Ethanol Blog

Ethanol Industry Asks Senate Leaders to Approve COVID-19 Aid

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The American Coalition for Ethanol is making a plea to U.S. Senate leaders to include economic relief for biofuels producers in the next round of stimulus legislation.

In a Wednesday letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, ACE Chief Executive Officer Brian Jennings said producers remain in a tough spot following the COVID-19 economic shutdown.

"On behalf of the members of the American Coalition for Ethanol, I write to request that the next COVID-19 economic relief package include S. 3756, bipartisan legislation introduced by Sens. (Charles) Grassley (R-Iowa) and (Amy) Klobuchar (D-Minnesota) to reimburse biofuel producers for a share of feedstocks they purchased and processed into renewable fuel during the first quarter of the year," Jennings said in the letter.

"While Congress has enacted three-phases of stimulus to respond to the economic downturn caused by the coronavirus pandemic, the renewable fuel sector has so far been left behind.

"Ethanol use declined by 50% because of the social distancing, stay-at-home, and shelter-in-place orders instituted across the country to fight COVID-19, a catastrophic and unprecedented demand shock for domestic biofuel producers. Ethanol usage remains well-below pre-COVID levels and is not expected to recover through 2021. The Renewable Fuels Association estimates losses for the ethanol industry already exceed $3 billion."

Legislation in the U.S. House of Representatives includes a direct-compensation program similar to the Grassley-Klobuchar bill, in a May 15 stimulus package.

"With COVID-19 numbers on the rise and talk of future shutdowns intensifying, renewable fuel producers could see the economic damage more than double current levels," Jennings said.

"Action is needed now."

The Grassley-Klobuchar legislation would reimburse ethanol producers on feedstock purchases.

"This relief is critical to helping the U.S. biofuel industry survive this unimaginable economic downturn and remain a key part of rural America's future," Jennings said.

On a call with reporters last week, Grassley said one of his key priorities in a new aid package is to subsidize ethanol feedstock purchases.

The plan would reimburse biofuel producers for their feedstock purchases from Jan. 1, 2020, to March 31 through the Commodity Credit Corp.

The Senate plan differs from the "Renewable Fuel Reimbursement Program" included in the House HEROES Act, which would provide a 45-cent per-gallon payment for biofuel producers for qualified fuel produced from Jan. 1, 2020, through May 1. Ethanol plants not producing during that time frame could still receive a 22.5-cent credit based on fuel volumes they produced during that time period in 2019 as well.

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