House committee weighs cut of 20 percent in ethanol subsidy

Washington, D.C. – A House committee is considering a 20 percent cut in the ethanol subsidy that is otherwise set to expire this year.

A Ways and Means Committee spokesman said that a reduction of the tax credit from 45 cents to 36 cents per gallon was among ideas the panel was considering for a green-energy bill. The subsidy would be extended through next year.

A draft of the bill could be released in the next few days, said committee spokesman Matt Beck. The Hill, a congressional newspaper, reported that the committee’s action on the bill was likely to be delayed until September.
Senate Democratic leaders are working on a broader energy bill that could include subsidies for biofuels.

Rep. Leonard Boswell, D-Ia., said that “it may come down to either extending the ethanol credit another year at 36 cents or not extending it at all.”

The chairman of the House Agriculture Committee, Rep. Collin Peterson, D-Minn., said a cut of that size could doom the bill.

He also said a proposal floated by an ethanol industry group to shift some of the subsidy into retrofitting service stations and convenience stores to sell higher ethanol blends was considered too late and too complex.
The proposal by the group Growth Energy has split the industry. Groups including the Renewable Fuels Association and the National Corn Growers Association said they want the existing tax credit extended.

Growth Energy spokesman Chris Thorne said the proposed cut showed why his group’s plan was needed. Biofuel tax credits “are proving themselves vulnerable,” while redirecting the money into infrastructure “is a lasting improvement that will outlive the funding,” he said.

Meanwhile, the fuels group reached a deal with groups representing gasoline distributors and retailers to address their liability concerns linked to sales of higher ethanol blends. They are all backing a bill introduced Tuesday that would set up a process for the Environmental Protection Agency to certify the safety of tanks, pumps and other equipment.

Des Monies Register