Association, the National Corn Growers Association and other agriculture groups have thrown their support behind a bill introduced by Sens. Amy Klobuchar, D-Minn., and Tim Johnson, D-S.D., which would shift VEETC from a blenders credit to a producers credit and would phase out the payment over the next five years. Growth Energy and the RFA said the bill, known as the SAFEST Act, is a step toward responsible fiscal reform while still promoting domestic renewable fuels. But Advanced Biofuels USA, a group devoted to the development and improvement of advanced biofuels, called the SAFEST Act “a Trojan Horse” and said the bill would actually work against the goal of increasing production and use of renewable fuels. “Proposed reductions in funding, inadequate funding of National Science Foundation studies, the introduction of an overly complex vehicle fuel use mandate, and ill-defined definitions will thwart the intent of the SAFEST Act,” the group stated. “It sounds good, but closer scrutiny reveals devastating potential consequences.”

Clearly there is widespread differing opinions on which course of action is best related to domestic biofuels support. Ethanol industry groups, including the Renewable Fuels Association, Growth Energy and the American Coalition for Ethanol, are collaborating with the National Corn Growers Association to produce a unified long-term policy recommendation for ethanol and other biofuels. The report is expected to be released soon.