On December 10th, the Senate voted to approve an $858-billion tax cut package that provides a significant amount of incentives for the clean vehicle sector. Late last Thursday, the U.S. House of Representatives, by nearly a 2-1 margin, passed the bill, paving the way for President Obama to sign the bill into law, which he did on Friday.
Ethanol Tax Credit
The tax-cut package, under debate by the Senate on Friday, includes a few stipulations that would, if passed, provide a boost for the biofuels industry. Wrapped within the tax bill is a provision that would extend, through 2011, the 45-cent-per-gallon ethanol tax credit that's set to expire on December 31st. Also included within the package is an extension of the 54-cent tariff on imported ethanol and a 10-cent credit for small-scale U.S. producers of the corn-based fuel.
Refiners and blenders pocket 45 cents for every gallon of ethanol blended with gasoline. The subsidy, courtesy of the U.S. government, helps the industry stay afloat amidst the dwindling demand for gasoline and increasing costs of ethanol production. It's been argued that, without the subsidy, the ethanol industry would die a quick death. If a report from BusinessWeek turns out to be true, then the industry might soon be dealt a glancing blow.