Corn-based ethanol has accelerated the decrease of wheat acreage in the U.S. over the past 30 years and tightened food supplies around the world. Further, the 30-year-old ethanol tax credit costs the nation more than $6 billion dollars per year.
The Volumetric Ethanol Excise Tax Credit expired at the end of 2011. After three decades, this is a first step toward restoring the balance between food and fuel crops. ABA called on bakers to march on Washington four years ago as part of the Band of Bakers, starting a sea change of attitudes around the country and on Capitol Hill regarding ethanol.
Wheat competes with crops, such as corn, for acreage, so when ethanol subsidies incentivize the growth of corn, less wheat is grown and wheat prices go up.
The Energy Independence and Security Act’s (EISA) of 2007 provisions increasing corn based ethanol production, the EPA’s implementation of the RFS2 and the EPA’s decision to allow an E15 fuel blend for newer vehicles are all factors impacting the baking industry’s grain commodity challenges.
- ABA supports reliable and diverse energy resources, to include increasing the use and development of alternative fuels to improve the nation’s energy efficiency;
- ABA supports energy policies that ensure a balance between alternative fuel production and the ability to provide consumers with reliable and affordable baked products;
- ABA supports expiration of the refundable Volumetric Ethanol Excise Tax Credit (VEETC) and to resist calls for spending on infrastructure for conventional biofuels;
- ABA opposes implementation of the E15 fuel blend standard.
Congress allowed the federal tax credit for ethanol to expire at the end of 2011 and ABA was supportive of this effort. ABA continues to support research, development and rapid deployment of both cellulosic ethanol and bio-diesel made from sources that do not divert feedstocks from traditional, established markets including food, feed and bio-based chemicals.
This issue falls under the ABA Energy & Environment Committee.
ABA Issue Expert: Rasma Zvaners