Senators John Thune (R-SD), Amy Klobuchar (D-MN) and Dianne Feinstein (D-CA) have reached a bipartisan agreement that would end the $.45-per-gallon Volumetric Ethanol Excise Tax Credit (VEETC) and the $.54-per-gallon tariff on ethanol imports on July 31, 2011, rather than the current expiration date of December 31, 2011.

Senator Klobuchar’s office said that the bipartisan plan “would dedicate two-thirds of the savings from the agreement — $1.3 billion — to debt reduction and the remaining $668 million to renewable fuel incentives.”

The agreement includes a proposal extending the Cellulosic Biofuel Production Tax Credit of $1.01 per gallon (currently due to expire at the end of 2012) for three years (to December 31, 2015). This includes an annual cap of 50 million gallons in 2013, 100 million gallons in 2014 and 155 million gallons in 2015.

It also proposes extending the Alternative Fueling Infrastructure Tax Credit for three years to December 31, 2014, rather than the current expiration date of December 31, 2011. This covers technology neutral investments in electricity charging stations, blender pumps or natural gas fueling stations. The Joint Committee on Taxation estimates, however, that about half of qualifying investments will be in non-ethanol structure.

Finally, the agreement includes a one-year extension of the Small Producer Tax Credit to December 31, 2012, rather than the current expiration date of December 31 this year.

The Renewable Fuels Association (RFA) stated that this agreement supports the continued development of new technologies and new feedstocks for cellulosic ethanol. “We are pleased the agreement recognizes the importance of cellulosic ethanol by committing $305 million to this effort. However, we are concerned that capping cellulosic ethanol development sends the wrong signal and we will continue to work with the Congress and the Obama Administration to address this anomaly as this process continues,” the RFA added.