Ethanol industry wants a piece of Obama stimulus

Ethanol distillers want "an immediate $1 billion to finance current operations and avoid layoffs and a $50 billion federal loan guarantee program to build new conversion facilities and pipelines," plus unspecified incentives for research and development and a tax credit for job creation, as part of the economic stimulus being planned by President-elect Barack Obama, reports Congressional Quarterly.

"The industry, which has been battered by falling fuel prices and erratic commodity markets, denies it is asking for a bailout," writes Aliya Sternstein. "But environmentalists and the food industry are calling the ethanol stimulus ideas irresponsible and potentially detrimental to the rest of the alternative energy sector." Craig Cox, Midwest vice president of the Environmental Working Group, told CQ that ethanol may increase greenhouse-gas emissions through increased tilling of land, and is "essentially eating up" money that could be used to subsidize other forms of renewable energy. "I think we need to question whether this industry can really ever stand on its own," he said.

"Ethanol producers argue that they are the best available solution to the energy crisis and are integral to any 'green' initiative aimed at energy independence, job opportunities and fighting global warming," Sternstein reports. "Ethanol companies have been pinched by decreased demand for fuel as well as the national credit crunch, according to the [Renewable Fuels]Association. In addition, ethanol manufacturers lost money by using the commodities markets to bet that corn futures prices would rise. Those prices recently dropped." (Story is not available online.)

UPDATE, Dec. 30: The Renewable Fuels Association says its request for part of the stimulus should not be considered a bailout.