UpdateUS renewable groups welcome Senate ethanol-subsidy deal

07 July 2011 17:32  [Source: ICIS news]

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HOUSTON (ICIS)--US renewable fuels trade groups on Thursday welcomed a Senate compromise proposal that would, if enacted, end ethanol subsidies and tariffs on 31 July.

This agreement has enough of the right ingredients to move the conversation forward,” said Brooke Coleman, executive director of the Advanced Ethanol Council (AEC).

But Coleman said the deal’s provisions on tax credits could create uncertainty and risk.

“While we appreciate the ambition to lengthen the duration of the tax credits, the last minute switch from a yearly credit to a gallon-based, capped credit adds artificial and unnecessary layers of uncertainty and risk for the financing community,” he said.

Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA), also welcomed the compromise.

While not perfect, the compromise demonstrates the willingness of ethanol producers to do their part in addressing US government budget concerns while not sacrificing the progress and evolution of the industry, he said.

RFA is particularly pleased that the compromise deal commits funds to help develop new technologies and new feedstocks for cellulosic ethanol, he said.

However, Dinneen added that funding for cellulosic ethanol development should not be capped.

“We are concerned that capping cellulosic ethanol development sends the wrong signal, and we will continue to work with the Congress and the Obama Administration to address this anomaly in as this process continues,” he said.

Under the deal, as proposed by three Senators, the US will repeal the 45 cent/gal ethanol blender credit, effective on 31 July, ICIS reported. This should save $2bn (€1.4bn) through the rest of the year.

The 54 cent/gal ethanol tariff will also end on 31 July.

Two thirds of the money saved by ending the benefits - $1.33bn - will go towards reducing the nation's deficit, the senators said.

Another $668m will go towards new energy technology.

Specifically, the deal will extend the nation's cellulosic biofuel tax credit by three years. The credit, worth $1.01/gal, was set to expire on 31 December 2012.

In addition, the agreement will expand the definition of cellulosic biofuel to include biodiesel made from algae.

Cellulosic blending caps will be set at 50m gal (189m litres) for 2013, 100m gal for 2014 and 155m gal for 2015.

($1 = €0.70)

Al Greenwood contributed to this article 

Check out Doris de Guzman’s Green Chemicals Blog for views on sustainability issues


By: Stefan Baumgarten
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