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Nathanael Greene’s Blog

Baucus tax bill has good stuff, but corn ethanol tax credit is poison pill

Nathanael Greene

Posted December 3, 2010 in Moving Beyond Oil, Solving Global Warming

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Montana Senator Max Baucus’ release of a tax bill proposal yesterday includes investments in clean energy that would be a step forward in creating a clean energy economy, such as an extension of a grant program for clean energy projects and a tax credit for construction of high efficiency new homes.  Unfortunately, the proposal undermines these investments by throwing even more good money after bad by extending the environmentally harmful and fiscally irresponsible corn ethanol tax credit—known as the Volumetric Ethanol Excise Tax Credit or “VEETC”.  This handout to the oil industry means doing more harm than good when it comes to investing in clean energy and must be eliminated.

The VEETC will cost $4.75 billion next year alone, more than 2 times the roughly $2.25 billion in tax incentives for all other renewables in the tax extenders package.  Last year, corn ethanol received more than 70% of all federal tax incentives for all forms of renewable energy.  Not only is the VEETC bad fiscal policy, but it’s sucking all the oxygen out of our federal budget for renewables. Continuing to pump scarce taxpayer dollars into polluting corn ethanol will kill any hope that we’ll be able to transition to the new, better-performing advanced biofuels we need.

Instead of paying oil companies billions in scarce taxpayer dollars to use corn ethanol they are already required to use by law, Congress and the Obama administration must begin investing in smart energy policies that support a transition to the advanced biofuels that will deliver more jobs, more energy security and a cleaner environment.  Cutting wasteful handouts to the corn ethanol industry is the only chance we have to turn around the direction of our biofuels policy. The VEETC must be allowed to expire at year-end.

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Comments

BrianDec 3 2010 09:20 PM

You all can't help but demagogue the oil industry. The VEETC is horrible; but framing it as a handout to the oil industry is disingenuous. You all know very well that the ethanol industry (Growth Energy, RFA, etc.) are the people fighting like hell to keep this thing around, while many oil companies have said publicly that they'd be fine with it expiring.

Tom KoehlerDec 4 2010 01:40 PM

Corn ethanol - displaces 10% of our nation's gasoline. Nothing else come close to that. And you call it names like "dirty" and castigate it. Who are you working for and who is paying you? You certainly are not helping America wean itself from petroleum addiction and you certainly are not helping the environment. Something stinks here and i think its corruption. But we will never know because NRDC is like the rest of all politics...paid for by special interests but not transparent.

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