Domestic Fuel

Nobody seems to be happy about the tax breaks/unemployment benefits deal announced by President Obama yesterday and no one is sure what all it ultimately will include, but Sen. Chuck Grassley (R-IA) says that ethanol blenders tax credit and associated tariff, as well as the biodiesel tax credit may be in it.

During his regular weekly conference call with reporters this morning, Grassley said there are details that have yet to be worked out, “But I’m led to believe that the extenders of 2009 – 71 of them, including biodiesel – would be extended for the years 2010 and 2011,” Grassley said. The breaks that run out at the end of this year, including ethanol, would also be extended through 2011, so all of them would end at the same time.

Grassley says he doesn’t know if the ethanol tax credit will be lowered in the deal. “I have been an advocate that we shouldn’t change any policy in any of these extenders, and I don’t think it will be changed, but I don’t have a final answer on that,” he added. He expects the existing tax law will be extended, just changing dates, and that would include extending the associated tariff on imported ethanol as well. “You’ve got to have a tariff or you’re going to be subsidizing Brazilian sugar ethanol, and you don’t want to do that,” he said.

Listen to some of Grassley’s comments below, and thanks to Julie Harker with Brownfield Network for passing along the audio from the conference call. The questions are asked by Dan Looker of Successful Farming and Philip Brasher with the Des Moines Register. Chuck Grassley

The ethanol industry is also unsure whether the deal will include an extension of the ethanol blenders tax credit, known as VEETC, but they are hopeful. On the Renewable Fuels Association E-xchange blog, RFA’s Matt Hartwig wrote that, while the tax package is still very much in flux, “We remain confident that VEETC will be extended, if for no other reason than to prevent shedding thousands of jobs associated with domestic ethanol production.”

“A potential tax package would be the most appropriate vehicle to which an extension of VEETC could be attached,” Hartwig says. “But other potential vehicles may also emerge. The RFA will continue to work with Congress and the Administration to identify any appropriate vehicle that will ultimately land on the President’s desk for his signature.”