The Hail Storm Against the Tax Package Intensifies

While many in the domestic U.S. energy industry were giving sighs of relief yesterday after the Senate passed the one-year extension of the tax package, others were not so calm. Two organizations in particular that are not happy with the renewal of the biofuel portion of the tax package were the Brazilian Sugarcane Industry Association (UNICA) and Friends of the Earth. On Monday, in Angry Sparks Turning to Flames Over Ethanol Tax Package, I wrote about how UNICA was asking for Brazil to initiate dispute settlement proceedings at the World Trade Organization if the Volumetric Ethanol Excise Tax Credit (VEETC) and the tariff were passed. They both were.

UNICA President Marcos Jank reiterated yesterday, “Despite calls from across the country – including nearly 100 newspaper editorials, over 80,000 letters from clean energy advocates, and opposition from a bipartisan group of Senators and one of the broadest coalitions imaginable – the U.S. Senate voted today to extend the subsidies and trade protection for U.S. ethanol producers for one more year.

He continued, “While we were disappointed with today’s outcome, and the expected rubber stamp by the U.S. House of Representatives, we know that the days of ethanol subsidies and trade protection are near the end, either because they will expire at the end of 2011 or as a result of litigation at the World Trade Organization (WTO).”

Friends of the Earth (FOE)  is also floored that the Senate could so blindly pass the $860 billion tax package. They are an environmental organization that has been vocal against corn-based ethanol in the U.S. and all biofuel development global. In a statement released yesterday, Ben Schreiber, FOE’s climate and energy tax analyst said, “Friends of the Earth is deeply dismayed that the Senate followed President Obama down the path of capitulation to bad economic and environmental policies.

He continued, “The Senate bill has been larded up with tax cuts to support dirty and dangerous energy sources, including petroleum, coke, natural gas and corn ethanol. The worst examples of environmentally destructive handouts are a forty-five cents per gallon tax credit to corn ethanol via the Volumetric Ethanol Excise Tax Credit (VEETC) and a fifty cents per gallon tax credit for the production of liquid coal.”

“Speaker Pelosi and members of the House must prevent unfair and irresponsible giveaways to the wealthiest Americans and corporations from moving forward. Otherwise, this Congress will leave behind a legacy of wasteful spending that could inhibit our government’s ability to function in the public interest,” concluded Schreiber who in this statement did not offer up what ‘fair and responsible’ giveaways or spending might be.

Unfortunately, this debate is far from over. The extension is one-year only and all renewable energy industries will be back in Washington for the 112th Congress beginning talks on what, if any, energy incentives will look like in 2012 and beyond.

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