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Published October 26, 2010, 08:48 AM

Vilsack urges continuation of biodiesel, ethanol tax credits

WASHINGTON — Agriculture Secretary Tom Vilsack on Oct. 21 urged Congress to reinstate the biodiesel tax credit and extend the ethanol tax credit.

By: Jerry Hagstrom, Special to Agweek

WASHINGTON — Agriculture Secretary Tom Vilsack on Oct. 21 urged Congress to reinstate the biodiesel tax credit and extend the ethanol tax credit.

Vilsack also announced a range of federal assistance for renewable energy development through the Biomass Crop Assistance Program established in the 2008 farm bill.

“Domestic production of renewable energy, including biofuels, is a national imperative, and that’s why USDA is working to assist in developing a bio-

fuels industry in every corner of the nation,” Vilsack said in a speech at the National Press Club. “By producing more biofuels in America, we will create jobs, combat global warming, replace our dependence on foreign oil and build a stronger foundation for the 21st-century economy.”

Vilsack’s statements on the tax credit appeared to reflect recent discussions between the ethanol industry and White House Chief of Staff Pete Rouse about changes to the ethanol tax credit and protective tariff, both of which expire at the end of the year.

Vilsack said the lapse in the biodiesel tax credit has caused a loss of 12,000 jobs. He also called for “a short term extension” of the ethanol tax credit, but declined to answer questions about proposals to lower the credit, saying that a “healthy discussion” about changes is taking place. Vilsack did not list an extension of the tariff in his formal remarks, but said in response to a question, “The tariff is likely to continue, but over time it is likely to be phased out.”

Vilsack said the ethanol tax credit still is needed because it is a relatively new industry that requires more investment.

Joel Velasco, the Washington representative of UNICA, the Brazilian Sugarcane Industry Association, said the U.S. corn-based ethanol industry is mature and does not need the tax credit or the tariff.

A growing market

But Matt Hartwig of the Renewable Fuels Association said the industry still is in the development stage and needs the credit. Hartwig said the tariff only is to cover the value of the credit and should be extended at whatever level the credit is extended.

The final rule for the Biomass Crop Assistance Program will be published in the Federal Register Oct. 22, and Vilsack emphasized Oct. 21 that the programs under it were funded in the 2008 farm bill and do not require further congressional action.

The programs include reimbursements to farmers of up to 75 percent of the cost of establishing a bioenergy perennial crop for up to five years for grassy crops and up to 15 years for woody crops and assistance for the collection, harvest, storage and transportation of biomass to biomass conversion facilities for two years. He also said USDA will help pay for construction of 10,000 blender pumps and storage systems to make renewable fuels more easily available to consumers.

Vilsack noted the opening of regional biomass research centers to accelerate the development of a commercial advanced biofuels industry. The centers will be located in Madison, Wis., Lincoln, Neb., and in Alabama, Georgia, Arizona, Washington state and Oregon.

He said USDA’s rural development division will announce assistance to biorefinery plant projects within 60 days and that USDA is trying to figure out whether it can make changes to its federal loan guarantee programs to make them more attractive to investors.

Vilsack said, however, that changes to the loan guarantees will depend on whether “we have the capacity to do that” and also noted that changes would have budget consequences.

Throughout his speech, Vilsack emphasized the importance of renewable fuels to the long-term vitality and job creation potential in rural America. Noting that rural America has experienced population decline and higher poverty levels than urban areas, Vilsack said “President Obama refuses to accept the notion that America’s rural past predicts its future.”