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Posted on  

April 21, 2003

Growing ethanol industry could get added incentive

Production may increase by as much as one-half from recently proposed federal legislation

By Robert Pore

With Nebraska's ethanol industry booming, it could get even more of a boost as key pieces of legislation have made significant gains in both houses of Congress in recent weeks.

The number of ethanol plants in Nebraska is expected to grow from the seven existing plants to as many as 10 to 12 facilities by next year, including the Platte Valley Fuel Ethanol plant in Central City, according to the Nebraska Ethanol Board.

Currently, Nebraska ethanol plants produce about 400 million gallons annually, using nearly 200 million bushels of corn.

That annual state ethanol production could conceivably grow to more than 600 million gallons by 2005, with nearly 35 percent to 40 percent of the corn grown in Nebraska going to ethanol production.

What could be an added incentive to the state's ethanol industry is passage of the Renewable Fuels Standard legislation this year.

That legislation is being pushed by bill co-sponsors Rep. Tom Osborne, R-Neb., in the House and Sen. Chuck Hagel, R-Neb., in the Senate.

In the House, the Energy Committee recently approved a comprehensive energy bill that includes the 5-billion-gallon-per-year Renewable Fuels Standard, which was similar to legislation introduced by Osborne.

"The Renewable Fuels Standard is good for the farm and great for America," Osborne said. "By encouraging the use of renewable fuels, we help to create more demand for our producers' products -- which often leads to new ethanol plants, creation of more local jobs and higher prices for our producers' goods."

Currently, there are 70 ethanol plants with a capacity to produce 2.75 billion gallons annually in the United States.

Ten new plants are currently under construction, with dozens more in the planning stages.

Osborne said a national Renewable Fuels Standard would reduce the U.S. trade deficit by $34 billion, reduce government farm payments by $5.9 billion over 10 years, and help improve overall air quality.

Under the bill passed by the House Energy Committee, the current oxygenate standard for reformulated gasoline would be removed, air quality anti-backsliding provisions would be enhanced, and the Renewable Fuels Standard would be established.

Osborne said the legislation comes at an important time.

"With American troops' ongoing work to liberate the people of Iraq, as well as the nation's economy continuing to trail, the House has taken responsible action to provide the nation with an energy policy designed to reduce our dependence on foreign oil and create greater economic and national security," he said.

A provision passed by the Senate Finance Committee would also give Nebraska's growing ethanol industry a shot in the arm.

The committee approved legislation to extend the 10-cents-per-gallon small ethanol producers' tax credit to small, farmer-owned cooperatives and other ethanol facilities.

Under current law, small ethanol producers who make less than 30 million gallons are eligible for the tax credit up to 15 million gallons. The proposed legislation would expand the number of plants eligible for the credit by bumping up the production limit from 30 million to 60 million gallons.

The legislation would also revise existing tax law to permit farmer-owned cooperatives to pass the tax credit on to their members through dividends and allow those producers to treat it as income as if they had generated it directly.

In other action, the Senate Environment and Public Works Committee passed the Reliable Fuels Act of 2003, which included Hagel's bill to established a Renewable Fuels Standard, earlier this month.



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