Senators Coburn, R-Okla., and Feinstein, D-Calif., have filed an amendment that would eliminate the 45 cents/gallon blender’s tax credit and the 54 cents/gallon tariff on imported ethanol. Sen. Coburn said the credit costs $5 billion a year.
“Ethanol subsidies and tariffs sap our budget,” Sen. Feinstein said in a statement. “They’re bad for the environment, and they increase our dependence on foreign oil. It’s time we end subsidies that we cannot afford and tariffs that increase gas prices.”
Sens. Cardin, D-Md., Webb, D-Va., Burr, R-N.C., Collins, R-Maine, and Risch, R-Idaho, are co-sponsors.
In March, Sen. Coburn made an effort to introduce the legislation but was blocked by Senators who support the ethanol tax credits, protective tariffs and the consumption mandate. Majority Leader Reid, D-Nev., reportedly then agreed to allow a vote on the proposal at a later date but with the condition that it will require a two-thirds majority for adoption.
The pending legislation in the Senate, a small business bill that would have provided the vehicle for the Coburn-Feinstein amendment, was pulled but the Senators are expected to renew their efforts later.
In February, the House adopted an amendment to a spending bill (H.R. 1) by Rep. Sullivan, R-Okla., to prohibit EPA raising allowable ethanol levels in gasoline to 15 percent from 10 percent. The provision did not survive in the final legislation.
Sens. Grassley, R-Ind., and Conrad, R-N.D., have responded to calls for an end to support for ethanol by introducing legislation that would scale back the blenders’ tax credit while continuing other incentives through 2016.
Their bill would reduce the credit from 45 cents/gallon to 15 cents/gallon in 2013. After 2013, the credit would be pegged to the price of oil. There would be no credit if oil prices average at least $90/barrel in a given year and 30 cents/gallon if oil prices are $50/barrel or less. The current 54 cents/gallon tariff on imported ethanol would be reduced to 30 cents in FY12 and 15 cents from ’13-16. The bill would continue the tax credit for cellulosic ethanol at the current $1.01/ gallon through ’16. The alternative-fuel vehicle refueling property credit for equipment such as ethanol-blender or dispenser pumps would be increased to cover the entire cost of the equipment if it is used for ethanol blends of at least 20 percent. The credit, which expires this year, is now capped at 30 percent of installation cost.