Senate Vote Fails on Ethanol Tax Incentive

02:30PM Jun 14, 2011
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Source: Renewable Fuels Association
The Renewable Fuels Association today applauded those Senators that voted to stop the political gamesmanship of Sen. Tom Coburn (R-OK) over federal investment in ethanol. On a cloture vote to proceed to an amendment that would end the current ethanol tax incentive immediately, Senator Coburn lost 40-59, falling 20 votes short of the sixty votes needed to obtain cloture.
Corn futures took a tumble today as many traders believed this would pass the Senate vote. 
"This vote demonstrates the lack of appetite for this kind of destructive policy and political gamesmanship. The Senate and the country need to focus on a comprehensive energy strategy that seeks to expand America’s ability to renewably meet its fuel needs. Initiatives like the legislation introduced by Senators Thune and Klobuchar yesterday are the exact kind of responsible policy prescriptions that will create domestic jobs and help meet the energy challenges of the 21st century. With this kind of political theater hopefully behind us, American ethanol producers are ready to work with lawmakers to ensure a robust and diverse domestic ethanol industry can develop in a fiscally responsible manner."

The RFA supports the Ethanol Reform and Deficit Reduction Act  offered by Senators John Thune (R-SD) and Amy Klobuchar (D-MN).  Under this proposal, the current ethanol tax incentive, known as VEETC, would transition to a variable tax incentive tied to the price of oil. Additionally, the bill would make available funds saved by the transformation of VEETC to expand ethanol fueling infrastructure by improving tax policies currently available for blender pumps and other ethanol-related infrastructure. Specifically, the bill calls for 53,000 blender pumps, a number the RFA noted was needed to help achieve the goals of the Renewable Fuels Standard. The bill would also extend current tax incentives for the next generation of ethanol technologies using cellulosic and other feedstocks. If passed, the bill would take effect July 1, 2011. This bill is similar to legislation introduced by Senators Chuck Grassley (R-IA), who is a cosponsor of this bill, and Kent Conrad (D-ND).