The ethanol group Growth Energy says it wants federal subsidies to be redirected from the current blenders' tax credit to a fund that would help gas station owners purchase up to 200,000 new fuel pumps capable of producing ethanol blends up to 85 percent. Growth Energy CEO Tom Buis claims the blenders' tax credit is no longer effective in supporting ethanol production. In fact, says Buis says, "We're over-producing ethanol."
Instead, Buis says the current barriers to increased ethanol use are in an inadequate infrastructure, hence the call for more blender pumps.
The government paid about $5 billion last year to companies to blend about 10.6 billion gallons of ethanol into gasoline, but Growth Energy says most of that money would be better spent paying for things such as specialized blender pumps at gas stations that can dispense ethanol.
Jeff Broin, chief executive of the largest U.S. ethanol company, POET, and co-chairman of Growth Energy, said, "With a blender pump in every neighborhood and a flex-fuel car in every garage, ethanol can compete against oil without the tax incentive."
The organization also is calling for legislation to require all new vehicles sold in the United States to be "flex-fuel" vehicles capable of using the E85 blend. This would result in as many as 120 million flex-fuel vehicles in use in the United States , according to the organization.
Buis said he hopes to get a change in policy through the climate and energy legislation the Senate is set to consider the last week of July. The current ethanol blenders' tax credit is scheduled to expire at the end of this year.
Growth Energy is not alone in its call for a shift in the way federal ethanol subsides are disbursed –– the National Farmers Union has issued a statement of support –– but others in the ethanol "movement" are not on board. The Renewable Fuels Association –– which also lobbies for ethanol –– released a joint statement with the American Coalition for Ethanol, the National Corn Growers Association, and the National Sorghum Producers, supporting extension of the blenders' credit.
"There can be no question that the current tax policies to support the evolution of America 's ethanol industry have been successful," said Renewable Fuels Association President Bob Dinneen. "Now is not the time to add uncertainty and complexity to the energy tax debate."
Critics say the industry should stand on its own after receiving subsidies for 30 years and argue the tax credits are a waste of taxpayer dollars.
Meanwhile, the House Ways and Means Committee is considering cutting the value of the ethanol tax credit by 20 percent, citing a summary of a bill the panel is scheduled to mark up soon. The credit would be worth just 36 cents a gallon under the proposal, instead of the 45 cents now available.
The Congressional Budget Office estimates that the ethanol tax credit cost taxpayers $5.2 billion last year. At a reduced rate of 36 cents, the subsidy would cost $3.8 billion in 2011, according to an estimate in the House discussion draft. The proposal would extend the diminished credit through the end of 2011.
Three Democrats who sit on Ways and Means — Joseph Crowley (N.Y.), Mike Thompson (Calif.) and Pete Stark (Calif.) — are among the sponsors of legislation (HR 3187) that would eliminate the credit by 2014. Details of the Growth Energy proposal can be accessed online at this site.
