BRAZILLIA (Commodity Online): The Volumetric Ethanol Excise Tax Credit (VEETC) over imported ethanol, which lasted for more than three decades, is likely expire with the end of 2011.
From January 1st onwards, the United States market will be open to imported ethanol without protectionist measures.
The imported ethanol was taxed US$0.54 per gallon and a corresponding tax credit of US$0.45 per gallon for blenders.
"With Congress in recess, there are no opportunities for further attempts to prolong the tax credit or the tariff, so we can confidently say these support mechanisms will be gone at the end of 2011," said Leticia Phillips, Washington representative for the Brazilian Sugarcane Industry Association (UNICA).
This means that in 2012, the world's largest fuel consuming market will be open to imports of less costly and more efficient ethanol, including sugarcane ethanol produced in Brazil, recognized since 2010 by the US Environmental Protection Agency (EPA) as an advanced biofuel because of its verified reduction of up to 90% in greenhouse gas emissions compared to gasoline.
But if attempts in Congress to prolong the tax credit had been successful, the subsidy package now about to expire would continue to cost American taxpayers about US$6 billion per year.
"The raw materials used in ethanol production should be evaluated strictly on the quality and sustainability of the ethanol they provide, not with political or protectionist criteria favoring country-specific feedstocks without regard for efficiency. What should matter ahead of all other considerations is the lowest possible use of fossil energy to produce as much clean, renewable energy as possible, while reducing emissions that lead to global warming," said Marcos Jank, president, UNICA.
Eliminating barriers to Brazilian ethanol has been a priority for UNICA since 2007 as they argued that, ending costly and unnecessary subsidies will save US taxpayers money, help lower prices at the pump and expand access for US consumers to advanced renewable fuels like sugarcane ethanol. That in turn will contribute to reduce greenhouse gas emissions, benefit public health through a reduction in respiratory ailments and increase energy security.
"For the first time ever, the two top ethanol producers, which together account for more than 80% of world production, are not imposing an import tariff. Brazil zeroed its tariff in early 2010 and now the US is moving in the same direction. It's time for these two countries to show leadership and work together to develop a truly global free market for ethanol, without trade barriers, as is already the case for oil," said Jank.
According to Jank, the end of the US tariff comes at a time when Brazil's sugar-energy industry is striving to resume accelerated growth, to keep up with booming demand for its products, both domestic and from abroad.
