House may shield ethanol tax credits from budget ax | TheFencePost.com

House may shield ethanol tax credits from budget ax

Eric Brown

A 45-cent-per-gallon tax credit for ethanol blenders may not be eliminated in its entirety after all, as the U.S. House of Representatives looks to piece together a compromise on the issue rather than pass the bill approved by the Senate back in June.

According to legislative staff for U.S. Rep. Cory Gardner, R-Colo., the Senate’s June bill that approved ending the tax credit for ethanol by the end of July was a nonstarter in the House. The measure would have provided about $2 billion in deficit reductions but worried farmers locally and nationally about its effects on ethanol production and the price of corn.

Sen. John Thune and U.S. Rep. Kristi Noem – both of South Dakota – have been “trying to negotiate legislation that would work with the ethanol industry to change the current tax structure,” a statement from Gardner’s office said.

With debt ceiling and deficit talks in the rear-view mirror – for the time being – House legislators will return from summer recess in September to discuss the ethanol tax credit compromise, among other issues.

In an emailed statement Friday, Gardner spokeswoman Rachel Boxer said the congressman hasn’t seen the details of the new proposal, “but is optimistic that Thune and Noem will be able to work something out that the industry can support and that is also fiscally responsible during these difficult budgetary times.”

Like Gardner, Stephen Koontz and Norm Dalsted, both agriculture economists at Colorado State University, as well as Mark Sponsler, CEO with Colorado Corn based in Greeley, were uncertain this week about the exact details of the ethanol tax credit negotiations.

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“But I’m encouraged,” Sponsler said.

Sponsler expressed concerns recently about the effects the tax-credit elimination would have on the price of corn, which already experiences high volatility. In addition to the bill’s potential effect on the price of corn – a crop of which 26 percent grown in the U.S. goes toward ethanol production – Sponsler was also concerned about how a bill like the Senate’s could hinder efforts toward second-generation ethanol products.

Some have questioned the severity of the impact the ethanol tax credit cut would have on ethanol production and corn prices. The only other alternative for gasoline blending is using methyl tert-butyl ether, an additive that has seen its use decline in the U.S. due to environmental and health concerns, so ethanol would still be used in basically the same quantities regardless of the tax-credit cut or what is passed by the House, Koontz said.

Also, ethanol companies weren’t concerned if the tax credit had been eliminated all together. Ethanol producers, such as Dan Sanders Jr., general manager at Front Range Energy in Windsor, said most of the tax credit was going to petroleum companies anyway – since those are the companies that blend ethanol – and that, with measures included in the Senate’s June bill, ethanol would have been more accessible for consumers.

A 45-cent-per-gallon tax credit for ethanol blenders may not be eliminated in its entirety after all, as the U.S. House of Representatives looks to piece together a compromise on the issue rather than pass the bill approved by the Senate back in June.

According to legislative staff for U.S. Rep. Cory Gardner, R-Colo., the Senate’s June bill that approved ending the tax credit for ethanol by the end of July was a nonstarter in the House. The measure would have provided about $2 billion in deficit reductions but worried farmers locally and nationally about its effects on ethanol production and the price of corn.

Sen. John Thune and U.S. Rep. Kristi Noem – both of South Dakota – have been “trying to negotiate legislation that would work with the ethanol industry to change the current tax structure,” a statement from Gardner’s office said.

With debt ceiling and deficit talks in the rear-view mirror – for the time being – House legislators will return from summer recess in September to discuss the ethanol tax credit compromise, among other issues.

In an emailed statement Friday, Gardner spokeswoman Rachel Boxer said the congressman hasn’t seen the details of the new proposal, “but is optimistic that Thune and Noem will be able to work something out that the industry can support and that is also fiscally responsible during these difficult budgetary times.”

Like Gardner, Stephen Koontz and Norm Dalsted, both agriculture economists at Colorado State University, as well as Mark Sponsler, CEO with Colorado Corn based in Greeley, were uncertain this week about the exact details of the ethanol tax credit negotiations.

“But I’m encouraged,” Sponsler said.

Sponsler expressed concerns recently about the effects the tax-credit elimination would have on the price of corn, which already experiences high volatility. In addition to the bill’s potential effect on the price of corn – a crop of which 26 percent grown in the U.S. goes toward ethanol production – Sponsler was also concerned about how a bill like the Senate’s could hinder efforts toward second-generation ethanol products.

Some have questioned the severity of the impact the ethanol tax credit cut would have on ethanol production and corn prices. The only other alternative for gasoline blending is using methyl tert-butyl ether, an additive that has seen its use decline in the U.S. due to environmental and health concerns, so ethanol would still be used in basically the same quantities regardless of the tax-credit cut or what is passed by the House, Koontz said.

Also, ethanol companies weren’t concerned if the tax credit had been eliminated all together. Ethanol producers, such as Dan Sanders Jr., general manager at Front Range Energy in Windsor, said most of the tax credit was going to petroleum companies anyway – since those are the companies that blend ethanol – and that, with measures included in the Senate’s June bill, ethanol would have been more accessible for consumers.