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House Bill Extends Ethanol Tax Breaks

WASHINGTON, D.C. -- Under a new House bill unveiled last week by two dozen lawmakers, the U.S. government would extend until 2016 ethanol tax breaks and a hefty tariff on imports, Reuters reported.

The tax breaks are worth $6 billion a year, according to critics of the bill. Credits include a 45-cent per gallon tax break for gasoline blenders, a 54-cent a gallon tariff on imports, a $1.01 a gallon credit to cellulosic ethanol producers, and a 10-cent per gallon small-producer tax credit for ethanol, the report stated.

Meanwhile, the $1 a gallon biodiesel tax credit, which expired at the end of 2009, is pending in Congress, Reuters reported.

Without action by the government, three of the four incentives -- the blender credit, ethanol tariff and small-producer credit -- for ethanol will expire at the end of 2010. The cellulosic credit expires at the end of 2012.

Sponsors of the new bill claim a long-term extension will assure a home-grown fuel supply and bring cellulosic ethanol into commercial production, according to the report.

While ethanol is a small share of U.S. motor fuels, "that's the biggest thing we have done" to reduce reliance on imported oil, John Shimkus, an Illinois Republican and a lead sponsor of the bill, said in the report.

Federal law guarantees use of 12 billion gallons of ethanol in 2010 and at least 36 billion gallons annually from 2022. Of that total, 60 percent would be advanced biofuels, such as cellulosic ethanol.

However, foodmakers, meatpackers, environmentalists and others argue the bill is a wasteful subsidy, and a cause of higher food prices, as it would use food crops to make fuel.

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