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Bill Holmberg
American Council On Renewable Energy (ACORE)
Ph: +1-202-393-0001 x7588

Washington, D.C. August 4, 2010: As the U.S. House of Representatives considers a possible reduction in the Volumetric Ethanol Excise Tax Credit (VEETC), aimed at supporting the domestic ethanol industry and its market competitiveness, the Biomass Coordinating Council (BCC) called for a careful re-examination of the wide-ranging benefits this policy has provided to the United States in addition to an in-depth discussion of potential modifications to make it more effective for the future. The BCC Chairman and board member of the American Council On Renewable Energy (ACORE) Bill Holmberg stated, âEURoeWe have heard from our friends in Congress regarding the need to reduce the cost of the ethanol incentive and support the intention to redirect the tax credit where it can be most effective. We are responding.âEUR

Similar to the previous statement issued by Growth Energy suggesting that the ethanol tax incentive be used to extend the current infrastructure and promote increased ethanol blending, access, and use around the country, Holmberg agrees that the House Ways and Means Committee has an opportunity to save money and increase the effectiveness of VEETC. âEURoeThe call by Growth Energy for both the public and policymakers to recognize that blender credits are meaningless if biofuels do not have full access to the market is right on target,âEUR said Holmberg. âEURoeIf given that access, we can begin to help change the refueling habits of consumers and take steps to reduce our dependence on foreign oil while continuing to hold down the cost of gasoline.âEUR

The BCC has long advocated making VEETC, currently only accessible to companies blending ethanol with gasoline, available to the ethanol producers themselves. It also urges that a portion of the refunded taxes be directed towards advancements in refueling infrastructure, including blender pumps, to ensure the sustainability of the ethanol industry. An overall reduction and re-structuring of the tax credit levels could also be advantageous if such measures appropriately reflected the ethanol industryâEUR(TM)s established role in helping to fuel America and reduce overseas oil imports.

Holmberg outlines, âEURoeReducing the tax incentive as the Ways and Means Committee proposed could work well if the reduction includes these provisions: retaining a certain percentage of the creditâEUR(TM)s value to fund refueling infrastructure; directing VEETCâEUR(TM)s benefits to producers; and rewarding those biofuels producers who increase operational efficiency, reduce water usage, and lower their carbon footprint. This redirection and re-allocation of incentives to domestic producers would also render the need for an ethanol import tariff unnecessary.âEUR

A five year extension of the VEETC policy, in conjunction with a decision by the Environmental Protection Agency (EPA) to permit raising ethanol blend levels higher than 10 percent, would allow the ethanol industry to overcome a potential stall in demand due to a future blend wall. Policy and market assurance for ethanol producers also translates into staying on track to meet the goals of the Renewable Fuels Standard (RFS) mandating the production of 36 billion gallons of renewable fuels by 2022. âEURoeIt is important to appreciate that the corn ethanol industry is developing the foundation that will serve other alternative fuels as they come on line, and this effort should continue,âEUR said Holmberg.

âEURoeOpponents of fuel ethanol are quick to find fault with the only alternative fuel that has proven its value and commendably worked its way into every gas tank in America,âEUR stated Holmberg, but the benefits of the current ethanol industry cannot be overlooked. He points out that working to meet mandates like the RFS has resulted in a significant savings to US taxpayers through numerous economic and strategic benefits such as lower fuel costs, reduced federal farm outlays, generated income for federal, state, and local governments through taxes paid by the industry, and increased rural economic development and job creation. Studies by the EPA conclude that a fully-implemented RFS would result in the United States reducing its oil imports by $34 billion annually, and net farms incomes would increase by 36 percent, or $13 billion, every year.

Bob Dinneen, President and CEO of the Renewable Fuels Association, highlighted ethanolâEUR(TM)s success story in a recent editorial in the Washington Post saying, âEURoeOnly lamenting the value of the tax credit for ethanol without discussing the benefits of ethanol production is misleading. Federal tax revenue generated by ethanol production and use of ethanol totaled more than $8 billion in 2009, $3 billion more than the value of the tax credit.âEURThe EPA also recognized the environmental advantages of promoting biofuels; a realized RFS would also cut back greenhouse gas emissions by 138 million tons per year, or the equivalent of removing 27 million cars off the road.

The advantages of a domestically-grown and produced fuel, however, extend far beyond just the economic and ecological impacts. The present ethanol industry is helping to provide a first step towards energy security while scaling down the countryâEUR(TM)s continued dependence on oil and how it is distributed. Holmberg warns, âEURoeLeading the opposition against ethanol for nearly 100 years, âEUR~Big OilâEUR(TM) has maintained its power in the U.S. by first knowingly using poisonous lead additives, then water-polluting MTBE, and now continues to add cancer-causing and harmful aromatics to meet octane levels instead of simply incorporating higher blends of environmentally-safe ethanol. Trusting âEUR~Big OilâEUR(TM) to honestly serve America, our national security, health concerns, and overall future is highly questionable.âEUR

Jeff Broin, President of AmericaâEUR(TM)s largest ethanol producer, POET, also agrees that ethanolâEUR(TM)s potential for reducing oil dependence is being unfairly limited. âEURoeBy omitting Growth EnergyâEUR(TM)s Fueling Freedom Plan from the Energy Bill, Senate leadership missed an opportunity to significantly lessen AmericaâEUR(TM)s dependence on foreign oil. Instead of spending taxpayer money on unproven technologies, policy-makers should invest in the infrastructure that would allow for the expansion of the only renewable energy source that is displacing significant volumes of foreign oil today: ethanol.âEUR

Overall, the BCC and other organizations are taking a stand to convey the wide scale importance of the ethanol industry. Holmberg contends that the failure to extend VEETC incentives to either producers or blenders would raise the motor fuel tax on ethanol blends. âEURoeLetting the current policy expire and taxing renewable blends like gasoline is going backwards in our efforts to reduce imports, stimulate the economy, and create domestic, lasting employment opportunities,âEUR he added.

âEURoeNone of the many benefits of ethanol will happen if the fuel does not get into the cars, plain and simple,âEUR said Holmberg. But the BCCâEUR(TM)s support of VEETC goes far beyond tax credits and ethanol blend levels. âEURoeWhat we are proposing, like Growth Energy and other groups, is a roadmap to get where this country needs to be. That roadmap would be greatly enhanced if we had unanimity within the ethanol industry and the support of the environmental and wildlife groups since the industry is fully committed to securing future sustainability in the United States, protection of its natural systems, and limiting the build-up of greenhouse gases.âEUR Holmberg concluded by suggesting that, âEURoeenvironmental and wildlife groups should review the advancements made in the ethanol industry over the past twenty-five years to avoid being duped by âEUR~Big OilâEUR(TM) and their allies. We can all support the biofuels industry of today and tomorrow with a common cause and ensure its contributions to the United States America.âEUR

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