US ethanol group sees variable credit system as subsidy option

28 June 2011 03:08  [Source: ICIS news]

INDIANAPOLIS (ICIS)--A proposal to replace the tax credit that US refiners get for blending ethanol in gasoline with a variable credit based on crude prices could be one way to reform US ethanol policy, an industry group said on Monday.

The variable credit system would kick in when crude oil prices hit a certain level, of around $90/bbl (€63/bbl) for example, said Tom Bryan, vice president of BBI International.

He was speaking at the sidelines of the 27th International Fuel Ethanol Workshop & Expo (FEW) held in Indianapolis.

The proposal for a variable credit system is gaining widespread support among US ethanol makers, which are facing the possibility of losing government subsidies for their product in the coming months.

The US Senate voted earlier in June to eliminate the 45 cent/gal (12 cents/litre) tax credit that US refiners receive to mix ethanol in gasoline.

However, two US senators have also recently introduced legislation that would swap that credit for a new system that would give tax breaks based on the price of crude oil.

The four-day 2011 FEW conference runs through Thursday and is expected to draw some 2,000 delegates. BBI owns and operates the event.

($1 = €0.70)

For more on ethanol, visit ICIS chemical intelligence

By: William Lemos
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