#Biofuel

I don’t think Bertel would have gone for my original headline:

It Seemed Like A Gouda Idea. Colby Was A Dip But Knew He Curd Build The Car. He Was Not A Whey Nacho Man Nor A Whiz At Car Building As His Wife Brie Reminded Him On Those Nights She Got Grilled On Kahula And Cream While Sitting On A Brick In Front Of Their Swiss Cottage In Monterey, Jack Baruth Being Her True Love. Colby Was Becoming A Basket Queso In His Quest To Get His Kraft In Front Of Auto Writer Csaba Cheddar: Utah State Students Build Car Powered By Cheese Waste

The House Science Committee approved a bill that bars the EPA from approving E15 gasoline without a further study into its effects. The bill passed 19-7 as members voted along party lines. The bill was sponsored by Rep. James Sensenbrenner (R-WI).

After spending thirty years and $45 billion dollars encouraging the use of ethanol the United States Congress has adjourned for the year without extending tax subsidies to the to ethanol industry. The subsidy currently costs taxpayers $6 billion a year. A related import tariff on Brazilian ethanol was also allowed to expire. With a wide group of critics, cutting across political and ideological lines, the tax break had become unpopular in Washington. Business interests in the food and cattle industry as well as environmentalists opposed the law which paid 45 cents per gallon to fuel blenders to subsidize their costs for producing E10 gasoline/ethanol blend. The subsidy resulting in corn being diverted from feedlots and food processors to ethanol production, raising the cost of many foodstuffs. The environmental movement now opposes corn ethanol as a fuel it because it considers the fuel and its production to be “dirty”, in the words of Friends of the Earth.

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.

It seems that yesterday’s optimism about a possible end to the ethanol “Blender’s Credit” may have been somewhat premature, as Senate Budget Committee chair Max Baucus has now proposed extending the 45 cents per gallon tax credit at the lower rate of 36 cents per gallon. The ethanol industry has expressed disappointment, but says it will accept the proposal. Which, given the fact that the Blender’s Credit is opposed by groups as diverse as Friends Of The Earth and FreedomWorks, seems like the reasonable step. And because the 36 cent per gallon extension is only good for a year, even if it is approved, this battle will rage on.

The ethanol industry might have enjoyed a small popularity bump when NASCAR switched to E15 (15% ethnol blend) gas, but it’s facing one of its biggest tests yet, as the so-called “blender’s credit” draws within a month of its expiration date. And the signs aren’t looking good for the most important subsidy in the ethanol playbook. Bloomberg reports that 17 Senators from both parties are pushing to end the 45 cent-per-gallon tax credit for ethanol blenders (and 54 cent-per-gallon import duty), and they’re opposed by only 13 Senators openly pushing for renewal. Plus, they’ve got a pretty strong argument:

If the current subsidy is extended for five years, the Federal Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol that the Federal Renewable Fuels Standard already requires them to use. We cannot afford to pay industry for following the law

Since corn-based ethanol began coming under attack for a wide variety of negative environmental and social impacts, the renewable fuels industry has sought to cover the sins of its corn juice gravy train with a coat of “advanced biofuel” greenwash. Accordingly, the ethanol blending mandate (from the 2007 Energy Independence and Security Act (EISA)) has included requirements for cellulosic and non-corn-derived biofuels which the industry says will replace corn… eventually. Unfortunately it seems that “eventually” is going to take longer than was expected, as the EPA has already slashed the 2010 mandate for advanced biofuel blending from 100m gallons to 6.5m gallons. And today the EPA announced rules for the 2011 advanced biofuel blending goal, and once again the non-corn fuels are getting the short end of the stick.

GM is spending about $100 million a year adding flex-fuel capability to our vehicles. We can’t afford to leave this capital stranded… I think it would be very helpful if we could get government assistance. But I really want the oil industry, I want the people who are at this conference, I want the government and I want us to just work together to make ethanol a reality,

This was the message the GM’s Tom Stephens took to the Renewable Fuels Association’s National Ethanol Conference in Orlando. And though Stephens’ exhortation of the ethanol industry makes for a pleasant addition to GM’s typical ethanol message (i.e. the first sentence of the quote), it’s little more than filler. GM’s push to align itself with the ethanol industry continues unabated, as Stephens reveals that half of all GM vehicles will be flex-fuel capable by 2012. The problem is that GM reckons the country needs another 10k E85 pumps (up from the current 2k), and since the ethanol industry would effectively collapse without government support, nobody from the industry is jumping in to take responsibility for this self-serving infrastructure project.