Congress should consider revising or ending the 45 cent-a-gallon tax credit for blending corn ethanol with gasoline, the Government Accountability Office said.
The credit "may no longer be needed to stimulate conventional corn ethanol production because the domestic industry has matured," GAO said in an Aug. 25 report posted on the investigative agency's Web site today. Ethanol production "is well understood, and its capacity is already near" a 15 billion gallon-a-year congressional requirement for conventional ethanol, the report found.
Energy legislation approved by Congress in 2007 required that 36 billion gallons of biofuels be used by 2022, up from 9 billion gallons last year, in an effort to reduce petroleum use. The legislation reduced the "volumetric ethanol excise tax credit" from 51 cents for 45 cents a gallon starting this year.
GAO estimated the tax credit supporting conventional corn ethanol production could cost the U.S. $6.75 billion in lost revenue by 2015, up from $4 billion last year.
The credit "does not stimulate additional ethanol consumption," according to the report. GAO said options include keeping the credit, reducing or phasing it out, or modifying it to counteract crude oil price fluctuations.
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