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Ethanol expects another tough year

DANIEL LOOKER 08/23/2011 @ 1:23pm Business Editor

The American Coalition for Ethanol is holding its annual meeting in Des Moines, Iowa this week without a lot to celebrate. The group’s president, Lars Herseth, joked Tuesday that ACE relocated one session of the meeting from the Waterloo Room at the Marriott Hotel.

Unlike Napoleon, ACE isn’t willing to accept defeat yet, (even though the room is named after Waterloo, Iowa, not the European battlefield).

After several attempts in Congress to kill the 45 cent-a-gallon blenders tax credit for ethanol, the group is still fighting to salvage limited support for blender pumps and other infrastructure that could help the industry reach more consumers.

Brian Jennings, the group’s executive vice president, said that a compromise in the Senate to drop the tax credit early before it expires at the end if this year was a disappointment. It would have swapped a tax credit that costs the federal government about $6 billion a year for some $500 million in support for infrastructure.

“We felt, at ACE, that this left a lot of the priorities we had on the cutting room floor,” said Jennings.

His group would have liked a federal mandate to speed up making flexible fuel vehicles capable of burning up to 85% ethanol (E-85). And, instead of eliminating the tax credit, ACE favored a variable rate credit that would kick in when petroleum prices are low.

Even the deal to support more blender pumps, brokered between Senators John Thune (R-SD), Amy Klobuchar (D-MN) and Dianne Feinstein (D-CA), fell through. ACE and other ethanol supporters had hoped it would have been part of the compromise on extending the the federal debt ceiling. It was dropped when that legislation left out changes to tax revenue.

Jennings said the industry might have a chance to get similar legislation adopted with the federal gasoline excise tax expires in September, but it will be a difficult battle.

Jennings also said he expects the federal mandate to use biofuels, known as the Renewable Fuel Standard 2, to come under attack in Congress next year.

He urged his members to do even more grass roots lobbying.

“We simply need to go back on offense,” he said

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