By on March 16, 2011

At the end of last year, the Volumetric Ethanol Excise Tax Credit (aka “Blender’s Credit) very nearly expired before congress passed a one-year, $6b extension to the subsidy. The near-collapse of the largest “renewable energy” subsidy on the federal books came as the backlash built against the EPA’s approval of E15 (15% ethanol) blends for certain vehicles, with a huge coalition of industries, environmentalists and budget hawks coalescing around the idea of ending government support for corn-based ethanol. That coalition lost some momentum as the VEETC was extended in order to drum up support for the controversial tax bill that was passed during December’s lame duck session. But now, SolveClimate [via Reuters] reports that the brewing deficit battles have put the Blender’s Credit back on the chopping block, as a new bill seeks to cut the wasteful, inefficient and unpopular (outside of farm states) subsidy.

Sponsored by a Maryland Democrat and an Oklahoma Republican (Sens. Ben Cardin and Tom Coburn, respectively), the bill is being pitched as a bipartisan effort to correct “bad economic policy, bad energy policy and bad environmental policy.” And the Cardin-Coburn bill doesn’t stop at corn ethanol, but ends government subsidies for all forms of feedstock-based ethanol, including sugar beet-derived fuels. A competing Democratic proposal, forwarded by Sens. Dianne Feinstein and Jim Webb, would cut support only for corn ethanol. That bill would also

ower the tariff on imported ethanol to match the 45-cent-per gallon subsidy that will remain in place under what the duo calls “non-corn, second generation advanced biofuels.”

“Ethanol is the only industry that benefits from a triple crown of government intervention: its use is mandated by law, it is protected by tariffs, and companies are paid by the federal government to use it,” Feinstein said. “By lowering the import tariff to match the non-corn ethanol credit, we allow refiners to purchase cheaper, environmentally-friendly ethanol from foreign sources while at the same time preventing foreign producers from benefitting from U.S. subsidies.”

Both bills face challenges, as the House and Senate struggle to create a budget that will keep government operating.

the anti-VEETC crowd might wonder why ethanol tax credits aren’t at the top of the trim list. Mostly it’s because of a Capitol Hill aberration that draws a sharp divide between legislating and appropriating.And that is eternally frustrating to Kate McMahon with the advocacy organization Friends of the Earth. Congress, she emphasized, could operate more efficiently and thoughtfully if it took less of a piecemeal and more of a holistic approach to policy.

“The hard part is that the budget is in a different world from appropriations and you can’t legislate in the appropriations process,” McMahon, FOE’s biofuels campaign coordinator, told SolveClimate News in an interview.  “We could be doing both of these things at once and not doing them in silos. It’s an insane narrative. We need to be having a broader conversation.”

Still, perhaps the desire to create a leaner budget combined with bipartisan opposition to ethanol subsidies will be enough to send the corn juice scam packing. In any case, it seems that from here on out, the ethanol lobby will at least have its work cut out for it simply maintaining the status quo. And with the VEETC expiring again at the end of this year, 2011 could well be the year that the subsidy keeping ethanol afloat finally gets the axe.

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15 Comments on “Ethanol “Blender Credit” Under Attack Again...”

  • avatar

    Would someone please stop this ethanol insanity?

  • avatar

    What a shill:
    Citing protests in Egypt, Wesley Clark calls for expanded reliance on ethanol
    Many think corn ethanol helped cause the food grain price rise that started the riots.  This shill wants to double down on bad policy.

    • 0 avatar

      You’d find that all military brass agree with Gen. Clark on this issue. Our reliance on foreign oil (much of it from potential military adversaries) terrifies our military, they want American energy independence as much as anyone, but since they don’t have an environmental agenda they’re pushing for the most pragmatic solutions; ethanol and coal-gasifacation.

  • avatar


  • avatar

    Get back to me once Iowa is no longer the first stop on the presidential primary campaign trail.

    • 0 avatar

      It’s not just Iowa.
      For one, the problem is that the bulk of the population and economic clout in the United States is help by states that are pretty much an ideological given, so there’s no need to sell to them.  Instead, a disproportionate amount of time is spent pandering to swing-states and, as such, swing-state issues distort the intellectual debate.  This is why we get things like Ethanol, rust-belt pandering and the embargo of Cuba: because no one gives a damn what California, New York or Texas think we all know how they’ll go.
      The other problem is the primary system itself: you have to pander to regional concerns rather than present a unified vision, and you end up pandering, again, to swing states rather than those that are entrenched.  By the time you finish the primaries, you have the baggage of thousand little favours.  On a straight party plebiscite this wouldn’t happen.
      Third is the balkanized nature of Congress and the Senate.  In Westminsterian systems you don’t (usually) see regionalism because the regional reps are kept in check by a powerful cabinet and prime minister.  In rep-by-pop systems the representatives are de-coupled from the districts who elected them and have no incentive to work for their constituents.  The American system avoids the strong House Leader/Prime Minister aspect this entails (this isn’t a bad thing, as it ensures Federal operations don’t somp all over local concerns) but it gains an awful level of pettiness, disunity and, quite frnakly, corruption, pork and nepotism.

    • 0 avatar

      Also, psar, the Senate is not proportional to population, which tends to benefit the agricultural states. Texas might have ten times as many people as Kansas, but they each have two Senators, and the Senate has set up its own rules to require a 3/5 supermajority to do almost anything.

    • 0 avatar

      You’re right.  I forgot about the Senate, probably because the Canadian Senate is thoroughly forgettable.

  • avatar

    “lower the tariff on imported ethanol to match the 45-cent-per gallon subsidy”

    I don’t think the USA should be using corn to make ethanol, but, if the government is hell-bent on that dumb idea, it makes more sense that the USA should be shipping ethanol INTO Brazil–not the other way around.  They have the infrastructure and the cars to run E85, but only make enough ethanol to meet about 25% of their needs.  The tanker ships, on their way back to the USA, could pick up some of their oil or gasoline to bring here.

  • avatar

    Only corn growers like the bill. Dairy and cattle farmers hate it as it drives up the cost of their feed.

  • avatar

    We ought not to blame the farmer, as it’s not really the farmers who are pushing or even benefitting from this kind of legislation.  It’s a few blender/processors and (importantly) big agribusiness entities like ADM and Monsanto.  The farmers are pretty much at the “serf” level, here.

  • avatar

    While we’re at it, let’s follow Germany and get rid even of E10.

  • avatar

    Get this crap out of my gas…..please.  Ethanol is for drinking, NOT driving.

  • avatar

    I’d tune my 1JZ to run e85 if I could. But since I can’t and I don’t want my other cars running on any blend of corn and gasoline, I say get rid of this shit.

  • avatar

    The only ethanol I want in my car is the ethanol within the can in my cup holder!

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