Ethanol industry warns of 112,000 jobs at risk

March 19, 2010

The renewable fuels industry has claimed that unless federal tax incentives for ethanol are extended, 112,000 jobs could be lost.

The Renewable Fuels Association said yesterday that nearly 30% of the industry’s workers could be out of a job if the 45-cents-per-gallon Volumetric Ethanol Excise Tax Credit is not continued.

US ethanol production capacity would be cut by 38%, with the difficulties especially hard for the nation’s rural communities, which are “already haemorrhaging employment opportunities”, the RFA said.

The question is, from where will the ethanol come?” - Bob Dinneen, RFA

The Association was commenting after the release of a report on the loss of the Volumetric tax credit, which it commissioned from the economist John Urbanchuk.

“Value-added”

“Ethanol has provided an unparalleled, value-added opportunity for agriculture and rural America,” said RFA President Bob Dinneen.

“Supporting nearly 400,000 jobs, America’s ethanol industry is building a strong foundation for a robust renewable fuels industry in this country.”

Mr Dinneen said investors were looking for assurange to continue building the ethanol industry, and that failing to extend the tax credits would be “shortsighted” with respect to the nation’s dependence on foreign oil.

The RFA wants a long-term extension of the Volumetric tax credit, along with the Small Producers’ Tax Credit and the Cellulosic Ethanol Tax Credit.

Without the Volumetric tax credit, the Association suggested that 4.56 billion gallons of production capacity would be taken out of service, on top of the one billion gallons of production plants already idled.

It said the tax incentives would be an “important policy” alongside the Renewable Fuels Standard, which sets targets for fuel suppliers to supply renewable fuels including ethanol.

Although the Standard is driving US demand for ethanol, the RFA President pointed out that without the tax incentives, production to supply that demand would merely move abroad – leaving the US reliant on foreign biofuels.

“The question is not whether ethanol will be used – the Renewable Fuels Standard requires it. The question is, from where will the ethanol come?” Mr Dinneen explained.

“Extending the tax incentives ensures that both the grain-based as well as cellulosic sources of ethanol needed to meet the RFS are produced domestically.”

The RFA claimed that the $5 billion in tax incentives during 2009 led to an $8.4 billion increase in increased tax revenues from the ethanol industry, along with “tens of billions” of increased state and local tax revenues.