Leaders Favor Ethanol Subsidies

A high-profile pair say the U.S. government should continue its commitment to ethanol and lift tariffs on international imports, according to a report by the Sioux Falls, SD, Argus Leader.

Jeff Broin, CEO at Poet, a Sioux Falls-based ethanol company, and former South Dakota Sen. Tom Daschle said the federal government should extend ethanol subsidies and pay them to ethanol producers rather than the oil companies that blend ethanol with their gas. Daschle, who was a co-chairman for President-elect Barack Obama’s national campaign and is expected to be named his secretary of Health and Human Services, said he was not speaking on Obama’s behalf.

A 52-cent-per-gallon federal ethanol subsidy is set to expire in a year, but Daschle and Broin said Congress should extend it for five years.

U.S. ethanol producers are helping American drivers become less dependent on oil from foreign countries, some of them hostile to the U.S., Broin said during a Capitol Hill forum sponsored by the American Council on Renewable Energy. This success means the U.S. ethanol market will be saturated by the end of next year unless Congress and automakers act quickly to raise the limit on the amount of ethanol that can be used in conventional cars and trucks to 15 percent or 20 percent, he said. Federal law and auto warranties prohibit blends higher than 10 percent for conventional vehicles and 85 percent for flex-fuel vehicles.

Investors will not put their money into researching and developing cellulosic ethanol, which is made from nonedible woody plant materials, if the market for ethanol isn’t there, Broin said. Today, most ethanol is made from corn.

(Source: Argus Leader)

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One comment on “Leaders Favor Ethanol Subsidies

  1. Good to read that Jeff Broin and Tom Daschle now advocate lifting the tariff on imports of ethanol from Brazil, but it is clear that they are still willing to rob whatever money from Peter (U.S. taxpayers) Paul (the ethanol industry) demands to keep it afloat and growing. The VEETC (now $0.45 per gallon, not $0.52 per gallon), if (and the one for biodiesel) it keeps being extended, it will cost taxpayers more than $7 billion a year by 2015. Add to that the $3 billion a year in subsidies to cellulosic producers, and the total becomes $10 billion per year. By 2022 it will be $28 billion per year.

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