Ethanol industry on board with bill to extend tax subsidies

Published 10:30 am Friday, May 6, 2011

A bipartisan U.S. Senate bill set to extend and phase out tax subsidies for ethanol is gaining widespread support, and the ethanol producers are on board.

A coalition of ethanol industry groups supports the bill that would gradually reduce the amount of ethanol subsidies over the next five years, instead of eliminating them at the end of this year. The Domestic Energy Promotion Act of 2011 is co-sponsored by Iowa Republican Sen. Charles Grassley and North Dakota Democratic Sen. Kent Conrad. Instead of letting the 45-cent per gallon ethanol subsidies expire on Dec. 31, 2011, the bill gradually decreases them until 2016.

Also, savings from reducing the subsidies would be applied to the budget deficit. Minnesota Democratic Senators Al Franken and Amy Klobuchar are among a host of Senators who support it.

“The whole idea is that we know the country faces severe budget problems now,” Klobuchar said. “But, I don’t want to pull the rug out from under biofuels.”

Franken visited Poet Biorefining in Glenville last week; and he and Poet’s general manager, Rick Mummert, see eye-to-eye.

By enticing more gas stations to carry ethanol in blender pumps, the ethanol producers will have more of their product in front of customers.

A blender pump allows the customer to hit a button and choose the amount of ethanol blended into their gasoline. Choices range from low percentages all the way to E85.

“What we want is just a level playing field with petroleum,” Mummert said. “And we want to advocate choice for the people at the pump.”

Although some gas stations already have blender pumps, Mummert said more needs to be done. One concern is the automobile industry. Most new cars can run efficiently on ethanol blends, but manufacturers aren’t making many flex-fuel cars, and most older vehicles do not support the blends at all.

“That’s the challenge; you’re running an automobile on ethanol, it’s not going to be as efficient,” Mummert said about many older cars on the road. “So we need those that are tuned to run on it.”

Perhaps the biggest challenge of all is overcoming the big oil companies, according to Mummert, who said the system is unfair. And he thinks the ethanol industry, along with Senators, is in a unique opportunity.

“How many industries have gone to the government and said, ‘Hey, here’s a program. Take away our subsidies,’” Mummert said. He added oil companies should be held to the same standard. “If they’re going to start taking away subsidies, I’m fine with that — that’s what we want, but they better take them away equally.”

Some senators have questioned if the subsidies have been needed at all, adding they are a burden to the American taxpayer.

“I think the bottom line is it’s a political challenge,” Mummert added. “People have to recognize it’s a David and Goliath story, and we are David.

Another process includes educating the American people. Currently, ethanol is capped at 10 percent in fuel at the nation’s gas stations. Mummert said many misconceptions lie around ethanol, including wasting corn and producing wasteful byproducts. However, ethanol production only uses corn not meant for human consumption, and the byproduct of ethanol is a protein rich feed for livestock, as all the starches are removed from the corn.

“If anyone came to one of these ethanol plants and actually toured one, you’d see we’re actually making food,” Mummert said about one of ethanol’s extra advantages.

If the bill passes, subsidies for ethanol will expire in 2016.