Congress busy with ethanol and biodiesel

By Dave Nilles | January 04, 2007
It didn't take long for ethanol and biodiesel to reach the forefront of the 110th Congress, which began its session last week. The bill creating perhaps the most splash was released on the first day.

Reps. Earl Pomeroy and Kenny Hulshof introduced the Renewable Fuels and Energy Independence Promotion Act of 2007. The bill would permanently extend tax breaks for ethanol and biodiesel production.

The proposed legislation would create a permanent 51 cent-per-gallon ethanol tax credit and a 10 cent-per-gallon small producer ethanol credit. Both current tax credits are set to end in 2010. The bill would also permanently extend the 54 cent-per-gallon ethanol import tariff.

On the biodiesel side, the proposed legislation would permanently extend the $1 per-gallon biodiesel tax credit and the 10 cent-per-gallon biodiesel producer income tax credit. The producer income tax credit provides small agri-biodiesel producers with 10 cents-per-gallon up to 15 MMgy of agri-biodiesel per year, provided their annual capacity doesn't exceed 60 MMgy.

The $1 per-gallon excise tax amounts to a penny per percentage point of agri-biodiesel blended with petroleum diesel. Agri-biodiesel is biodiesel produced from "first-use" feedstocks such as virgin vegetable oils or animal fats.

The American Soybean Association (ASA) praised the bill. "This legislation will help support the price of our soybeans by creating long-term demand for biodiesel made from soybean oil," said ASA President Rick Ostlie. "In turn, it will allow soybean growers to make America more energy secure through biodiesel production."

Another bill would significantly raise the bar for biofuels use in the United States. Sens. Tom Harkin and Richard Lugar introduced the Biofuels Security Act of 2007. The bill would set the renewable fuels standard (RFS) at 30 billion gallons per year by 2020 and 60 billion gallons per year by 2030. The current RFS creates a floor of 7.5 billion gallons of ethanol and biodiesel use by 2012. The U.S. ethanol industry is expected to have capacity to produce more than 8 billion gallons within the next 12 to 18 months.

Lugar and Harkin's bill also addresses the consumer side of ethanol. It requires all U.S. automobiles to be flexible fuel vehicles by 2017. It also requires major oil companies to carry E85 at half of their gas stations by 2017. There are currently more than 5 million FFVs in the United States. The National Ethanol Vehicle Coalition lists more than 1,100 E85 refueling locations on its Web site.

"The American Coalition for Ethanol (ACE) is very grateful to Sens. Harkin and Lugar for introduced the Biofuels Security Act of 2007, a bill that contains many of ACE's highest legislative priorities," said ACE Executive Vice President Brian Jennings. "Now is the time for bold policies to help increase the availability of homegrown and renewable alternatives to oil.

While lending some support to ethanol in general, the National Petrochemical and Refiners Association (NPRA) expressed opposition to the bill. "While NPRA shares the enthusiasm of these leaders for measures to enhance the energy independence of our country, we cannot support this legislation," said NPRA Executive Vice President Charles Drevna. "As NPRA has consistently stated, energy policy based on mandates is no recipe for success."

Few specific details were available on two other announcements. Sen. Harry Reid introduced the National Energy and Environmental Security Act of 2007. The bill lays out several energy-related goals, including increasing vehicle efficiency and alternative fuels production, and developing new technologies.

Finally, the Senate Energy and Natural Resources Committee announced Friday that it will hold a Feb. 1 session to examine the use of biofuels in the transportation sector.

Dave Nilles is Online Editor for Ethanol Producer Magazine. Reach him at [email protected] or (701) 373-0636.

Posted: 11:46 a.m. CST Monday, January 8, 2007