Our View: On VEETC, We Won

by Garry Niemeyer (National Corn Growers Association) Back in August, the Green Scissors Project identified ways the federal government could shave $380 billion from the federal budget over five years. But their $380 billion in proposed cuts included a major error that accounts for more that 10 percent of their suggested cuts — $38.8 billion that they argued the Volumetric Ethanol Excise Tax Credit would otherwise cost between 2012 and 2016. They conveniently ignored the important fact that there will be no VEETC between those years. VEETC expires about a month from now, and corn growers and the ethanol industry have long agreed to let it expire and have since stopped fighting for its renewal.

Regardless, we are quite amused that ethanol opponents continue to attack VEETC, even though no one on our side is fighting for its renewal.

...But let’s return to the Washington Times editorial and look at where its writers err.

They say: “Powerful agribusiness interests collect a 45-cent-per-gallon tax credit.” In reality, VEETC is a tax credit for ethanol blenders — who are largely oil companies, not ethanol producers. Ethanol producers are not the ones who set the price, so this money does not come back to ethanol producers or the elusive “powerful agribusiness interests.” They call ethanol “an unnecessary and sometimes harmful additive to gasoline.” On the contrary, it is necessary, if you want to wean the country away from foreign oil and toward energy independence, or if you want to reduce greenhouse gas emissions or if you want to support the rural economy.

...They say “Brazil eliminated its ethanol tariff barriers a decade ago.” Actually, Brazil in 2010 imposed a temporary moratorium on its tariff, and that moratorium expires at year’s end. Soon, Brazil will start again imposing a 20 percent tariff on ethanol imports. READ MORE and MORE (StarTribune) and MORE (TwinCities.com) and MORE (WRAL)

Excerpt from Star Tribune: He (POET CEO Jeff Broin) also expressed disappointment that Congress didn't enact an industry proposal to replace the ethanol subsidy with a short-term program to help retailers install pumps capable of dispensing E-15 and higher blends.

"If we keep this industry stifled at 10 percent ethanol, we will see much higher oil prices at some point in the future," he said. "I don't know if that's next year or five years from now or 10 years from now, but it will happen." READ MORE

Excerpt from TwinCities.com: Chippewa Valley Ethanol also has a strategy to diversify. It produces industrial alcohol, used in products like makeup, and high-end vodkas like Prairie Organic for Phillips Distilling Co. of Minneapolis and Shakers. READ MORE