Ethanol Industry Supports Farm Bill Changes

Farm BillA tentative agreement reached by conference committee members on funding for a new farm bill would reduce the tax incentive for blenders to use ethanol from 51 cents a gallon to 45 cents. The president of the Renewable Fuels Association says they can support that.

RFA“We do understand that they are looking at that in order to pay for cellulosic tax credits and some other important programs,” said Bob Dinneen in an interview Monday. “While we wish they could find other means of paying for those important priorities, we understand the budget constraints that Congress is under.”

The ethanol blenders credit reduction would go into effect once the Environmental Protection Agency administrator certifies that the 7.5 billion gallon mandate has been reached. The ethanol import tariff would also be extended until Dec. 31, 2010, which would be in line with the ethanol tax credit.

Meanwhile, a new subsidy of up to $1.01 per gallon would be created for ethanol made from biomass sources other than corn.

The reduction in the existing blenders tax credit would reportedly save over $1 billion, while the blenders credit for celllulosic ethanol would cost approximately $400 million.

Tax credits for biodiesel were also stripped from the bill.

Congress is currently working to complete a new farm bill under the fifth extension of current law. Congress passed and President Bush signed the latest extension until May 2 but it will likely be May 8 before they can actually get a bill finished and on the president’s desk. The current law expired in September.