Washington, D.C. - Senators John Thune (R-S.D.) and Amy Klobuchar (D-Minn.) today introduced legislation, S.1185, the Ethanol Reform and Deficit Reduction Act, to transition our country to a more sustainable model of incentives for domestic renewable fuel production, while helping reduce the nation's deficit by $1 billion. Thune and Klobuchar's bipartisan legislation would end the existing 45 cent per gallon Volumetric Ethanol Excise Tax Credit on July 1, 2011, instead of the current expiration date of December 2011, and would dedicate $1.5 billion of the savings to renewable fuel infrastructure, helping provide consumers with lower gas prices.
"With 10 percent of our nation's fuel supply coming from ethanol, our domestic biofuels industry is helping displace foreign sources of energy every single day," said Thune. "Despite the important role they play in powering our economy, the renewable energy industry understands the challenging fiscal condition our nation is in and is more than willing to make necessary adjustments. Our bipartisan legislation takes a commonsense approach to reform the current volumetric tax credit and puts savings toward deficit reduction and biofuels infrastructure, which benefits consumers."
"Our bipartisan legislation would provide businesses a clear glide-path to move forward and keep the biofuels industry competitive while reducing our debt by a billion dollars this year," said Klobuchar. "Homegrown energy has played an important part in reducing our dependence on foreign oil, combating rising gas prices, and supporting thousands of jobs in Minnesota and throughout our nation."
Original cosponsors of this legislation include: Senators Chuck Grassley (R-Iowa), Mike Johanns (R-Neb.), Tom Harkin (D-Iowa), Dick Lugar (R-Ind.), John Hoeven (R-N.D.), Tim Johnson (D-S.D.), Jerry Moran (R-Kan.), Ben Nelson (D-Neb.), Al Franken (D-Minn.), Mark Kirk (R-Ill.), Dan Coats (R-Ind.), Richard Durbin (D-Ill.), and Claire McCaskill (D-Mo.).
Additional details of the Thune-Klobuchar bill include:
Allocate $1 billion toward deficit reduction.
Blender Pump Investment Tax Incentive
Expand existing alternative fuel station tax credit to include blender pumps and extend the credit through 2016 or until the Secretary of Treasury has certified 53,000 blender pumps nationwide, whichever occurs first; modify the tax credit to allow for ethanol blends between E15 and E85; and clarify that entire cost of dual-use blender pump qualifies for the credit rather than the incremental cost.
A taxpayer may take a 30 percent credit for the installation of alternative fuel infrastructure, up to $30,000, including E85 (85 percent ethanol and 15 percent gasoline) infrastructure. This credit is currently scheduled to expire on December 31, 2011.
Small Producer Ethanol Credit
Extend through 2014 the small producer ethanol credit. This credit is currently scheduled to expire December 31, 2011. The small ethanol producer credit is valued at 10 cents per gallon of ethanol produced. The credit may be claimed on the first 15 million gallons of ethanol produced by a small producer in a given year. It applies to any ethanol producer with production capacity below 60 million gallons per year.
Credit for Production of Cellulosic Biofuels and Special Depreciation Allowance for Cellulosic Biofuels Plants
Extend through 2014 the existing $1.01 per gallon tax credit for cellulosic biofuels (scheduled to expire December 31, 2012) and include algae-based biofuels.
Extend through 2014 the 50 percent accelerated depreciation for new cellulosic biofuels plant property (scheduled to expire December 31, 2012) and include algae-based biofuels.
Variable Credit Safeguard
Create a variable safeguard to protect against drops in the oil market by designing a variable blender's credit that would be triggered only if oil fell below $90 per barrel. The modified credit would be a fraction of the current credit and would decrease by 2 cents per gallon in each subsequent year. This safeguard would expire at the end of 2014.