Rep. Jeff Flake, (R-Ariz.), would like to put an end to the subsidies for the ethanol industry. He has introduced legislation to rescind the Volumetric Ethanol Excise Tax Credit (VEETC) - the so-called ethanol blender’s credit - and eliminate the prohibitive tariff on imported ethanol, ending taxpayer subsidies of the U.S. ethanol industry and opening the market to competition.
H.R. 426, the Remove Incentives for Producing Ethanol Act of 2011, also would repeal the Renewable Fuel Standard, a federal mandate which has been in place since 2005, requiring the ethanol industry to produce a set amount of ethanol each year. Congress' mandate for renewable fuels in 2011 is 13.95 billion gallons.
This trifecta of government protections has given ethanol an unfair advantage in the free marketplace for too long and cost taxpayers billions, according to a Flake news release issued in December. “In 2009 alone, Americans paid the hefty price of $6 billion in federal subsidies to support the ethanol industry. Despite the enormous price tag, the artificially inflated demand for ethanol has done little to reduce our dependence on foreign oil and has had dubious environment benefits at best.”
According to USDA’s World Agricultural Supply and Demand Estimate report issued Feb. 9, ethanol production will consume 4.95 billion bushels of corn, or about 40 percent of the nation’s 2011 crop.