US Congressmen Kenny Hulshof (R-MO) and Earl Pomeroy (D-ND) have introduced the Renewable Fuels and Energy Independence Promotion Act (H.R. 5650), which would make the federal excise tax credit for ethanol and biodiesel permanent.
The bill removes sunset provisions for ethanol and biodiesel incentives that accompanied the Volumetric Ethanol Excise Tax Credit (VEETC), which took effect Jan. 1, 2005. Currently, the incentives will expire in 2008.
The incentive is a volumetric-based tax credit aimed at helping lower the cost of ethanol and biodiesel to consumers who pay road taxes, such as truckers, and in tax exempt markets, such as school districts.
Since taking effect, the incentive has been the primary stimulant for a dramatic increase in new biodiesel plants—there are currently 65 operational plants, with 50 more under construction.
Renewable fuels are a critical component to our nation becoming more energy independent. By making the tax credits for biodiesel and ethanol permanent, we are providing the stability these emerging industries need to grow.—Rep. Pomeroy
Several bills have been introduced in the Senate to extend these tax credits, including S. 2401 by Sen. Chuck Grassley (R-IA), Chairman of the Senate Finance Committee.