Senator Ben Nelson (D-Neb.), who supports the corn-based fuel, told reporters that an extension of the credit for blending ethanol into gasoline is included. "I believe it will be in there...based on some discussions," he said. Nelson did not know the length of the extension or whether it would be continued at the current level.
Refiners [image-nocss] and gasoline blenders currently receive a 45-cent-per-gallon credit for each gallon of ethanol mixed in, an incentive ethanol producers call vital to ensuring a robust market for the fuel. It is scheduled to expire at the end of the year.
Sen. Dianne Feinstein (D-Calif.), who is among the lawmakers battling the credits, also told reporters that the deal contains an extension. She believes it is at the 45-cent level, said the report, but was uncertain about the duration.
"Ethanol tax credits--that's a problem. As far as I know they are in and they should not be," she told reporters.
Continuation of the incentives would be a victory for ethanol producers and farm-state lawmakers, who have been battling a left-right coalition of lawmakers and interest groups trying to kill the credits, the report said.
A Left-Right coalition is emerging against ethanol subsidies, which some call an "energy boondoggle," said an earlier report by the Wall Street Journal. Last week, 17 senators signed a letter calling ethanol "fiscally indefensible" and "environmentally unwise." Led by Dianne Feinstein (D-Calif.) and Jon Kyl (R-Ariz.), the group said Congress should not extend certain subsidies that expire at the end of the year, including the 45-cent-per-gallon tax credit for blending ethanol into gasoline and tariffs on cheaper imports.
Conservatives like Tom Coburn (R-Okla.) dislike this costly industrial policy, according to the report, while liberals like Barbara Boxer (D-Calif.) and Sheldon Whitehouse (D-R.I.) are turning against the hefty carbon emissions that come with corn fuels.
And speaking at the National Press Club last Monday, Energy Secretary Steven Chu said that "ethanol is not an ideal transportation fuel" and that the government's focus should be "on ways that we can actually go beyond ethanol." He still supports alternative fuels that are not made from corn, but which are not yet commercially viable, the report added.
"Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition or require its use. We understand that ethanol may be the only product receiving all three forms of support from the U.S. government at this time," the senators said.
Click hereto view the full text of the letter.
Meanwhile, saying that ethanol offers the most effective alternative to foreign oil and supports hundreds of thousands of jobs in the United States, Senators Chuck Grassley (R-Iowa) and Kent Conrad (D-N.D.) have gathered signatures for a letter to Senate leaders urging action this year on legislation to extend renewable fuel tax and tariff provisions.
The senators said immediate action is warranted to "provide stability and certainty for producers and consumers of renewable fuels."
"Ethanol has proven its value as a homegrown, renewable fuel and, in light of the hundreds of billions of dollars shipped abroad as a result of foreign oil dependence, ethanol is a relative bargain," Grassley said.
"Our country is spending over $730 million a day on imported petroleum this year, money that often ended up in the hands of unstable or unfriendly governments," Conrad said. "This is not the time to reduce the supply of a domestic source of fuel and place at greater risk the thousands of well-paying jobs that the renewable fuels industry has created."
The senators said that ethanol is the only renewable fuel that is substantially working to reduce U.S. dependence on oil. Domestically produced ethanol displaces millions of barrels of imported oil every year from Saudi Arabia, Venezuela and Nigeria and now accounts for almost 10% of the U.S. fuel supply.
Last April, Conrad and Grassley introduced a bill to extend, through 2015, the volumetric ethanol excise tax credit, or VEETC, which is also known as the blenders' credit; the small ethanol producer tax credit; the cellulosic producer tax credit; and the ethanol import tariff.
Ethanol is good for rural economies, they said, and a recent study found that the failure to extend the VEETC credit and the secondary tariff would result in the loss of more than 100,000 jobs nationwide and reduce ethanol production by nearly 40%.
The lapse of the separate tax credit for biodiesel, which expired at the end of 2009, has cost nearly 23,000 jobs, according to Grassley. "We can't risk a repeat performance with ethanol, where 112,000 jobs are at stake," he said. Of the ethanol tariff, he said, "the United States already provides generous duty-free access to imported ethanol under the Caribbean Basin Initiative, but the CBI cap has never once been fulfilled. In fact, last year, only 25% of it was even used by Brazil and other countries."
Click herefor the text of the letter.
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