Following the Ethanol Debate

The biofuel lobbying groups are geared up for another battle over government support of our domestic ethanol industry. The next few months will determine the fate of the $.45/gallon ethanol tax credit, the Volumetric Ethanol Excise Tax Credit (VEETC), currently set to expire at the end of 2010.

Media coverage of the ethanol issue has appeared in The Wall Street Journal, The Washington Post, The Chicago Tribune and The New York Times. Also see Robert Rapier’s blog, Energy Squared.

The two biggest proponents of the extension are the Renewable Fuels Association (RFA) and Growth Energy. They are currently split over their preferred type of government support for the industry. RFA is promoting a 5 year extension of the VEETC (and presumably the tariff) while Growth Energy supports a phasing out of the tax credit with government funding going into developing the infrastructure to promote ethanol sales.

They have been noticeably silent on the issue of whether or not the tariff will be extended. The tariff, $.54/gallon, prevents the Brazilian ethanol industry from competing with ethanol produced in the United States. When prodded, the domestic ethanol producers have successfully muddled the issue over threats of job losses if the tariff expires, while asking why the U.S. should replace its dependence on foreign oil with a dependence on foreign ethanol.