US government group suggests ending ethanol tax credit

02 October 2009 23:05  [Source: ICIS news]

HOUSTON (ICIS news)--The US Government Accountability Office (GAO) suggested that the nation should consider lowering or removing its ethanol tax credit since the industry is mature, according to a report released on Friday.

The 45 cent/gal (€0.08/litre) tax credit was established to support the nation's ethanol industry, the GAO said.

The GAO report also recommended that regulators develop a way to assess how all stages of biofuels production could affect the environment - from cultivation and harvest to use.

A US trade group, the Renewable Fuels Association (RFA), said the report repeated old criticisms of the ethanol industry without addressing the nation's reliance on foreign oil.

“This amounts to little more than a book report, rehashing many of the criticisms that have been leveled at the ethanol industry from a variety of special interests without introducing any new information," the RFA said.  "As is the nature of reports such as these, they are out of date as soon as they are completed."

The group said US ethanol producers are operating more efficiently - reducing water use and energy use by 20% in the past five years.

“The tax incentive has been instrumental in helping to build a renewable fuels industry in this country," the group said.

"It should remain. As long as petroleum and fossil fuel companies that dominate the energy market continue to receive preferential tax treatment and hidden subsidies, incentives are needed to develop renewable alternatives such as ethanol," the group said.

($1 = €0.69)

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By: Al Greenwood
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