Ethanol Policy Updates: E15 and Tax Credits

by Brian McGraw on June 28, 2011

in Blog

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The EPA has finalized label requirements for E15, backing down a bit from initial proposal which included the word ‘caution.’ The new label, as you can see, is a slightly less alarmist ‘attention.’ I will note that the new label does not point out in any form that ethanol will provide fewer miles per gallon for your vehicle. Adjusted for energy content, ethanol is more expensive than gasoline. However, if you do not adjust for energy content, ethanol costs less than gasoline. Being that the label doesn’t point this out, it seems that consumers might fill up with E15 as it will be slightly cheaper than E10, as few are aware that they will be reducing their fuel economy when moving from E10 to E15. I suspect that the government would be taking action if a private company were to do this.

The Corn Grower’s Association has weighed in, and they are unsurprisingly less than thrilled despite the fact that the EPA kowtowed to their demands:

“NCGA supports the use of a label but we are still concerned with the fact that it implies damage to other vehicles,” NCGA President Bart Schott said. “We also are bothered by the color choice for the label which could be mistaken for a warning label, setting the wrong tone for consumers.”

In other ethanol news, The Hill’s Energy blog has a post up noting that a deal has been struck with respect to mid-term support for ethanol. It’s not looking good:

Klobuchar said she is meeting with Thune and Feinstein later Tuesday to review a proposed agreement.  Klobuchar confirmed there would be “longer-term cellulosic tax credits” but said she didn’t have an exact date.

She said the money saved by killing the blender’s credit mid-year – it’s currently slated to expire at year’s end – would help pay for both deficit-reduction, and funding for cellulosic ethanol credits and ethanol infrastructure at service stations.

“This is a way to use the existing $2.4 billion that is still out there for the rest of the year, to use a big chunk of it for the debt and then the remaining money for the cellulosic tax credit and the blender pumps,” she told reporters.

Nothing ever changes. While lacking specifics, it seems clear from tone that the ethanol tax credit will disappear and then reappear into various forms of continued subsidies for the industry, via installing blender pumps for a fuel no one wants to use, or through expensive pipelines to pipe ethanol around the country.

UPDATE: Via Politico’s Morning Energy, it seems as if the report above is inaccurate, as Feinstein is reported saying that no deal has been struck yet.

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