Ethanol industry reacts to vote preserving VEETC

by World Grain Staff
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WASHINGTON, D.C., U.S. — By a vote of 59 to 40, on June 14 the U.S. Senate said no to an amendment by Sen. Coburn to repeal ethanol tax incentives, including the Volumetric Ethanol Excise Tax Credit (VEETC).

The American Coalition for Ethanol (ACE) and POET praised the vote, and said the stage is now set for meaningful tax reform.

“The decision of Congress to preserve this credit as a bridge to meaningful reform shows that America recognizes the importance of domestic, renewable fuels. Over the years as the tax credit has declined, we have been able to improve our efficiency and stay competitive with gasoline. Now it is time for the ethanol industry to take the next step in competing with oil. That can only happen if ethanol is allowed greater access to the fuel market,” said Jeff Broin, POET chairman and chief executive officer (CEO). “We must transition away from the tax credit and make a short-term investment that will reap long-term rewards. The expansion of flex pumps, dedicated ethanol pipelines and flex fuel vehicles would create a competitive market between ethanol and gasoline that would lower prices at the pump.”

ACE Executive Director Brian Jennings said the vote sends the right message to the American public.

“This vote is a major victory for the biofuels industry and American consumers and a setback for those clinging to our status-quo dependence on oil. It proves political stunts aimed at ethanol won’t be tolerated in the U.S. Senate. Now we can focus on continuing our work with the White House and both chambers of Congress to support meaningful and responsible legislation to reform ethanol policy, such as S. 1185, the Ethanol Reform and Deficit Reduction Act, introduced by Senators Thune, Klobuchar, and many others this week,” Jennings said.

The Brazilian Sugarcane Industry Association (UNICA) said it was disappointed the amendment didn’t pass, but noted the final vote tally shows significant support for reforming U.S. ethanol policy.

“Tax credits and trade barriers possibly made sense in 1980 to foster the nascent ethanol industry, and the policies have unquestionably worked. America's corn ethanol has blossomed into a thriving business with booming exports to other countries and now accounts for half of all ethanol produced around the globe. But 30 years later, the time has come to remove the industry's training wheels and promote market competition,” said Leticia Phillips, UNICA’s representative in North America.

Brazil ended its ethanol government subsidies more than a decade ago, and eliminated its ethanol tariff last year, Phillips said. It is time for the U.S. to do the same, she said.

“Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs,” Phillips said. “The same principle holds true for renewable fuels. Allowing other alternative fuels like sugarcane ethanol to compete fairly in the U.S. would save Americans money, cut dependence on Middle East oil and improve the environment.”
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