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Historic Anti-Corn Ethanol Amendment Faces Uphill Battle

Almost three-quarters of the Senate approved a measure to end the $6-billion-a-year blenders credit, but its prospects for ultimate passage remain cloudy

By Elizabeth McGowan, SolveClimate News

Jun 23, 2011
Sen. Dianne Feinstein (D-Calif.)

Both the tax credit and the tariff are scheduled to expire at the end of this year. The Feinstein-Coburn measure is designed to put a halt to the payments June 30.

Relatively recently, Congress had two prime chances to shut the corn ethanol subsidy spigot. For instance, while both chambers engaged in frantic, down-to-the-wire horse-trading to avoid a spring government shutdown, VEETC opponents pointed to eliminating ethanol tax credits as a no-brainer.

And back in December, they had the opportunity to let the then five-year-old tax credit die a natural death when it expired at the end of the month. However, stalwart ethanol-subsidy advocates from agricultural states, such as Iowa Republican Sen. Chuck Grassley, pressured legislators to renew the VEETC during the lame-duck session.

Gaining House Momentum?

After the lopsided vote on his amendment, Coburn urged his House colleagues to get rid of this "wasteful earmark and tariff at their earliest opportunity."

Over in the lower chamber, the Environmental Working Group is hopeful that Reps. Wally Herger, a California Republican, and Joseph Crowley, a New York Democrat, will join forces as early as this week — perhaps Thursday — to introduce companion legislation identical to the Feinstein-Coburn initiative.

That House effort also will have the backing of a diverse coalition that includes representation from business associations, hunger organizations, grassroots groups, agriculture, the environmental community and budget hawks.

Indeed, Action Aid USA, Americans for Prosperity, the Competitive Enterprise Institute, Greenpeace USA, the National Black Chamber of Commerce, the National Meat Association, the Sierra Club, the Snack Food Association, the Southern Alliance for Clean Energy were among the 34 organizations signing a of support to Senate leaders.

"Continuing to subsidize oil companies to blend ethanol — which they are already required to do by the Renewable Fuels Standard — is wasteful and unnecessary," they wrote in a two-paragraph letter. "This amendment will save U.S. taxpayers several billion dollars this year and have virtually no impact on ethanol production, jobs or prices."

Both the Congressional Budget Office and the Government Accountability Office have concluded that dropping the subsidy won't harm domestic production or demand of corn ethanol.

Coburn praised his fellow senators for embracing pro-growth tax reform and rejecting the parochial politics that can paralyze legislators.

"The best way to reduce our crushing $14.3 trillion debt is by reducing wasteful spending a billion dollars at a time," said Coburn, whose website home page features a ticker that constantly updates the national debt. "This amendment saves taxpayers $3 billion."

RFS Should Be Enough

Everybody trying to drive a stake through corn ethanol subsidies is perplexed as to why a government-mandated renewable fuels standard isn't enough for a mature industry.

"This industry can't continue to suck more money from the federal government," Karpf said. "They are already over 90 percent of the way to their mandate."

When Congress amended the Clean Air Act by endorsing the Energy Independence and Security Act in 2007, it upped the renewable fuels standard by requiring that 36 billion gallons of biofuels be produced by 2022.

This year, the United States is required to blend 13.95 billion gallons of biofuels with conventional transportation fuels, according to Environmental Protection Agency figures.

Totals for 2011 include 1.35 billion gallons of advanced biofuel, 800 million gallons of biomass-based diesel and 6.6 million gallons of cellulosic biofuel. The cellulosic ethanol requirement is a dramatic drop — 97 percent — from the ambitious goal of 250 million gallons targeted in 2007.

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