A joint effort of highway groups and farm organizations helped achieve an historic victory for renewable fuels in 2004 with the passage of the American Jobs Creation Act.

This important tax bill created the Volumetric Ethanol Excise Tax Credit (VEETC), which ensures that Highway Trust Fund (HTF) revenues are not adversely affected by ethanol use. VEETC also makes ethanol blending flexible for petroleum companies and more accessible for growing markets such as E85, E diesel and fuel cells.

VEETC also strengthens the nation’s commitment to biofuels. The act extends the ethanol tax incentive at 51 cents per gallon through December 31, 2010. It also creates a new tax incentive for biodiesel and improves the small ethanol producer tax credit to allow a farmer cooperative to pass the credit along to its farmer owners.

VEETC is expected to generate more than $3 billion per year in additional HTF revenue, improving the ability of the federal government and states to improve transportation infrastructure.