Ethanol Blog
Todd Neeley DTN Staff Reporter

Monday 03/08/10
Biodiesel, Ethanol may Work Together on Long-Term Tax Credits

Representatives of the U.S. biodiesel and ethanol industries said they may work together to seek long-term extension of the biodiesel tax credit and the ethanol blenders tax credit, according to Agriculture Online.

A $1 tax credit for biodiesel expired Dec. 31, 2009 and the ethanol blenders credit is set to expire Dec. 31, 2010.

Speaking at the Commodity Classic in Anaheim, Calif. last week South Dakota soybean farmer and Director of the National Biodiesel Board, Bob Metz, said his group would like to see a long-term tax credit in place. Metz also asked the ethanol industry to work with biodiesel on the longer-term credits.

Brian Jennings, executive vice president of the American Coalition for Ethanol said it may become more difficult to secure long-term credits as the oil industry continues to acquire ethanol assets.

If fewer plants are owned by farmers and local investors, "you can say goodbye to the support we've enjoyed in Congress," Jennings told Agriculture Online.

(Agriculture Online, March 7, 2010)

(http://bit.ly/…)

DTN: As we've seen in the past year, neither the ethanol industry nor the biodiesel industry can take anything for granted. Although the biodiesel industry appeared to have a strong case to have its $1 tax credit renewed, such action was lost in the shuffle in Washington and simply put off because lawmakers know they could reinstate the credit retroactively. The year before the ethanol industry saw 6 cents shaved off the blenders tax credit, dropping from 51 cents to 45 cents. Both industries insist that they haven't lost status in Washington. However, lawmakers have become increasingly aware of the opposition both industries face when it comes to federal assistance. What that might mean going forward is anybody's guess. (Todd Neeley)
Posted at 10:06AM CST 03/08/10 by Todd Neeley
Comments (2)
Consolidation is unavoidable in the renewable fuels sector. Congress has been an incredible supporter and has provided the ultimate gift in RFS2. This mandate should now allow the renewable fuels industry to take off its training wheels and rely upon the value of the RIN to assist production. How do you turn a liability in to an asset (insert Arthur Anderson joke here)? From the US government viewpoint, you ditch renewable fuel excise tax credits, allow the RIN to do its job, and start generating revenues from the allocation of carbon to the country's biggest polluters. And what happens when the carbon credits generated by the renewable fuels sector pale in comparison the total allowances required by the biggest polluters? Government revenues increase even more! How does Exxon turn a liability into an asset? They deploy their cash reserves in a manner that delivers greater returns than their weighted average cost of capital. If it is more efficient to own renewable fuel assets, they will buy them. Attention citizens of the USA: we are insolvent, and there will be reckoning ahead. Excise tax credits for renewable fuels and their potential sunset are symbolic of a future dictated by necessity rather than desire.
Posted by Andrew Gray at 11:21AM CST 03/08/10
Even if the federal mandarins catch on, they might just want to expand the franchise, under the banner "Insolvent R US"!
Posted by S.D. Maley at 12:40AM CST 03/09/10
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