(November 2, 2011) Washington – A press statement from the European ethanol association ePure today confirmed they are requesting an investigation into U.S. ethanol tax policy and trade.  At issue is a European allegation that international ethanol traders were exporting E90 (90 percent ethanol blends) to Europe to take advantage of the European Union’s (EU) lower tariff on such blends as well as the tax incentive for ethanol blending in the U.S. – the $0.45 per gallon incentive known as VEETC set to expire at the end of this year.

In response to ePure’s press statement, the Renewable Fuels Association (RFA) issued the following statement:

“Based upon our research and work with the International Trade Commission (ITC), the RFA has neither discovered nor been provided any evidence by the EU or any other entity that such ethanol trades are occurring.  Moreover, the U.S. ethanol tax incentive that lies at the root of the European allegations will expire at the end of 2011, rendering the tax incentive portion of the alleged trading impossible in the future. 

“Importantly, domestic ethanol producers are not eligible for the tax incentive referenced by the Europeans. That tax incentive is specifically made available to gasoline blenders, marketers, and other end users. Therefore, U.S ethanol producers cannot nor should not be the focus of any potential European action.

“To be clear, all ethanol producing nations and regions provide incentives.  Nations of the European Union are no different.  The fact of the matter is U.S. ethanol remains the lowest cost, most cost effective ethanol in the market today.  This fact has led to a surge in U.S. ethanol exports to Brazil, Europe, Asia, and the Middle East.  Those volumes, as reported by the ITC and the RFA are denatured and undenatured volumes that have not received any tax incentive.  To date, the RFA has not found nor been provided any evidence the alleged trades of ethanol blended with gasoline have occurred.

“The RFA will thoroughly evaluate any action that may emanate from the EU.  The more salient issue, as the RFA has long pointed out, is the EU tariff schedule that encourages the import of E90 blends by classifying them at a lower tariff rate than other ethanol imports.  Based upon any claims made, the RFA will work with U. S. trade officials to take the appropriate steps.”