Coalition: E85 should be eligible for alternative fuel tax credit

By Holly Jessen | October 12, 2011

A newly formed group—the Coalition for E85—is battling an E85 price increase at the end of the year, when the Volumetric Ethanol Excise Tax Credit is likely to expire. In its place, the coalition is lobbying for a 50 cent per gallon tax credit as part of the Alternative Fuel Credit. “E85 is not only an alternative fuel, it is our nation’s most widely adopted alternative fuel,” said Matt Horton, CEO of Propel Fuels, one of the lead members of the Coalition for E85. “If we are to make a meaningful dent in our dependency on foreign oil, we must expand E85 infrastructure and ensure this fuel has fair tax treatment.”

The group of retailers, producers, equipment manufacturers and more announced Oct. 11 that it was launching a campaign to protect the investments of 2,500 small businesses and stop what it referred to as a multi-million dollar tax hike on consumers. If VEETC does indeed expire at year’s end the coalition predicts flex-fuel drivers will pay as much as 38 cents more per gallon for E85. In turn, many small businesses, which have invested more than $100 million in E85 infrastructure, would be forced to close their pumps. “It’s clearly at a point where ethanol as an additive—E10, E15—can go on without much in a way of subsidy” says Jeff Trinca, vice president Van Scoyoc Associates, which has been hired as a lobbyist for the coalition. “The problem is that the E85 folks are saying, ‘We’re just a baby, we’re just starting out.’”

Today, only 2,700 retail stations offer E85 nationally, Trinca said. In order for more drivers to fuel up with E85 and more stations to provide it, it has to be priced attractively. “How do you make sure that we go from 2,700 stations to 35,000 stations in the next few years,” he asked. “And if the price points too high are the stations going to be able to make the investment going forward?”

E85 could potentially provide 9 million U.S. drivers with a homegrown alternative fuel. And, in the future, E85 can be made from cellulosic ethanol. “The federal government has invested deeply in development and commercialization of these next-generation biofuels, but without E85, such innovations may never be fully developed,” the group said.

The coalition would like to see the fuel be recognized as an alternative fuel, and receive the 50 cent per gallon Alternative Fuel Credit. Other alternative fuels currently receiving the credit include compressed natural gas, propane and hydrogen. “The core of the argument is E85 is an alternative fuel,” Trinca said.

If this doesn’t happen, and VEETC expires leaving E85 with no tax credit, the impacts on the price and availability of the fuel will be dramatic, predicted Todd Garner, CEO of Protec Fuels. “We must not abandon E85 this close to self-sustainability,” he said. “We hope retailers, producers, auto makers, and others concerned about the future of E85 will stand up and fight with us.  Join the Coalition and let our government’s leaders know why E85 is critical.”

Current members of the coalition include Propel Fuels, Protec, Pearson Fuels, Clean Fuels Development Coalition, multiple ethanol industry associations, pump and tank companies, and individual E85 retailers. To learn more, or to join, contact info@CoalitionforE85.org.