By DOUG SCHMITZ
Iowa Correspondent

OMAHA, Neb. — Tax credits and tariffs are no longer needed to maintain an already strong ethanol industry, but increasing blends and adding more blender pumps and flex-fuel vehicles are, according to the head of the nation’s fourth largest ethanol producer.

“Because we have the 12.6-billion-gallon mandate next year,” said Todd Becker, CEO of Green Plains Renewable Energy, Inc. in Omaha, at a Sept. 23 news conference. “We’ve got good export demand. We’ve got good blend economics.

“We’ve got the change in the gasoline makeup with the CBOB (conventional gasoline blendstocks for oxygenate blending), and overall, we think the underlying fundamentals are good and we think production is somewhat in line with consumption.”

Becker also urged federal regulators and Congress to move quicker on blend increase and greater support of the biofuel infrastructure.
On Oct. 13, the U.S. Environmental Protection Agency (EPA) approved E15 ethanol blends for 2007 and later model years, raising the amount from 10 percent. But several automakers, blenders and auto advocacy groups are already protesting the new measure.

Created by the American Jobs Creation Act of 2004, the Volumetric Ethanol Excise Tax Credit (VEETC) provides blenders and marketers of fuel with a federal tax credit of 45 cents on each gallon of ethanol blended with their gaso-line. Becker said not renewing VEETC – worth an estimated $4.7 billion in 2009 – which is set to expire on Dec. 31, won’t likely have a major effect on his Omaha-based company or on the industry.

While there has been widespread concern within the ethanol industry that not renewing VEETC may result in more ethanol plants closing their doors, Becker said only “less efficient and less cost-effective plants” would suffer.

“The marginal production could potentially have a problem competing in times where, say, ethanol is a premium to gasoline, and they may need to shut that marginal production down,” he said.

But in the end, Becker said eliminating the $6 billion per-year ethanol subsidy would have zero impact on production.

“The industry has very different makeup across the industry,” he said. “There’s the marginal production and the efficient production, and at Green Plains, we believe we built the model on efficient production.”

Tom Buis, Growth Energy CEO, who also spoke at the news conference, said the renewable fuels advocacy group recently pitched to Congress its “Fueling Freedom Plan,” which calls for the build-out of 200,000 blender pumps and 120 million flex-fuel vehicles.

Stephanie Dreyer, Growth Energy public affairs associate, said the plan would create permanent access to the fuel market and spur the private investment necessary to commercialize cellulosic ethanol. She said the only reason the ethanol industry needs government support today is because “we are arbitrarily denied access to all but 10 percent of the fuel market.

“An investment in blender pumps, federal loan guarantees for ethanol pipelines and flex-fuel vehicles would eliminate the artificial market barriers and create an open market where all fuels can compete,” she said.

Ultimately, Buis said Growth Energy wants the government to shift support for the U.S. ethanol industry.

“What we’re suggesting is take the tax credits that are available – that we hope get extended for five years – and shift some of these funds into building out the infrastructure so we can compete in the marketplace,” he said.

In fact, Jeff Broin, Growth Energy co-chair, said he’d like to see 200,000 pumps capable of blending ethanol with gasoline and 120 million flex-fuel vehicles within the next five years.

“I believe it’s time to transition to an open market where consumers can choose their fuel,” he said. “With a blender pump in every neighborhood and a flex-fuel vehicle in every garage, ethanol can compete against oil without the tax incentive.”