Monday, December 13, 2010

Securing ethanol subsidies may be difficult

The ethanol industry earned a victory last week with the one-year extension of key federal subsidies, but securing those subsidies next year may be a tougher battle. "Industry officials say they're open to changing the way the government subsidizes producers next year, but there is disagreement within the industry about the best way to do it," Philip Brasher of the Des Moines Register reports. "A one-year extension of the subsidy buys the industry some time." With the federal deficit and an influx of conservative Republicans to Congress, the battle for those subsidies is expected to be more difficult in 2011.

"This allows us to have that debate next year but to figure out how we want to support the industry in a way that is fiscally responsible," said Bob Dinneen, president and CEO of the Renewable Fuels Association.  Nathanael Greene, an energy policy analyst for the Natural Resources Defense Council and a critic of corn ethanol, said the industry has "got to be nervous," given the deficit issue. "It doesn't look like corn ethanol is always going to get all it wants," Greene told Brasher.

"What happens in 2011 is up in the air," Brasher writes. "A rival trade group to the Renewable Fuels Association, called Growth Energy, has proposed to phase out the tax credit and shift the money into financing ethanol pipelines and retrofitting service stations to sell gasoline with higher ethanol content." RFA says "everything is on the table" in the discussion of how to continue federal support. "We have committed to reforming the tax incentive to make it more fiscally responsible, but it has to be one that works and one that encourages investment in new technologies and continues the evolution of the industry," Dinneen told Brasher. "I don't think we've seen a proposal out there yet that necessarily does all that." (Read more)

No comments: