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Senate Passes Energy Bill with 7.5 Billion Gallon RFS, President Expected to Sign into Law

Date Posted: July 29, 2005

by Robert Brice, Grainnet Editor

St. Louis, MO --After years of waiting, a comprehensive energy bill including a strong renewable fuels standard (RFS) is within reach.

The Senate passed the bill Friday, July 29, by a vote of 74 to 26, which follows the House approval of the bill Thursday by a vote of 275 to 156.

Now, the bill goes onto President George W. Bush, who has said he will sign the legislation.

The bill contains a 7.5 billion gallon RFS, which was nearly the 8 billion gallons many were dreaming of.

"This is one of the most significant votes on national energy policy in over a decade," National Corn Growers Association (NCGA) President,Leon Corzine said.

"Not since 1992 has the United States Congress enacted a comprehensive national energy policy.

"We are delighted that this legislation promotes more diverse and domestically based energy sources and we are particularly happy that this bill will expand the use of domestic renewable fuels," said Corzine.

"Everyone wins with the Energy Policy Act of 2005."

The RFS schedule calls for 4 billion gallons of ethanol being blended into the nation's fuel supply in 2006, increasing to 7.5 billion gallons by 2012.

The passage prompted praise from the Renewable Fuels Association as well.

"Today's Senate action sends the strongest biofuels legislation ever to President Bush for his signature," stated Renewable Fuels Association (RFA) President Bob Dinneen.

"After four-plus years, the country is finally one signature away from having a more sustainable, forward-looking energy policy.

"While support for the biofuels provisions is deep, wide, and bipartisan, it's fair to say we wouldn't be here without the sheer determination of Energy Committee Chairman Pete Domenici.

"His leadership, combined with the effective advocacy for farmers by Senate conferees Chuck Grassley, Tim Johnson, and Byron Dorgan, has brought us to the brink of success.

"Indeed, this bill is likely the most profound rural economic stimulus package since the New Deal," he concluded.

The American Coalition for Ethanol (ACE) President Bob Scott agreed that this victory has been a long time coming.

"ACE has worked toward an RFS since 1998 when the concept was first developed, and we are excited about the tremendous impacts this will have on improving the nation's energy situation."

The energy bill also contains these items:

-Elimination of the reformulated gasoline program's (RFG) oxysen standard.

-Flexibility for refiners to use ethanol where it makes th emost sense.

-A 12-month limit on the life of credits generated under the RFS program to safeguard the ethanol market.

-Language ensuring states cannot easily waive the RFS program.

-No liability protection for MTBE.

-Modernizing the Small Ethanol Producer Tax Credit so facilities producing less than 60 million gallons per year can participate.

Biodiesel Benefit

Biodiesel also will see benefits from the energy bill, specifically the extension of a federal excise tax credit, the industry’s number one priority.

The tax incentive, established originally as part of the American JOBS Creation Act of 2004, would have expired in 2006. It will now be extended through 2008.

The excise tax credit amounts to a penny per percentage point of biodiesel blended with petroleum diesel for "agri-biodiesel," such as that made from soybean oil, and a half-penny per percentage for biodiesel made from other sources.

It is taken at the blender lever with the intended effect of lowering the cost of biodiesel to consumers in taxable and tax exempt markets.

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