By Mr. GRASSLEY (for himself, Mr. Conrad, Mr. Johanns, Ms. Klobuchar, Mr. Franken, Mr. Johnson of South Dakota, Mr. Harkin, and Mr. Nelson of Nebraska).
S. 884. A bill to amend the Internal Revenue Code of 1986 to provide for a variable VEETC rate based on the price of crude oil, and for other purposes; to the Committee on Finance.
Mr. GRASSLEY. Mr. President, I am pleased today to be joined by a number of my colleagues in introducing the Domestic Energy Promotion Act of 2011, an important piece of legislation that I believe is a good starting point in how tax policies for ethanol should evolve. I am joined in this effort by Senators CONRAD, JOHANNS, KLOBUCHAR, FRANKEN, Tim Johnson, HARKIN and Ben Nelson.
Over the years, I have supported domestic ethanol production as a means to improve the environment, reduce our dependence on foreign oil, increase our national security, and bring economic activity to rural America. Those efforts have undoubtedly been an enormous success. Domestic biofuels now supply more than 13 billion gallons of homegrown fuel, accounting for nearly 10 percent of our Nation's transportation fuel needs.
In 2010, Congress enacted a one-year extension of the Volumetric Ethanol Excise Tax Credit, or VEETC, also known as the blenders' credit. This 1-year extension has allowed Congress and the domestic biofuels industry to determine the best path forward for Federal support for biofuels. The legislation we are introducing today is a serious, responsible first step to reducing and redirecting Federal tax incentives for biofuels.
This legislation will reduce VEETC to a fixed rate of 20 cents in 2012, and 15 cents in 2013. It will then convert to a variable tax incentive for the remaining 3 years, based on the price of crude oil. When crude oil is more than $90 a barrel, there will be no blenders' credit. When crude oil is $50 and below, the blenders' credit will be 30 cents. The rate will vary when the price of crude is between $50 and $90 a barrel. When oil prices are high, a natural incentive should exist in the market to drive ethanol use.
It also would extend, through 2016, the alternative fuel refueling property credit; the cellulosic producers' tax credit; and the special depreciation allowance for cellulosic biofuel plant property. The bill would modify the alternative fuel refueling property credit to allow the credit for ethanol blends from E20 to E85. The credit would apply to 100 percent of the cost of the property, so long as dual-use pumps are used partly for alternative fuels. Finally, the bill would extend the ethanol import tariff, through 2016, stepping it down to 20 cents for 2012 and 15 cents for 2013 through 2016.
This legislation is a responsible approach that will reduce the existing blenders' credit and put those valuable resources into investing in alternative fuel infrastructure, including alternative fuel pumps. It would responsibly and predictably reduce the existing tax incentive, and help get alternative fuel infrastructure in place so consumers can decide which fuel they would prefer. I know that when American consumers have the choice, they will choose domestic, clean, affordable renewable fuel. They will choose fuel from America's farmers and ranchers, rather than oil sheiks and foreign dictators.
Some of my colleagues have argued that it is time to end the incentives for biofuels immediately and entirely. Not only is this bad energy policy, poor tax policy, and dangerous to our national security, it is also intellectually dishonest. I believe a discussion concerning our Nation's energy and tax policy should be debated in a comprehensive manner. Biofuels are not the only form of energy that receives incentives or supportive policies from the Federal Government.
How about the incentives for wind, oil, natural gas, nuclear, and geothermal? If the Senate intends to consider reforms to biofuels incentives, it should be in the context of a comprehensive review of all energy tax incentives. This bill is meant to serve as a first step in the process. This bill demonstrates a significant reduction in biofuels incentives over the next 5 years. I challenge my colleagues to find any other energy source that is contributing as much to our economy and energy supply that is willing to step up and do that in the current legislative debate.
Now is not the time to pull the rug out from under the only domestic renewable energy source that is making significant contributions to our energy supply. I thank my colleagues for their support, and I look forward to a comprehensive discussion to advance sensible, responsible energy tax policies.
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