Tax credit for E85 fuel in energy bill
Thursday, July 28, 2005
Printable FormatProposal would help put in station pumps
By CHARLYN FARGO AGRIBUSINESS EDITOR
State Journal Register
Legislation proposed by U.S. Sen. Barack Obama, D-Ill., to provide a federal tax credit to build E85 ethanol fueling stations across the country passed out of conference committee Wednesday.
The legislation inserted by House Speaker Dennis Hastert, R-Yorkville, is part of the comprehensive Energy Bill the House and Senate are expected to vote on today or Friday.
E85 is a blended fuel that contains 85 percent ethanol and 15 percent gasoline.
In the conference committee, the original legislation was modified from a 50 percent tax credit , as proposed by Obama, to 30 percent for installation of E85 pumps, a few of which already popped up in central Illinois.
The 30 percent tax credit, up to $30,000, would cover the cost of putting in E85 pumps. It would be paid for by using funds from penalties assessed by the National Highway Safety Administration on auto manufacturers that violate fuel mileage standards.
"Experts in the field indicate this will triple the number of E85 pumps," Obama said in a news release. "This really makes the option of buying a flexible-fuel vehicle realistic when you save significant amounts per gallon of E85 and get substantially better gas mileage."
Ethanol is a cleaner-burning, renewable fuel made from corn, and E85 can be used in flexible-fuel vehicles that also can run on unleaded fuel when E85 isn't available. Currently, E85 is as much as 50 percent cheaper per gallon than unleaded gasoline.
Standard vehicles can burn fuel with a 10 percent ethanol mix.
There are 3.5 million flexible-fuel vehicles on the road throughout the United States and 100,00 in Illinois. Vehicle manufacturers are expected to expand production as more fueling stations off E85.
Nationwide, while there are more than 180,000 gas stations, only about 600 offer E85. In Illinois, there are approximately 20 gas stations with E85 pumps.
"We're real confident, unless the sky falls in, we'll get this tax provision passed," said Phil Lampert, executive director of the National Ethanol Vehicle Coalition. "And within 12 months, I think we'll triple the number of E85 stations in the country."
He also thinks more E85 stations will prompt car manufacturers to more widely market flexible-fuel vehicles. "They don't want to promote flexible-fuel vehicles and then have customers say they can't find the flexible fuel," Lampert said. "That's very important."
Obama introduced the tax-credit measure in the Senate in the spring, and it was co-sponsored by Illinois' other Democratic senator, Dick Durbin. Obama also worked for the credit's inclusion in the energy bill as one of the conferences preparing the Senate-House conference committee report.
Illinois' ethanol industry had six plants in the state at the beginning of the year, with one more under construction. Last year, it produced 875 million gallons of the additive from 325 million bushels of corn.