ACE Conference looks at life without VEETC, fight to protect RFS

By Holly Jessen | August 25, 2011

The assumed demise of the Volumetric Ethanol Excise Tax Credit was a subject that came up over and over during the 2011 American Ethanol Coalition Ethanol Conference. It wasn’t the only focus, however. “Our enemies are not going to be satisfied with VEETC going away,” Brian Jennings, executive vice president, “they are already fixing their sights on the [renewable fuel standard.]”

About 225 people attended ACE's  “Rooted in America” conference held Aug. 22 -24 in Des Moines, Iowa. One of the several keynote speakers, Sen. Tom Harkin, D-Iowa, promised he’d fight vigorously to protect RFS2 and predicted that the biofuels industry would not only meet but exceed the 36-billion-gallon target. Those that say they are in favor of advanced biofuels but are not in favor of ethanol don’t know what they are talking about, he added. “Apparently they don’t realize that you are leading the charge to advanced biofuels,” he said, referring to the first generation corn-ethanol industry.

Although VEETC survived efforts this summer to repeal it immediately, it’s possible that those efforts will begin again once Congress goes back into session in September, Jennings warned. Ultimately, he doesn’t think it will happen, but if it does, he described it as a new low in Congressional hypocrisy, considering the fact that Congress lacks the courage to ask oil companies to give up the billions it receives in subsidies and tax incentives. Efforts to reform VEETC look to have failed and conventional wisdom in Washington is that the tax incentive will lapse as scheduled at the end of the year. “I think the lesson that we all need to learn from this process is that we shouldn’t be ashamed of a tax incentive for ethanol and we damn well should not be ashamed of the RFS,” he said.

Ron Lamberty, senior vice president of ACE speculated that the conference was, in a way, a funeral for VEETC. In the past, with the blenders credit in place, the ethanol industry has relied too heavily on just price as a selling point for the fuel. Can the fuel stay competitive based on its many other advantages, such as reduced emissions contributing to cleaner air and job creation? “I am positive that life is going to become very interesting with no VEETC,” he said.

On the good news side, Lars Herseth, president of ACE, pointed out that the industry trade groups have been working together in a much more open manner. He publically thanked the National Corn Growers Association for insisting that the groups, ACE, Growth Energy and the Renewable Fuels Association, meet in the same room for a series of meetings, adding that he felt it was important that process is repeated in the future. The RFS2 is the most important piece of energy legislation which creates a market for biofuels, Herseth said. “We need to take that message out and we need to do it in unison with our other trade group partners.”

The way Jennings sees it, the future holds opportunity as well as some challenges. Those challenges can be described as swimming upstream, fighting an uphill battle or any number of clichés, he said. For example, the Cellulosic Ethanol Production Tax Credit expires at the end of 2012, presenting the possibility to start a dialogue about resurrecting tax incentive efforts.

It’s time to go back on the offense, rather than defense, Jennings said. Big Oil put the ethanol industry on the defense by creating an alternate reality about ethanol, filled with misconceptions and myths about ethanol. “Their money cannot change the fact that they are wrong on the issues, and it can’t change the real economic benefit that this industry, that people in this room are delivering to this country every single day,” he said. “Ethanol is not some abstract thing—it’s delivering real benefit to real people.”

Work is ongoing to clear regulatory hurdles to bring E15 to the marketplace—bringing near-term relief and opportunity for the industry. Adding more blender pumps and flex-fuel vehicles will also continue to be a high priority for ACE, he said. The group will also work toward identifying more champions for ethanol in Congress, and not just in the Midwest but in areas like Florida, Pennsylvania and Washington.  “Until certain men of Congress that have voted against us feel the political consequences, they won’t be willing to change,” he said.