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Whither the blenders credit?

Posted: July 26, 2010 at 11:12 AM CST

Right now, blenders credits as biofuels incentives are in serious trouble on the political front. Since the biodiesel credit lapsed Dec. 31, multiple efforts have been unsuccessful in attaching an extension to various bills. The latest vehicle was the jobs bill—but the energy provisions were stripped from the bill before it emerged from the Senate. Biodiesel Magazine editors are now investigating what the next approach to get the biodiesel blenders credits extended will be. It’s becoming clearer that those worried about the biodiesel industry’s ability to survive are few in number. It’s also been interesting to note that the value of 2010 RINs credits has been over 50 cents a gallon in recent weeks, compared to a little more than a penny for ethanol RINs. It’s hard to get a handle, however, on what the impact of the high biodiesel RINs value has had on biodiesel production.

Will the ethanol blenders credit face a similar fate as biodiesel? VEETC, the ethanol blenders credit, is due to expire at the end of the year. In preparing for her feature on the blenders credit in the September issue of the magazine, Holly Jessen visited with many of the major players in the policy drama. N.D. Rep. Earl Pomeroy said the bill he introduced in March to extend the ethanol blenders credit is expected to be released by the House Committee on Ways and Means this week. It extends the blenders credit and import tax one year and cuts the credit by 9 cents to 36 cents per gallon. It has a few steps to go in the House, but as we’ve seen this year, while the House is able to move legislation forward the Senate struggles with logjams. It would appear very likely that the ethanol blenders credit will lapse.

Multiple questions arise—Are we on the edge of a new era in biofuels with no blenders incentives? Will a lapse impact ethanol in the same way as biodiesel? Ethanol use as an oxygenate and RFS mandated volumes support production levels, but will it be enough?

-Susanne Retka Schill