Congress ends tax breaks for ethanol

Congress adjourned in December without extending a federal $6 billion-a-year tax subsidy for corn ethanol, which has been in place for 30 years.

Ethanol is essentially grain alcohol produced from crops such as corn that’s mixed with gasoline to produce an ethanol-gasoline blend motor fuel.

The subsidy provided the ethanol industry with a tax subsidy of 45 cents a gallon for ethanol-blended fuel. Congress also allowed the 54-cents-a-gallon tax on imported ethanol to expire by failing to extend that tariff.

It is unknown if Congress intends to revisit the issue during the 2012 legislative session.

The U.S. Environmental Protection Agency (EPA) has granted approval to allow the use of gasoline made up of 15 percent ethanol, known as E15, in model year 2001 and newer passenger vehicles including cars, SUVs and light pickup trucks. But the EPA hasn’t approved the blend for motorcycles, heavy-duty trucks or non-road engines.

The AMA has repeatedly expressed concerns to government officials and federal lawmakers about possible damage to motorcycle and all-terrain vehicle (ATV) engines caused by the inadvertent use of E15 when the new fuel becomes widely available.

The AMA believes more research is needed before E15 is approved for use in motorcycles and ATVs.

“We are concerned that, if the allowable level of ethanol is raised, it could result in premature engine damage or failure while a bike is being ridden on a highway,” says AMA Government Affairs Manager Imre Szauter. “We are also concerned about any degradation in performance, fuel economy and rideability that may result from the long-term use of blended fuels with greater than 10 percent ethanol.”