Senate Votes to End Ethanol Tax Credit by July 1st

On June 16, Senate voted to end the subsidy for ethanol, called the Volumetric Ethanol Excise Tax Credit (VEETC), by July 1st. The measure passed by a surprising large margin 73 to 27. Seven of the senators who voted against terminating VEETC immediately, have co-sponsored an alternative bill that would radically reduce the credit over the next three years.

The subsidy gives “blenders” – meaning oil refineries - a tax credit of $.45 per gallon of ethanol and costs taxpayers $6 billion per year. The vote also would end a $.54 tariff on imported ethanol, which comes primarily from Brazil and is cheaper than corn-based ethanol.

FCNL lobbyists have been lobbying Senators to end subsidies for any energy system that is not truly renewable. Many of the Republican senators we have visited, such as Senators Scott Brown (Massachusetts) and Rand Paul (Kentucky), voted to end VEETC. FCNL opposes corn ethanol because its carbon footprint is only marginally better than oil and using food to meet our energy needs is driving up world food prices.

The vote is considered “symbolic” because the amendment it approved is unlikely to become law. Nonetheless the surprisingly lopsided vote shows Congress would much rather cut energy subsidies than cut Medicare. If the tax credit is not eliminated as part of the deal that raises the debt ceiling in July, it is unlikely that it will be extended at the end of the year when it is now scheduled to expire. The size of the vote also shows that subsidies for fossil fuels and nuclear power are now vulnerable and could be eliminated to help reduce the deficit.