President Obama signed legislation this week providing $26 billion in emergency assistance to cash-strapped states to pay for thousands of teachers, policemen, firefighters and other government workers.
Proponents of the idea say the expenditure will be offset by a number of revenue increases and spending reductions, including a $1.5 billion cut to the Department of Energy's renewable energy loan guarantees.
Critics, including those from the renewable fuels sector blasted the plan shortly after it was introduced. And this week, a researcher from the Union of Concerned Scientists - - a nonprofit group working for a healthy environment - - called for increased investment in cellulosic ethanol to meet what he calls, "the billion gallon challenge."
More than three decades ago, ethanol producers received the first investment incentives to grow the fledgling biofuels industry. One of the most recent was the Volumetric Ethanol Excise Tax Credit, or VEETC (vee-TEK). Also known as the blender's credit, VEETC (vee-TEK) gives motor fuel blenders a 45 cent tax credit for every gallon of ethanol blended with gasoline. Under current law, the tax incentive will expire at the end of this year. And a growing number of lawmakers, economists and scientists believe the blender's credit has outlived its usefulness and should not be extended. Among them is Jeremy Martin, with the Union of Concerned Scientists.
Jeremy Martin, Union of Concerned Scientists: "I think VEETC's run its course and isn't a policy that's needed anymore, it's really redundant at this point."
This year's alternative fuels production mandate is 12 billion gallons. The amount increases to 36 billion gallons over the next 10 years. Up to now, corn-based ethanol has satisfied much of the mandate, but the crop is only expected to cover about half of the total in 2022.
To help make up the difference, the government is directing the industry to increase the amount of cellulosic ethanol, to hit a target of 16 billion gallons in a little more than a decade. A variety of feedstocks can be used to make cellulosic ethanol including corn cobs, wood chips and switchgrass.
Despite current mandates calling for 100 million gallons of cellulosic ethanol to be produced this year, the industry will fall well short of the goal.
Martin believes the problem has to do with the lack of incentives for investors. Calling it the "Billion Gallon Challenge," he wants the federal government to inject $4 billion into cellulosic ethanol production instead of renewing the blender's credit which costs taxpayers $6 billion annually.
Jeremy Martin, Union of Concerned Scientists: " The problem that's in front of us right now, you know, the optimal way to support a large cellulosic industry. And, you know, can we really back the government out entirely, use a carbon price, those questions are kind of silly when we have mandates which are being completely missed and targets which are being completely missed? So we really need to get this industry up and going and then we'll be able to look at it and say 'what's required and which of the technologies are cost effective today, which ones need some more work, which ones have other benefits that we need to somehow recognize,' but the challenge before us is getting up to speed."