The Senate on Thursday gave a split decision on federal subsidies for ethanol, handily voting to immediately do away with an existing blender tax credit while leaving the door open to a possible future deal to continue other assistance.
Senators gave clear agreement — 73–27 — to the idea of immediately removing a 45-cent-per-gallon tax credit set to expire at the end of the year for blending ethanol in gasoline. Along with that credit — worth upward of $6 billion this year — the amendment from Sens. Dianne Feinstein (D-Calif.) and Tom Coburn (R-Okla.) would also end a 54-cent-per-gallon tariff on ethanol imports….
A second amendment from Sen. John McCain (R-Ariz.) that would end federal spending for ethanol blender pumps and storage facilities lost 41–59.
And this vote suggests that we will be seeing a scaling back of some ethanol subsidies at some point probably in the not-too-distant future.
But that moment isn’t quite at hand. The Politico reports:
The vote was mostly symbolic as the underlining economic development bill is not likely to make it into law, but it’s the latest sign that lawmakers are ready to kick ethanol subsidies to the curb.
The Hill reports on the deal that might ultimately win:
Sens. John Thune (R-S.D.) and Amy Klobuchar (D-Minn.) — joined by other ethanol allies — are floating legislation that would end the 45-cent per gallon ethanol blender’s credit (which along with the import tariff is slated to expire at year’s end), but maintain a smaller and “variable” blender’s credit for three years when oil prices are below certain levels.
It would steer some savings from ending the credit to deficit reduction while also extending credits for cellulosic ethanol production, small ethanol producers, and installing alternative fuel pumps.
It certainly makes sense to tie any such remaining subsidies to the price of oil.
Another reason we probably won’t see ethanol subsidies disappear entirely quickly is that the White House issued a characteristically wishy-washy statement that they would block a full repeal:
“With respect to incentives, the administration is open to new approaches that meet today’s challenges and save taxpayers money. We oppose a straight repeal of the Volumetric Ethanol Excise Tax Credit,” White House spokesman Clark Stevens said this week.
As I’ve said before, in a world of blatantly increasing food insecurity — driven by population, dietary trends, rising oil prices, and growing climate instability — America’s policy of burning one third of our corn crop in our engines (soon to be 37% or more) is becoming increasingly untenable, if not unconscionable (see “The Corn Ultimatum: How long can Americans keep burning one sixth the world’s corn supply in our cars?“). Heck, even former Pres. Bill Clinton start talking about this in a Washington Post piece headlined, “Clinton: Too much ethanol could lead to food riots.”
Today’s vote, however symbolic, indicates that the days of endless subsidies for biofuels are coming to an end.