The extensions "will happen, but it will be a very, very tough" battle, Jon Doggett, vice president of public policy for the National Corn Growers Association, speaking at the National Ethanol [image-nocss] Conference in Orlando, Fla., said.
The tax credit that supports the U.S. biodiesel industry expired at the end of 2009 as Congress focused on health care legislation, driving production of the fuel to a near halt, according to the National Biodiesel Board, the industry's primary trade group.
The same thing could happen to ethanol, said Marty Durbin, executive vice president of government affairs for the American Petroleum Institute (API). "The bigger issue is whether or not they're actually going to get to it," said Durbin. "We lost too many bets at the end of last year saying 'Yeah, Congress will definitely extend that, definitely extend this,' but nothing happened."
The United States is required to use 12 billion gallons of renewable fuels such as ethanol this year, up from 10.5 billion gallons last year.
If the ethanol tax credit were allowed to expire, consumption of the fuel would plunge, John Eichberger, vice president of government relations for NACS, told Bloomberg. "If we cannot blend ethanol fuel with the tax credit, we probably will not be blending ethanol fuel because it is not economically viable," he said.
U.S. Senator Charles Grassley (R-Iowa) said that the tariff reducing competition from Brazil, which makes the fuel from sugarcane, will be in jeopardy. Iowa is the largest maker of the fuel in the nation.
The tariff on Brazilian imports is on shakier ground than the tax credit or the consumption requirement, Grassley said. "Obviously, I'm going to be fighting to maintain it."
Poet LLC, in Sioux Falls, S.D., Archer Daniels Midland Co., Decatur, Ill., and Valero Energy Corp., San Antonio, Texas, are the largest U.S. ethanol producers, said the report. Iowa is the largest maker of the fuel in the country.
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