Biofuels backers probably have a little spring in their step today as provisions have now been tucked into the tax package worked out between President Obama and Republican congressional leaders which would extend ethanol and biodiesel incentives.
Here's where things stand as the Senate launches into consideration of the package:
Ethanol: The volumetric ethanol excise tax credit (VEETC) or blenders' credit, would also known as the blenders’ credit – will continue at its current level of 45 cents through Dec. 31, 2011. The tariff on imported ethanol will continue at its current level of 54 cents. The "Section 1603" grant program, a program from the 2009 economic stimulus law which allows companies to claim a grant instead of an existing investment tax credit, would be extended for a year.
The VEETC and the import duty had been scheduled expire at the end of 2010.
Biodiesel: The $1 per gallon biodiesel tax credit would be made retroactive to Jan. 1, 2010, and would continue through 2011. The plan would also continue the small agri-biodiesel producer credit of 10 cents per gallon. The bill also extends through 2011 the $1.00 per gallon production tax credit for diesel fuel created from biomass.
The biodiesel tax credit lapsed at the end of 2009 and lawmakers could not agree on a plan during 2010 to revive it.
Alternative fuels credit. The bill would extend the $0.50 per gallon alternative fuel tax credit through 2011. The bill does not extend this credit any liquid fuel derived from a pulp or paper manufacturing process (i.e., black liquor).
And folks like the Renewable Fuels Association (RFA)are pretty happy this morning. "Continuing to invest in our domestic ethanol industry is a proven method to create jobs and spur innovation and economic opportunity all across America," said RFA President and CEO Bob Dinneen. "While this legislation is not as long as we had hoped, it is a common sense approach that will ensure American ethanol production continues to evolve and new technologies commercialized. We urge Congress to move expeditiously to pass the legislation. Then, honest and good faith discussions about how we reform all energy tax policy -- including for all oil and ethanol technologies -- can occur."
Meanwhile, House Democrats opted Thursday to vote as a caucus against the tax package that President Obama worked out with Republican congressional leaders. But House Speaker Nancy Pelosi (D-Calif.) signaled they would continue to work on the plan before it came up for a vote in the House.
"In the caucus Thursday, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written," according to a statement released from Pelosi. "We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote."
One of the main provisions irking House Democrats are details of the estate tax plan in the package. The agreement included a setting the estate tax at 35% on estates beyond $5 million per person ($10 million per couple) for two years. Democrats say that's too generous and want the provision scaled back to the marks that were in effect for 2009 -- a 45% rate on estates beyond $3.5 million per person ($7 million per couple).
Should they be successful in getting the estate tax details changed, key will be whether Republicans would go along with any such shift.
So next week looms large once again for the fate of the 2001 and 2003 tax cuts that were to expire at the end of this year. And now, biofuels incentives are part of the package as many had expected to be the eventual case.