U.S. ethanol production would drop a modest amount if tax incentives costing $6 billion a year are eliminated, a think tank at Iowa State University said on Tuesday.
The incentives -- a 45-cent a gallon excise tax credit for U.S.-made ethanol and a 54-cent a gallon tariff on imports -- are scheduled to expire at the end of the year. Almost all fuel ethanol is distilled from corn
Imports would remain at low levels if the tariff is removed, said the study by the Center for Agricultural and Rural Development(CARD), and domestic output in 2011 would be 700 million gallons, or roughly 6 percent, lower than with the tax credit.
CARD said U.S. consumption of ethanol primarily is set by a 2007 law that guarantees renewable fuels a share of the motor fuel market -- 12.95 billion gallons this year and rising to 36 billion gallons from 2022, with advanced biofuels to supply 21 billion gallons of it. Ethanol production has tracked the mandate in recent ...