Ethanol Industry's 'Wish List'; Food Before Fuel Coalition Response

December 15, 2008 06:00 PM

via a special arrangement with Informa Economics, Inc.

What ethanol lobbyists are urging Obama team, lawmakers to include in stimulus package

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

U.S. ethanol industry lobbyists and industry officials are urging the following programs to congressional leaders and to President-elect Barack Obama and his top officials as part of a multibillion-dollar economic stimulus package to be acted on early in 2009:

-- Credit facility for operating capital: Establishment of a $1.0 billion short-term credit facility that would provide ethanol producers with access to short-term credit to finance current operations. Access to these funds would be made available to qualifying ethanol producers through community and rural banks and the Farm Credit System at the prevailing non-financial commercial paper interest rate.

-- Federal loan guarantees for capital expansion: Establishment of a $50 billion Federal loan guarantee program to finance investment in new renewable fuel production capacity and supporting infrastructure.

-- Renewable fuel job creation tax credits:
The ethanol industry has created nearly 10,000 direct manufacturing jobs in the American economy. Expansion of the industry to meet the 36 billion gallon Renewable Fuel Standard will provide a solid foundation for the creation of the 2.5 million new Green jobs called for by President-elect Obama. In order to preserve this foundation and ensure the creation of new manufacturing sector jobs, ethanol producers should be provided with an income tax credit for every “Green Job” created by production operations.

-- Expanded federal funding for research and development in new renewable fuel technology: Existing funding for R&D grants in second generation ethanol technology should be extended and expanded to accelerate commercialization.

-- Establishment of flex fuel capability for all new vehicles: Any automobile manufacturer receiving federal financial assistance will be required to ensure that any and all new vehicles produced beginning with the 2010 model season be flex fuel capable (e.g. capable of running on any ethanol blend up to and including E-85.

The ethanol 'wish list' got a quick reaction from members of the Food Before Fuel coalition, who noted the following:

-- America needs to change course when it comes to biofuels, moving our policies away from the promotion of corn ethanol and toward energy solutions that do not pit our energy needs against our need for affordable food and enhanced environmental protection

-- As Congress and the Obama administration consider the ethanol lobby’s ideas a few key points that should guide their thinking:

* First, corn ethanol is not a green fuel. It contributes to carbon emissions and ground level ozone. That is why virtually every major environmental organization in the world has come out against policies that expand the use of corn ethanol. So corn ethanol jobs are not “green jobs” at all.

* Second, policies that promote expanded use of corn ethanol continue to drive inflation in food and feed prices. Consumers paying more at the checkout counter aren’t getting a bailout. Neither are industries like the poultry industry that have lost billions and shed thousands of jobs due to corn ethanol driving up corn prices to historic highs.

* Third, after 30 years of government subsidies corn ethanol is still not competitive in the market – and it is time to ask if we are just throwing good taxpayer money after bad – especially in light of the new evidence that corn ethanol is not green and that it does contribute to higher food and feed costs.

* Fourth, raising the blend limit beyond E10 will only create a whole new set of challenges. Blend limits higher than E10 have been shown to impair engine performance, which is why leading organizations representing the boating industry and others have expressed their opposition. In fact, blends above E10 often invalidate auto warranties because of their impact on engines.

* Finally, all sides agree on the need to move toward second generation biofuels that are truly sustainable and that do not use food-grain feedstocks. But there is no evidence that further supporting corn ethanol will help us reach that goal. Providing an old technology a crutch is rarely a formula for promoting the innovation needed to advance a new technology.  

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


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