E85 coalition continues push for tax credit relief

By Kris Bevill | January 06, 2012

The expiration of the 45-cent per gallon Volumetric Ethanol Excise Tax Credit on Dec. 31 has resulted in an immediate 38-cent per gallon increase on E85, eliminating the cost incentive for consumers to purchase the fuel and jeopardizing the investments made by retailers who have installed E85 infrastructure, according to the Coalition for E85. In order to keep E85 competitive with retail gasoline prices, the coalition proposed last fall to modify the language of the Alternative Fuel Credit in the U.S. tax code, including E85 as an alternative fuel rather than a gasoline additive. Although Congress has previously designated E85 as an alternative fuel, it was intentionally omitted from the Alternative Fuel Credit in order to prevent it from benefitting doubly from VEETC and the Alternative Fuel Credit. Now that VEETC has expired, the coalition believes this is no longer an issue so allowing E85 to join fuels such as compressed natural gas, propane and hydrogen in qualifying for the 50-cent per gallon tax credit is warranted and would effectively reverse the negative impacts of VEETC’s expiration. Because Congress failed to extend the Alternative Fuel Credit by Dec. 31, however, that credit has also expired and the coalition now must convince Congress to reenact the Alternative Fuel Credit in addition to adding ethanol to the list of applicable fuels. 

“Despite the tax credit’s expiration, we are continuing to work to protect the investments made by millions of flex fuel drivers, and thousands of retailers and producers who want to keep money spent on fuel right here in our country,” said Matt Horton, CEO of alternative fuel provider Propel Fuels. “Oil companies didn’t need the tax credit to keep blending ethanol into gasoline, but America’s alternative fuel retailers need the tax credit to keep E85 affordable. Without Congress’ continued support, America will become more dependent on foreign oil.”

The coalition noted that if E85 is not successful it puts the expansion of blender pump infrastructure at risk and could also negatively affect investments in the development of advanced biofuels. Coalition members are ramping up their efforts to convince Congress to make the change and urge supporters to assist them in their efforts. Sample letters to Congress, pump top posters and social media links have been made available at the coalition’s website for supporters of the movement.