The U.S. ethanol industry has more than 200 ethanol plants in two dozen states, primarily centered in the Midwest. Annual ethanol production in the U.S. is now estimated at 13-14 billion gallons/year, or about 8% of the total fuel production. The average ethanol plant employs 40-50 people, and is very important to the rural economy of the Corn Belt. Many ethanol plants in Minnesota and Iowa are smaller plants that were initiated by investment dollars from farmers and local businesses. The initiation of these ethanol plants in the past was greatly aided by the existing tax incentives for ethanol production. Many feel that we need to continue the ethanol production incentives to encourage the next generation of ethanol production from cellulosic, biomass and other new feedstock sources.
Groups such as Growth Energy and the Renewable Fuels Association, along with the National Corn Growers Association and major farm organizations, have been strong supporters of the adoption of the E15 blends and extensions of ethanol tax credits and incentives. However, many other groups, including some livestock organizations, have opposed the E-15 blends, and the extension of the ethanol tax credits and incentives. Oil companies, automakers and food companies have filed a lawsuit designed to block the 2010 decision by EPA allowing the sale of E15 gasoline blends.
In December 2010, the tax bill passed by congress and signed by President Obama included a renewal of $7 billion/year to continue the current ethanol tax credits and incentives for 2011, which included the 45¢/gal. ethanol blenders credit (VEETC) and the 54¢/gal. tariff on imported ethanol, as well as other smaller incentives and tax credits. Support for the extension and continuation of the ethanol tax credits and incentives was not unanimous, and several members of Congress wanted to reduce, eliminate or have more targeting of the tax credits and incentives. Many members of Congress want to re-visit to ethanol incentives in 2011 to consider future revisions. After the tax bill was passed by Congress, opposition to extending ethanol incentives was voiced by the American Meat Institute, Milk Producers Council, Natural Resource Defense Council, National Taxpayers Union and ActionAid USA, among others.
Prior to congressional action on the tax bill, a list of 59 groups and organizations sent a letter to congressional leaders calling for discontinuation of the ethanol blenders credit at the end of 2010. The list of those opposed to the VEETC included environmental and hunger groups, livestock and tax payer organizations and large food companies. A list of those that signed on the letter, in addition to the five organizations mentioned earlier, included the Tea Party, the Grocery Manufacturing Association, the National Catholic Rural Life Conference, the Center for Food Safety, the Environmental Working Group, the National Wildlife Federation, the Sierra Club, the National Chicken Council, the National Turkey Federation and several state dairy producer groups. While the National Pork Producers Council did not sign the letter, they have also lobbied extensively against extending ethanol tax incentives.