The biofuels industry is lobbying Congress to renew or start several subsidies it says are needed to protect the industry's future, but as lawmakers look for ways to trim the federal deficit those incentives may be in jeopardy. The $1-a-gallon biodiesel tax credit lapsed at the end of 2009, and Senate has been unable to agree on a bill that would revive the subsidy and extend it to the end of the year."The biodiesel subsidy itself isn't controversial, but Senate Republicans and some Democrats have objected to other spending in the bill that would add to the budget deficit," Phillip Brasher of the Des Moines Register reports. "The legislation includes money for state Medicaid programs and an extension of unemployment benefits."
"Congress must renew the 45-cent-per-gallon tax credit for ethanol or else the subsidy will expire at the end of the year," Brasher writes. "At the same time, the industry is seeking subsidies to install new pumps at service stations and fund the development of biorefineries that can make biofuels from crop residue and other new feedstocks." Salo Zelermyer, a former U.S. Department of Energy lawyer who now lobbies for some renewable energy firms, told Brasher any new biofuel measure that has a cost to taxpayers "is going to be difficult unless there's a clear mechanism to pay for it."
"Companies that want to make the next generation of biofuels claim they are close to making it economically but need more help from the government," Brasher writes. "None of the projects has yet to qualify for a federal loan guarantee." Iowa Sen. Chuck Grassley, who has long protected the industry from his seat on the Senate Finance Committee, told Brasher he was optimistic Congress wouldn't let the subsidy expire, but he wasn't sure anymore after the biodiesel credit. "If you were asking me this question a year ago about biodiesel, I would have said there's not a problem," Grassley said. "We would have gotten it passed by the end of the year." (Read more)
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