Ethanol. Right. Now.

Gas prices and the ethanol tax credit, in perspective

As we prepare for our ACE fly-in to DC happening next week, I crunched a few numbers and found the results interesting:

During March 2009, the time of our first DC fly-in, gas prices were under $2 per gallon.  Today, gas prices are averaging above $3.50 per gallon -- which means we're spending a half-billion more dollars per day to fuel our cars.  Every day, the U.S. is spending almost $1.5 billion just on gasoline, not including diesel or jet fuel.

Just the increase over March 2009 will be triple what the U.S. spends on the ethanol tax credit (VEETC, the Volumetric Ethanol Excise Tax Credit) by the time we get to DC next week.

The ethanol tax credits each year costs about what U.S. motorists spend on gasoline in only 4 days.

Does this put a few things in perspective?

Posted by: Ron Lamberty, Vice President / Market Development, American Coalition for Ethanol

Empowering fuel choice, remarks by ACE's Brian Jennings

“We’ve chosen ‘empowering fuel choice’ as our theme for this year’s conference,” said Brian Jennings, Executive Vice President of ACE, “and it really embodies what ACE has been about for a long time.”

Jennings cited several years of progress on the idea of fuel choice and multiple fuel blends.  In 2007, ACE published an “optimal blends” study which found that blends like E20 and E30 can perform well in cars, and in some cases get mileage as good as with straight gasoline.  In 2008, ACE published the first technical guide for petroleum marketers on the topic of blender pumps.  Last year, ACE was proud to sign on to the E15 waiver application along with other groups, ACE launched the “Blend Your Own Ethanol” national campaign, and bi-partisan legislation was introduced in Congress to improve access to flexible fuel vehicles and blender pumps.

However, with all this progress, ethanol has been forced against a wall.

“The blend wall is real, and it’s here,” Jennings said.

“Congress is arguing over everything, and EPA continues to dither on the E15 waiver,” Jennings said.  “This is gravely serious for us in the ethanol industry, but it’s also important for every American.”

If regulations allowed more ethanol to a gallon of gasoline, every consumer would be able to save money at the pump.  This is being blocked today by 30-year-old regulations, and Jennings says the Administration doesn’t recognize the mixed signals it is sending.

“The RFS sends a signal to produce more ethanol, but a thirty-year-old Clean Air Act restriction that limits ethanol to ten percent per gallon of gasoline is sending a signal to limit the use of ethanol,” Jennings said.

He expressed the industry’s frustration over the multiple delays in the U.S. EPA’s decision on the E15 waiver.  After 270 days, they said they needed more time.  In June they said they needed even more time, and now they are leaning toward approving up to E15 only in 2007 and newer vehicles.

“We could say the EPA is slow-walking the E15 issue, but that would imply that some progress is being made,” Jennings said.

He points out that if EPA approves E15 in only 2007 and newer vehicles, only 2 out of 10 vehicles would be able to use it.  How many petroleum retailers are going to change their fuel slate for that small market?

A main focus right now is the ethanol tax credit, the Volumetric Ethanol Excise Tax Credit (VEETC).

“If VEETC expires, jobs will be lost and prices will rise for consumers,” Jennings said.

Jennings said that Members of Congress are expressing to ACE that, with only 20 days left in the Congressional calendar, we need to focus on what’s doable.  Part of that depends on grassroots advocates and their willingness to talk to their Members of Congress – especially during the August Congressional recess.

“The very best ethanol lobbyists are sitting here,” Jennings said.  He encouraged ACE members and all ethanol supporters to take advantage of the August recess and meet with their Representatives, invite them to visit your ethanol plant or meet with your board of directors.  “That’s how we get things done,” he said.

Energy legislation needs to include these two provisions

The American Coalition for Ethanol, the National Corn Growers Association, and the Renewable Fuels Association wrote a letter today to U.S. Senate Majority Leader Harry Reid, encouraging him to include two key provisions in upcoming energy legislation - S. 1627, the Consumer Fuels and Vehicles Choice Act, and S. 3231, the Green Jobs Act.

"As you work to develop legislation to address the Deepwater Horizon spill in the Gulf of Mexico and
meet America’s many other energy challenges, we are writing to encourage you to include two bills in
your broad energy legislation that will promote the further production and use of biofuels in the United
States and thus help wean us off our dependence on oil: 1) the Consumer Fuels and Vehicle Choice Act
(CHOICE Act), S. 1627, and 2) the Grow Renewable Energy from Ethanol Naturally Jobs Act, or 'GREEN
Jobs Act,' of 2010, S. 3231."

Read the letter in its entirety here.

EPA delays E15 decision once again

EPA is required by law to make a decision on the request to allow the use of cleaner burning blends of up to 15 percent ethanol, and by the time they actually make a decision, it will be a full year later than the law requires. Every addict needs enablers, but frankly we could not have imagined the Environmental Protection Agency would be one of the major defenders of the status quo that is now fouling beaches from Louisiana to Florida.

We also have to wonder who is influencing EPA when they agree it will be impossible to meet the Renewable Fuels Standard but refuse to remove the requirement that fuel contain a minimum of 90 percent petroleum. That decision can only be good news for the likes of BP and ExxonMobil, and anyone else who chooses to ignore the dangers of relying on unstable and hostile foreign regimes for our fuel, or the dangers of drilling two miles below the ocean.

EPA could be accused of slow-walking this E15 decision, but that would imply that progress is being made. This decision has been pushed back an entire year, and has gone from making cleaner burning E15 available to all cars, to only 2001 and newer cars, and now possibly to only those made after 2007. Those vehicles were practically fresh off the assembly line when the data was submitted proving blends beyond E10 are safe for all vehicles, and now two years and millions of dollars have been wasted as EPA defends the status quo. Meanwhile, oil has been spilling from the Gulf of Mexico for 60 days and counting. What do government bureaucrats need to see to be convinced that our nation desperately needs take action to reduce our use of oil?

When ACE met with EPA in March of this year, we were told that by mid-year EPA was planning to approve E15 for 2001 and newer vehicles, a commitment the Agency put in writing in a December 1 letter. While there are many practical challenges to implementing E15 for only 2001 and newer vehicles, it may have been better than the status quo of being limited to only E10. But to add insult to injury, EPA is now indicating that they will consider E15 for only vehicles made after the 2007 model year – only 20 percent of the U.S. fleet. Even if every single vehicle made after 2007 used E15 every time it filled up, it would barely allow the U.S. to meet the 2012 Renewable Fuels Standard requirement.

As oil is ruining livelihoods and closing businesses, the economic and job-creation benefit of ethanol is being told it must wait in the wings. With the price of ethanol being almost a dollar less per gallon than gasoline today, EPA’s approval of a 5 percent increase in the ethanol content could save the U.S. more than $19 billion in fuel expenditures every year – almost as much as BP has committed so far to clean up the damage that oil has done in the Gulf.

ACE is encouraging all ethanol supporters to contact their Members of Congress to urge their support of legislation for more flexible fuel vehicles and blender pumps, such as S. 1627, the Harkin-Lugar ‘Consumer Fuels and Vehicles Choice Act.’ More FFVs and blender pumps would bring flexibility into the U.S. fuel system and give consumers greater fuel choice, while bypassing the bureaucracy that is preventing the cleaner alternative fuels from reaching the marketplace.

Posted by: Brian Jennings

Ethanol responds to new environmental group stall tactics

The American Coalition for Ethanol (ACE), Growth Energy, the National Corn Growers Association (NCGA), and the Renewable Fuels Association (RFA) today countered the tired claims of the Environmental Working Group (EWG) that American ethanol is not a sound investment.

Criticizing the tax incentive provided for the use of ethanol is a misleading exercise if proper context is not provided. A recent International Energy Agency report concluded the world spent $550 billion in subsidies for fossil fuels in 2008 alone. The approximately $4.5 billion spent to increase America’s use of domestically produced ethanol in 2008 is a bargain by comparison.

Equally misleading is a discussion of tax incentives without appropriately attributing increases in economic activity resulting from those incentives. In 2009 alone, U.S. ethanol production helped nearly 400,000 Americans keep their jobs or find a new one, added more than $15 billion to federal, state and local government tax revenues, and displaced more than 360 million barrels of imported oil.

“It’s disappointing that some in the environmental community continue to have an irrational and unsophisticated notion of how to reduce fossil fuel use,” said Brian Jennings, Executive Vice President of the American Coalition for Ethanol. “Some say the solution is to get rid of corn-based ethanol today, in hopes that some other potentially promising, but not yet commercialized fuel will be available tomorrow. The result would be more pain at the pump and more pollution for the planet. Ethanol is the only commercially available alternative to gasoline today, and removing it from our nation’s fuel supply would mean more oil use – and we ought to learn from the painful and ongoing lesson in the Gulf of Mexico that more oil is simply not a sustainable path.”

“It is unfortunate that groups purporting to represent the environment are still criticizing the only alternative fuel – domestic ethanol – that reduces our dependence on foreign oil,” said Tom Buis, CEO of Growth Energy.

“Family farmers in the U.S. have provided us with five record crops since 2005, and we're growing 20 percent more corn per acre than any other nation," said NCGA President Darrin Ihnen. "For American corn farmers, the ethanol industry provides the opportunity to add value added to our commodity while expanding the role of U.S. agriculture in our movement toward greater energy self-reliance. It needs and deserves the support it's getting in Washington.”

“America’s investment in domestic renewable fuels is only just beginning to pay dividends,” said RFA President and CEO Bob Dinneen. “Current technologies are directly replacing oil-based fuels in American gas tanks and creating tens of thousands of jobs. New technologies are coming online that will expand ethanol’s economic benefit while continuing to improve the industry’s environmental footprint and energy security contribution. The environmental community remains shortsighted in its dismissal of ethanol, particularly as the devastating impacts of our oil addiction are currently on full display.”

Agricultural production and ethanol biorefining continue to become increasingly efficient. According to a recent article in the scientific journal Biotechnology Letters, ethanol production alone has seen a 28 percent reduction in energy use, a 32 percent reduction in water use, and a 5.3 percent increase in ethanol yields all in less than a decade. Conversely, deep water drilling and tar sands extraction continue to drive oil’s carbon footprint even higher.

This assault from EWG is just the latest in a line of impractical attacks the environmental community has launched against American ethanol production.  Recently, environmental activists suggested that ethanol use in America would reduce our oil consumption – a good thing – and thus drive down the world price of oil – also a good thing. As a result, other nations would use more oil. Ergo, according to their tortured logic, ethanol must be penalized for the carbon emissions from the increase in oil use in other nations. Curiously, EWG suggests that more could be gained from proper tire inflation and obeying the speed limit. Yet, under the current logic of the environmental community, all of those activities would have to be penalized for increasing oil use elsewhere. 

“No other option exists today that can match ethanol’s ability to reduce oil use in American vehicles,” the groups stated.  “Rather than erecting roadblocks, we would welcome the constructive input of the environmental community to expand our use of renewable fuels and reduce our need for oil. That starts by allowing the use of 15 percent ethanol blends.”

The ethanol tax credit must be extended

A bill was introduced today in the U.S. Senate by Senators Charles Grassley (R-IA) and Kent Conrad (D-ND) to extend VEETC -- the Volumetric Ethanol Excise Tax Credit -- for five years at the current rate of 45 cents per gallon.  Called the GREEN Jobs Act of 2010 ("Grow Renewable Energy from Ethanol Naturally"), the bill mirrors its U.S. House companion bill, introduced on March 25 by Congressmen Earl Pomeroy (D-ND) and John Shimkus (R-IL). 

In his press release, Senator Grassley used the biodiesel tax credit as an example, stating that its expiration at the end of 2009 cost 29,000 clean-energy jobs and put 23,000 more at risk in America's biodiesel industry.

"We can't risk a repeat performance with ethanol, where 112,000 jobs are at stake," Grassley said.

Senator Conrad said, "Our country is in serious danger because of skyrocketing energy costs. This growing crisis demands urgent action. We must be committed to coming together in a bipartisan way to lessen our dependence on foreign oil, while aggressively pursuing alternative sources of energy such as biofuels. Extending these tax credits is a step in the right direction."

Brian Jennings of the American Coalition for Ethanol cited ethanol's direct benefits to Americans.

"The American people directly benefit from ethanol through the creation of hundreds of thousands of jobs and by saving money on a clean, renewable product at the pump. If it is a priority to save these high-skill, high-wage jobs in the U.S. and provide consumers with affordable fuel, it is imperative that these ethanol tax credits are renewed this year."

If you support the extension of these important tax credits for ethanol, please contact your Members of Congress and urge their support of these bills.  ACE hosts a Legislative Action Center where you can send a message to your representatives in Congress in less than one minute's time: www.capwiz.com/ethanol.

Posted by: Kristin Brekke

Legislation introduced in U.S. House to extend the ethanol tax credit

Today Congressmen Earl Pomeroy (D-ND) and John Shimkus (R-IL) introduced HR 4940, the "Renewable Fuels Reinvestment Act," to extend the ethanol tax credit, which is set to expire on December 31, for five years at the current 45-cent-per-gallon level.  The bill would also extend the ethanol Small Producers Tax Credit, the Cellulosic Ethanol Production Tax Credit, and the 54-cent secondary tariff for five years.  The bill currently has 29 co-sponsors.  Our official press comments can be read in this release. 

I was just in Washington, DC earlier this week for the American Coalition for Ethanol's second annual "Biofuels Beltway March."  Almost 30 of ACE's grassroots members from across the Midwest traveled to Capitol Hill to ask Congress to reauthorize VEETC, the Volumetric Ethanol Excise Tax Credit.  We broke into small groups and met with more than 60 Members of Congress or their staff, talking to them about how the ethanol tax credit directly benefits consumers and the hundreds of thousands of jobs all across America that are supported by the ethanol industry.

These grassroots advocates can tell ethanol's story in a way no paid lobbyist can.  I was reminded once again that a success story ethanol has been for rural America as I sat with farmer board members who told Congress about ethanol's benefits to the farm economy and to their small communities which have good new jobs.  I was impressed as I listened to ethanol producers talk about the increasing efficiencies at their plants, leading to lower water and energy usage.  I would like to thank each of these ethanol supporters for taking the time to participate in our DC fly-in.

A recent study found that in 2009, the U.S. ethanol industry supported nearly 400,000 jobs in the U.S. and generated a surplus beyond the cost of its tax credit of $3.4 billion for the federal treasury. Ethanol's positive return on investment is clear, and we look forward to working with leaders in Congress to enact an extension of these important incentives.

Posted by: Brian Jennings

Second annual ACE ethanol fly-in wraps up in DC

Thirty members of the American Coalition for Ethanol (ACE) have spent the last two days on Capitol Hill for the second annual ACE "Biofuels Beltway March," a DC fly-in that puts grassroots ethanol advocates in touch with Members of Congress.  We'll provide a full report as the staff members return to the office tomorrow, but initial reports are that the event was a great success!

What a critically important time to visit face-to-face with Congress.  So many important issues are at hand, including the extension of the Volumetric Ethanol Excise Tax Credit, the need to approve E15 for all vehicles, and legislation to promote more flex-fuel vehicles and ethanol blender pumps.

To see brief reports from some of the fly-in participants, go to www.twitter.com and search for #ACEflyin to see all 'tweets' marked with the official event hash tag. 

Posted by: Kristin Brekke

The best ethanol lobbyists

In just a few days ACE members will set out to take part in our annual “fly-in” where we showcase to Members of Congress the grassroots strength and voice of the ethanol industry.  Every advocacy/trade group in the country has a lobbyist – there’s nothing particularly special about that.  What makes ACE unique and helps us effectively advocate for aggressive and progressive ethanol policies is that we have thousands of grassroots members who are willing to take the time to let their Members of Congress know why ethanol is important to them.

A handful of these advocates join us each year in DC for the fly-in.  During last year’s fly-in ACE members Vivian Pappel (who owns a lab supply company in Nebraska), Rich Wiarda (a South Dakota farmer and board member for an ethanol plant) and Bill Hejl (a North Dakota farmer and former president of the World Association of Beet and Cane Growers) and I met with several Members of Congress and their staff.  Vivian, Bill, and Rich are pictured here with the Legislative Assistant in the office of Congressman Steve Kagen of Wisconsin.

Vivian said she had never “lobbied” Congress before, but thanks to some help from her teammates, a briefing we did for her and others prior to the Hill visits, and a few tips on effective lobbying – she was a rock star, as were Rich and Bill. For example, Vivian was able to impress upon Congress that her laboratory is able to create new jobs when her ethanol plant customers are doing well, and alternatively she faces the thankless proposition of cutting jobs when her ethanol plant customers are hurting.  It is one thing for a registered lobbyist to tell a Member of Congress that ethanol creates jobs in rural America – it is quite another for a business owner like Vivian to make that case.

Vivian’s story is the genuine grassroots narrative that is so compelling to Members of Congress.  It is that sort of compelling ethanol story our members intend to convey on March 22-23 in DC, when we make our voices heard on issues such as VEETC reauthorization, blender pumps, and FFVs.  There are still a few days remaining to sign up for the fly-in.  Register or learn more at this link.

Posted by: Brian Jennings