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Time to Vote

by Leticia Phillips on Jun 10, 2011

The political winds are changing on ethanol policy. The shift has been visible for weeks as one Republican hopeful after another - Tim Pawlenty, Sarah Palin and then John Huntsman - did what was once unthinkable in advance of the important Iowa caucuses that begin the Presidential nomination contests: they questioned the need or outright opposed continuing current ethanol subsides. That same sentiment will soon be put to the test on Capitol Hill as the U.S. Senate appears poised to vote on an amendment that would finally end 30 years of tax credits and trade protection for ethanol.

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The political winds are changing on ethanol policy. The shift has been visible for weeks as one Republican hopeful after another - Tim Pawlenty, Sarah Palin and then John Huntsman - did what was once unthinkable in advance of the important Iowa caucuses that begin the Presidential nomination contests: they questioned the need or outright opposed continuing current ethanol subsides. That same sentiment will soon be put to the test on Capitol Hill as the U.S. Senate appears poised to vote on an amendment that would finally end 30 years of tax credits and trade protection for ethanol.

According to published reports, Sen. Tom Coburn (R-OK) filed a procedural motion yesterday that will force a vote on an amendment he co-sponsors with Sen. Dianne Feinstein (D-CA) to end the 45-cents-per-gallon blenders credit for ethanol (which adds about $6 billion each year to the annual budget deficit) and the 54-cents-per-gallon tariff on imports like sugarcane ethanol. The vote - which would require support from 60 senators to pass - could come as early as next Tuesday.

Ending the ethanol import tariff will help lower fuel prices and provide Americans with greater access to clean and affordable renewable fuels like sugarcane ethanol. But you can expect defenders of the status quo to lobby mightily and resort to misinformation as they struggle to defend their subsidies. While we have debunked those claims many times before, let's recap the case for free markets and competition as the Senate prepares for this important debate.

Time to End the Tariff

Tax credits and import tariffs probably made sense in 1980 to foster the nascent ethanol industry, and the policies have unquestionably worked. America's corn ethanol has blossomed into a thriving business with booming exports to other countries and now accounts for half of all ethanol produced around the globe. But 30 years later, the time has come to remove the industry's training wheels and promote market competition.

Brazil ended government subsidies for ethanol more than a decade ago and eliminated its ethanol tariff early last year. It is time for the United States to do the same. As the world's top producers of ethanol, the U.S. and Brazil should lead by example in creating a free market for clean, renewable energy. The benefits would include:

  • Lower Fuel Prices. Ending the tax credit and tariff would reduce ethanol prices by 12 cents per gallon this year and 34 cents per gallon in 2014, according to a recent study from Iowa State University. Because most gas sold in the United States contains 10% ethanol - and the Environmental Protection Agency has increased that limit to 15% for newer vehicles - lower ethanol prices would lead to savings at the pump for all drivers.
  • Taxpayer and Deficit Savings. In a time of soaring budget deficits, $6 billion annually is real money. Ending the ethanol subsidies would save taxpayers that amount.
  • Clean Energy Diversity. Americans would gain greater access to Brazilian sugarcane ethanol - a cleanand affordable renewable fuel that reduces greenhouse gas emissions by 60% compared to gasoline.

Time to Take Action

Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs. The same principle holds true for renewable fuels.

But to make it a reality, Congress needs to hear from clean energy advocates before the vote on Tuesday. The time has come to end the $6 billion annual taxpayer handouts and lower fuel prices with access to cleaner, more affordable renewable fuels. Contact your Senators today and tell them allowing other alternative fuels like sugarcane ethanol to compete fairly in the U.S. would save Americans money, cut dependence on Middle East oil and improve the environment.

copyright 2010 Brazilian Sugarcane Industry Association