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By Nathanael Greene on Oct 11, 2010 with 1 response

Corn Ethanol Industry Acknowledges Tax Credit Must End

Tags: ethanol, VEETC

Rumors are swirling that the White House may announce support (subscrip req’d) for some sort of change to the main corn ethanol tax credit. In preparation for meeting with the White House, the major corn ethanol associations–RFA, Growth, NCGA, ACE–apparently swallowed their difference long enough to agree on a one-page platform best described in this OPIS article.

Much of this is radioactive, terrible biofuels policy: having Congress try to legislate away the science of lifecycle carbon emissions or allowing corn ethanol to qualify as an advanced biofuels under the RFSII or even extending the VEETC at current levels for a year (which would waste ~$6 billion dollars and mostly support fuels that produce more carbon pollution than gasoline). Especially the first two of these would basically force anyone who cares about the climate or getting to beneficial biofuels to simply oppose further implementation of the RFSII.

There is, however, something remarkable wrapped up in the industry’s position paper. There is an explicit acknowledgement that the VEETC as it is today should end and that taxpayer dollars should be spent encouraging better, lower carbon biofuels rather than just more biofuels. In its position paper, the industry supports a transition to a new tax credit that would go to producers and be paid based on reduced GHG emissions. This, as the industry acknowledges, would allow an end to the ridiculously protectionist (my words) import tariff as well. Whether it’s desperation as the expiration date for VEETC looms or enlightenment, I have to admit that this is a big step in the right direction.

As I’ve written about before, transforming the VEETC into a performance based credit is very much in line with NRDC’s Greener Biofuels Tax Credit proposal. A performance tax credit really should go further to pay for clean water, soil and habitat protection, but having the corn ethanol industry implicitly recognize that they need to reduce their GHG footprint is helpful.

Let’s hope that the White House and Congress take this opening and really run with the ball, shifting federal support away from dirty corn ethanol to the best advanced biofuels, rather than snatching defeat from the jaws of victory by supporting a VEETC extension or anything worse.

  1. By Thomas on October 11, 2010 at 3:47 pm

    I’m interersted in what the ethanol hawks out there think about these new highs for corn prices.  So which would you rather build you ec onomy on: the whims of thug dictators or those of mother nature?

    [link]      
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