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Home » Federal Legislation, Opinions, Policy

Senate Approves Cut in Ethanol Subsidies

Submitted by on June 17, 2011 – 6:56 amNo Comment

by Steven Mufsonand Lori Montgomery  (The Washington Post)  The Senate on Thursday approved an amendment that would end tax credits for ethanol that refiners blend into motor fuel in a vote closely watched as a sign of whether Congress can muster consensus on tax issues in the face of massive deficits.

In a 73-to-27 vote, the Senate backed an amendment by Sens. Dianne Feinstein (D-Calif.) and Tom Coburn (R-Okla.) that would abruptly eliminate the tax credits, which cost the federal government about $6 billion a year, on July 1. In addition to ending a 45- cent-a-gallon subsidy, the amendment would eliminate the 54-cent-a-gallon protective tariff that discourages imports.

The victory could prove symbolic since the amendment is attached to the Economic Development and Revitalization Act, which has little chance of winning final approval in the Senate. Moreover, the amendment would not eliminate the federal mandate that sets minimum quotas for ethanol use by refiners.

…But a subsidy’s virtue is in the eye of the beholder. Cornyn has opposed cutting tax incentives for oil drilling and Alexander has supported federal loan guarantees for new nuclear plants. Many members who supported Feinstein’s amendment back renewable energy incentives.

…Thursday’s Senate vote, in fact, may say more about the antagonism in Congress for the ethanol credit. Among ethanol supporters, geography trumped party. Senators from farm states — Iowa, Illinois, Indiana, Ohio, Nebraska, the Dakotas, Kansas and Minnesota — voted against the amendment regardless of party, including vociferous debt reduction advocates such as Sens. Rob Portman (R-Ohio), Mark Kirk (R-Ill.) and Mike Johanns (R-Neb.)  READ MORE and MORE (Biofuels Digest; includes government, industry and NGO response)  and MORE (Reuters) and MORE (Politico) and MORE (AgWired) and MORE (Wall Street Journal) and MORE (KHASTV)

Excerpt from Reuters:  …Meanwhile, the House of Representatives voted 283-128 on Thursday to prevent Agriculture Department funding for tanks and blender pumps that the ethanol industry wants so stations can sell gasoline with higher ethanol blend rates.

The Senate took the opposite view, voting against a separate amendment that would have blocked federal funding for such ethanol infrastructure.  READ MORE and MORE (New York Times) and MORE (Renewable Fuels Association)  and MORE (KTIV) and MORE (Wall Street Journal)

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