Subsidy saved.
President Barack Obama has signed into law the tax bill that extends� the ethanol subsidy and tariff� through next year and revives the $1-a-gallon tax credit for biodiesel and also continues it through 2011. The ethanol incentives are due to the expire at the end of this year. The biodiesel credit expired at the end of 2009.
Iowa State University economist Bruce Babcock says that extending the ethanol subsidy through 2011 will likely push production a little beyond the level that refiners are mandated to use next year 12.6 billion gallons. This year"s mandate was 12 billion gallons. Reviving the biodiesel subsidy is unlikely to have much effect on production, he said. Refiners are required to use 800 million gallons of biodiesel.
The biodiesel industry slowed dramatically early this year after the lapse of the subsidy. SThe reinstatement and retroactivity of the biodiesel blenders" tax credit provides a more predictable and stable market for our company and our customers, said Daniel Oh, president and CEO of Ames-based Renewable Energy Group, the nation"s largest biodiesel producer and marketer. REG used the downturn to acquire several plants and expand its reach into Illinois, which has a state tax exemption.
The ethanol group Growth Energy issued a statement saying the extensions Swill provide certainty in the market and give us a chance to work with Congress and the administration to enact longer term tax policy reforms that will level the playing field in the fuels market. Growth Energy has been pushing a plan to shift the subsidy into building infrastructure for marketing ethanol.
The House gave final approval to the tax bill late last night,� 277-148, sending the $900 billion bill to the White House.
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