US ethanol industry wants govt to extend subsidy
Sunday, 18 July 2010
MUMBAI, July 17 (Commodity Online): Corn based ethanol producers in US wanted the Congress to extend the tax credit cost for biofuel to five more years due to the increased use of biofuel for generating energy as compared to gasoline.
The emergence of this demand came after the Congressional Budget Office report, which showed the high costs on taxpayers for generating corn-derived ethanol to reduce gasoline consumption by one gallon: a figure the CBO puts at $1.78.
The CBO estimate reflects the fact that it takes about 1.5 gallons of ethanol to generate the same energy as one gallon of gasoline. Blenders of transportation fuel reap a tax credit of 45 cents for every gallon of ethanol they mix with gasoline.
CBO also pointed out the subsidy given to ethanol companies to be expired on December 31 this year and the biofuel tax credits cost about $6 billion during the government's 2009 fiscal year.
The Renewable Fuels Association, a Washington DC trade group representing ethanol makers, said the CBO study takes the industry's subsidy "out of context, providing no comparison to other technologies or contrasting the benefits of biofuels against the clear destruction wrought by fossil fuels."
Identical bills in the House and Senate call for extending the tax credit, which has existed in some form since the 1970s as a way to stimulate the appetite of gasoline retailers for alternative fuel.
The emergence of this demand came after the Congressional Budget Office report, which showed the high costs on taxpayers for generating corn-derived ethanol to reduce gasoline consumption by one gallon: a figure the CBO puts at $1.78.
The CBO estimate reflects the fact that it takes about 1.5 gallons of ethanol to generate the same energy as one gallon of gasoline. Blenders of transportation fuel reap a tax credit of 45 cents for every gallon of ethanol they mix with gasoline.
CBO also pointed out the subsidy given to ethanol companies to be expired on December 31 this year and the biofuel tax credits cost about $6 billion during the government's 2009 fiscal year.
The Renewable Fuels Association, a Washington DC trade group representing ethanol makers, said the CBO study takes the industry's subsidy "out of context, providing no comparison to other technologies or contrasting the benefits of biofuels against the clear destruction wrought by fossil fuels."
Identical bills in the House and Senate call for extending the tax credit, which has existed in some form since the 1970s as a way to stimulate the appetite of gasoline retailers for alternative fuel.