Ethanol Tax Incentive Loss Would Mean Lost Jobs

(from a report Posted by Cindy Zimmerman)

According to a report from the Renewable Fuels Association (RFA), failure to extend the Volumetric Ethanol Excise Tax Credit (VEETC) would reduce U.S. ethanol production capacity by 38% and eliminate 112,000 jobs in rural communities already hemorrhaging employment opportunities.

“Ethanol has provided an unparalleled, value-added opportunity for agriculture and rural America,” said RFA President Bob Dinneen. “Supporting nearly 400,000 jobs, America’s ethanol industry is building a strong foundation for a robust renewable fuels industry in this country. Failure to provide the kind of assurance investors require to continue building out this industry by extending the tax incentives would be shortsighted, relegating future generations to a reliance on both foreign oil and foreign renewable fuels.”

The RFA is advocating for a long term extension of VEETC, the Small Producers Tax Credit, the Cellulosic Ethanol Tax Credit, and the offsetting tariff on imports. According to the study “Importance of the VEETC to the U.S. Economy and the Ethanol industry,” failing to extend the tax incentive would idle an additional 4.56 billion gallons of production, based upon the 2010 expectation of 12 billion gallons of domestic ethanol production.

Our Take:
America is on the slow road to economic recovery. The ethanol industry showed extraordinary resilience in the face of unprecedented extremes in market volatility in 2008 and 2009. Thanks to VEETC, the ethanol industry kept many of the jobs created during the period of the intense build-out of ethanol production capacity.

There will come a time when ethanol and other alternative forms of energy will have broken the deadlock that petroleum has on transportation fuel. Ethanol, biodiesel and other fuels will stand on their own, but that time is not now.

We cannot afford to lose more than 100,000 jobs—neither in the direct dollars and cents of pay not drawn, and not spent in our rural regions across the country, but also in the ripple affect created in the industries—construction, machinery, agribusiness, etc—that will all take a hit from such a large loss of people in a position to spend money on their goods and services.

The economic development record for farm-based energy is one of overwhelming success. The investment in the growth of farm based energy that these incentives represent has been repaid many times over, and VEETC and the tariff will continue to be sound investments in America’s economy and its energy future.

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