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Broad Support for Change to U.S. Ethanol Policy

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A growing chorus of critics – environmental groups, food producers, agricultural interests, anti-hunger advocates, taxpayer organizations, federal and state government, and representatives from both sides of the aisle – are urging Congress to reform U.S. ethanol policy. Congress should open America’s renewable fuels market to real competition that allows consumers to enjoy the environmental, economic and energy diversity benefits of sugarcane ethanol.

Environmental Groups

“Over the past five years, Big Oil pocketed tens of billions of dollars through a little known subsidy called the Volumetric Ethanol Excise Tax Credit (VEETC)… With record budget deficits looming, the VEETC subsidy for Big Oil doesn’t pass the laugh test. Instead, it’s time to invest in solutions that cut our dependence on oil, reduce air and water pollution, and create clean energy jobs.”
— Joint advertisement by Union of Concerned Scientists, Natural Resources Defense Council, Friends of the Earth and Clean Air Task Force, June 24, 2010

"Renewing the corn ethanol subsidy makes no sense for our economy or for the environment."
— Jonathan Lewis, Attorney and Climate Specialist, Clean Air Task Force, March 25, 2010

“Continuing to subsidize dirty corn ethanol is outrageous. Congress already mandates a market for ethanol use.”
— Kate McMahon, Energy Policy Campaigner, Friends of the Earth, March 25, 2010

“Taxpayers should no longer throw good money after bad when it comes to subsidizing corn ethanol. The public should get something in return for its hard earned money, and that means demanding real environmental performance. It’s time to invest in the future, not the past.”
— Franz Matzner, Climate Center Legislative Director, Natural Resources Defense Council (NRDC), March 25, 2010

“All studies agree that ethanol from sugarcane can allow green house gas emission reduction of over 70% compared to conventional gasoline.”
— United Nations Environment Program (UNEP), “Energy balance and greenhouse gas emissions of biofuels from a life-cycle perspective”, By Menichetti E., and M. Otto., 2009

Anti-Hunger, Farmer, Religious and Development Organizations

"In this age of financial austerity, it is important that we start making smart choices about how to spend taxpayer dollars. And, first on the chopping block should be unnecessary, wasteful subsidies such as [Volumetric Ethanol Excise Tax Credit] VEETC. Please take a stand against wasteful taxpayer spending and allow VEETC to expire."
— Joint letter to Congress signed by 20 organizations including Action Aid USA, American Jewish World Service, Friends of the Earth, Global Hunger Foundation, Grassroots International, National Catholic Rural Life Conference, ONE and Oxfam America, July 21, 2010

“Congress should not waste taxpayer dollars by extending the current tax credits. The current package of ethanol mandates, incentives and subsidies is driving a rapid growth in ethanol production and the diversion of huge volumes of agriculture products from food markets to energy use. This year, the US will burn nearly one-third of our corn harvest in gas tanks, which drives up the price of corn. This has big implications for hunger, climate change, and land use around the world, contributing to food insecurity in developing countries.”
— Gawain Kripke, Director of Policy & Research, Oxfam America, March 25, 2010

“Ethanol from sugar cane is the pathway where the most consistent results were found. All studies agree on the fact that ethanol from sugar cane can allow greenhouse gas emission reduction of over 70% compared to conventional gasoline.”
— Organization for Economic Cooperation and Development (OECD), “Biofuel Support Policies: An Economic Assessment,” 2008

Livestock, Poultry and Meat Representatives

“Although we support the need to advance renewable and alternative sources of energy, we strongly believe that it is time that the mature corn-based ethanol industry operates on a level playing field with other commodities that rely on corn as their major input. The blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins – resulting in job losses and bankruptcies in rural communities across America.”
— Joint letter to Congress signed by National Cattlemen’s Beef Association, National Chicken Council, National Pork Producers Council, National Turkey Federation and American Meat Institute, April 29, 2010

“… corn-based ethanol has enjoyed unfair support and protection for more than 30 years at the expense of the American taxpayer and the livestock and poultry producers who rely on corn for feed. It’s time for the corn-based ethanol industry to stop using the American taxpayers as a crutch and finally compete on its own in our free market system.”
— J. Patrick Boyle, President and CEO, American Meat Institute, March 25, 2010

Food Producers and Restaurant Groups

“We urge Congress to shift government investments to advanced biofuels that do not pit our energy security against our food security.”
— Geoff Moody, Manager of Federal Affairs, Grocery Manufacturers Association, March 25, 2010

“In a time of ballooning federal deficits, it is high time for the government to say no to the ethanol lobby’s seemingly endless demands for more subsidies from the hard-pressed American taxpayer. Restaurants have to do business without government support in an intensely competitive market, and the ethanol industry needs to prove it can exist without taxpayers and consumers footing the bill.”
— Scott Vinson, Vice President, National Council of Chain Restaurants, March 25, 2010

“Let industries compete without tax incentives.”
— Donnie Smith, CEO Tyson Food Inc., when asked by The Wall Street Journal what should happen with the U.S. ethanol industry, September 7, 2010

Ethanol Producers and Blenders with Gasoline

“API and its member companies believe that allowing market forces and consumer preferences to determine where and how ethanol is consumed is the most effective and least costly way to integrate ethanol into our nation’s transportation fuels system.”
— Red Cavaney, President and CEO, American Petroleum Institute (API), March 1, 2007

“From an ethanol manufacturing standpoint, [the ethanol tax credit] it’s almost irrelevant today… It doesn’t factor into our ethanol plant economics at all… You would not see blending back down one barrel because of the credit being gone.”
— Gene Edwards, Executive Vice President for Corporate Development and Strategic Planning for Valero – the third largest ethanol producer in the United States, July 27, 2010

“If we lost the VEETC, we don’t necessarily see a big decrease in the use of ethanol..”
— Todd Becker, CEO of Green Plains Renewable Energy – the nation’s fourth largest ethanol producer, September 24, 2010

“I think we would be content for it to expire.”
— Kenneth P. Cohen, Vice President Public Affairs for ExxonMobil, when asked his position on the ethanol tax credit expiring at the end of the year, September 23, 2010

Taxpayer Groups

“Getting rid of corn ethanol subsidies and tariffs on sugarcane ethanol would make Americans more prosperous, and the world a greener, more predictable place."

— Luke Gelber, Citizens Against Government Waste, March 22, 2011

“For more than three decades the ethanol industry has received generous subsidies from taxpayers. With Americans staring into a budgetary abyss for the foreseeable future, blowing billions on more ethanol subsidies doesn’t make sense. Expanding the ethanol tax credit is fiscally reckless. Instead, Congress should be considering its repeal."
— Steve Ellis, Vice President, Taxpayers for Common Sense, March 25, 2010

Academic Researchers and Think Tanks

“It is puzzling why the biofuels industry continues to defend these subsidies when it has its mandates in place. U.S. tax credits cost taxpayers more than $5 billion per year, and import tariffs convey the message that the ethanol industry is so uncompetitive that it needs protection against foreign competition.”
— Bruce Babcock, Iowa State University professor of economics and director of the Center for Agricultural and Rural Development, “Mandates, Tax Credits, and Tariffs: Does the U.S. Biofuels Industry Need Them All?”, March 2010

An Iowa State University study estimates that the VEETC will cost $7 per gallon of ethanol this year that if Congress continues to extend the VEETC, it will cost $30.40 per gallon.To make matters worse, that’s not the end of the preferential treatment ethanol producers enjoy. We can’t even buy ethanol competitively. We could be importing Brazilian sugarcane ethanol, a fuel source that is less susceptible to crop disruption such as in the Midwest and is more environmentally friendly. Yet, there is a protective tariff against Brazilian sugarcane ethanol that eliminates a competitive market."

— Nicolas Loris, The Heritage Foundation, April 5, 2011

"The United States should gradually begin the phase down of the current 54 cent-per-gallon tariff on imported biofuels as Congress and RFS II provide a mandate for the biofuels industry to reach 36 billion gallons by 2022. All countries must take reciprocal action to remove trade restrictions on sustainable biofuels."

Jake Caldwell, Director of Policy for Agriculture, Trade and Energy, Center for American Progress, April 28, 2010

 

“Taxes on imported ethanol force consumers to rely on inefficient and expensive ethanol produced from corn in the United States. These tariffs, in effect, declare war on consumers, raising the price at the pump as well as the price of all goods and services that require transportation to their final point of sale.”
— Brian McGraw, Research Associate, Competitive Enterprise Institute, June 14, 2010

“Congress should do something for America's drivers by removing the tariffs that limit imports of cheaper ethanol and drive up prices at the pump.”
— Ben Lieberman, The Heritage Foundation, Senior Policy Analyst in the Thomas A. Roe Institute for Economic Policy Studies, May 12, 2006

“U.S. ethanol production and the demand for corn will continue to grow with or without the tax credit and tariff. U.S. drivers and taxpayers stand to benefit if they are allowed to lapse.”
— Bruce Babcock, Iowa State University professor of economics and director of the Center for Agricultural and Rural Development, “The economics of U.S. ethanol policy”, July 27, 2010

“If you want to take some of the pressure off this market, the obvious thing to do is lower that tariff and let some Brazilian ethanol come in.”
— C. Ford Runge, Economist, Center for International Food and Agricultural Policy, University of Minnesota, New York Times article, July 23, 2008

Federal Government

“I think there will be support for the biofuels industry. I think it may look different, but there's no question those supports are going to end at the end of the year.”

— U.S. Secretary of Agriculture, Tom Vilsack, interviewed on CNN's American Morning, August 16, 2011

“Ethanol produced from sugarcane complies with the applicable 50% greenhouse gas (GHG) reduction threshold for the advanced fuel category.”
— U.S. Environmental Protection Agency (EPA), “EPA Finalizes Regulations for the National Renewable Fuel Standard Program for 2010 and Beyond”, EPA-420-F-10-007, February 2010

“The VEETC was more important in helping to create a profitable industry when the industry had to fund facilities investment than it is now for sustaining the industry when most of the capital investment has already been made.”
— Report to Congressional Requesters, “Biofuel: Potential Effects and Challenges of Required Increases in Production and Use,” August 2009

“In the future, the scheduled rise in mandated volumes would require the production of biofuels in amounts that are probably beyond what the market would produce even if the effects of the tax credits were included. To the extent that the mandates determine levels of production in the future, the biofuel tax credits would no longer be increasing production.”
— Congressional Budget Office Report, “Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals,” July 2010

State of California

“This form of protectionism [import tariffs] increases the cost of supplying ethanol to the U.S. market and is a type of trade barrier not applied to other types of transportation fuel‐related foreign imports such as crude oil, gasoline, jet and diesel fuel.”
— California Energy Commission, “Transportation Energy Forecasts and Analysis for the 2009 Integrated Energy Policy Report”, August 2009

“Currently, Brazilian sugarcane ethanol has the lowest carbon life‐cycle rating of all of the different types of ethanol that are currently being produced at commercial‐sized facilities.”
— California Energy Commission, Transportation Energy Forecasts and Analysis for the 2009 Integrated Energy Policy Report”, August 2009

“Modeling work assessing the potential impact of removing the 2.5 percent ad valorem and the secondary import tariff suggest that the price of ethanol in the U.S. could be reduced from 2.5 to 14 percent, a potential benefit to consumers.”
— California Energy Commission, “Transportation Energy Forecasts and Analysis for the 2009 Integrated Energy Policy Report”, August 2009

“...sugarcane-based ethanol (for example, produced in Brazil and imported to California) or ‘second generation’ cellulosic ethanol…will reduce green house gas emissions by 79 percent over gasoline.”
— California Energy Commission, 2009 “Integrated Energy Policy Report”

“The federal government is subsidizing corn-based ethanol and we have a tariff of 54 cents-a-gallon on the most important ethanol to discourage cheap fuel coming in from Brazil. This is crazy.”
— Arnold Schwarzenegger, Governor of California, "CA Governor Continues to Blast Feds at Low Carbon Symposium," Power Market Today,” May 22, 2008

U.S. Congress on Both Sides of the Aisle

“Today, the government decides and they misdirect the investment to their friends in the corn industry or the food industry. Think how many taxpayer dollars have been spent on corn [for ethanol], and there's nobody now really defending that as an efficient way to create diesel fuel or ethanol. The money is spent for political reasons and not for economic reasons. It's the worst way in the world to try to develop an alternative fuel.”
— Rep. Ron Paul (R-TX), Interview with The New American, January 18, 2010

“There are folks who ideologically don’t want to see the tax credit.”

— Sen. Saxby Chambliss (R-GA), Interview with Bloomberg News, November 3, 2010

"There's no question that there's tax credit spending that is wasteful just like there's spending that's wasteful."
Sen. Tom Coburn (R-OK) calling tax incentives for corn-based ethanol a "stupid idea." The New York Times, November 1, 2010

“Maybe we will stop doing this damned foolishness called ethanol subsidies. It’s one of the greatest rip-offs that takes place on the American taxpayers.”
— Sen. John McCain (R-AZ), Remarks in Senate Energy and Natural Resources Committee Markup, July 21, 2010

“Our government pays to subsidize corn-based ethanol even as it collects tariffs that prevent consumers from benefiting from other kinds of ethanol, such as sugarcane-based ethanol from Brazil. As taxpayers, we foot the bill for the enormous subsides paid to corn producers. And as consumers, we pay extra at the pump because of government barriers to cheaper products from abroad. Here's a better way. Instead of playing favorites, our government should level the playing field for all alcohol fuels that break the monopoly of gasoline, lowering both gasoline prices and carbon emissions.”
— Sen. John McCain (R-AZ), Remarks on Energy Security and Our National Security, Fresno, CA, June 23, 2008

“It’s [the current U.S. ethanol subsidy system] a waste of tax dollars, which gets me excited. And it’s bad for the environment, which I think gets a lot of people on the other side of the aisle excited as well.”
— Rep. John Flake (R-AZ), On "Ethanol Subsidies" at WAMU's Capitol News Connection, July 22, 2010

“Bottom Line: Until the tariff [on sugarcane ethanol] is lowered, the United States will tax the only fuel it can import that increases energy security, reduces greenhouse gas emissions, and lowers gasoline prices.”
— Sen. Diane Feinstein (D-CA), Congressional Record, March 17, 2009

“The current real trade barrier on sugar-based ethanol imported from Brazil and other foreign sources gives gasoline imports a competitive advantage. I believe this makes no sense – particularly given our nation’s continued addiction to oil imported from the Middle East and other hot spots, as well as the volatility of global markets for the fuels we put in our cars.”
— Sen. Diane Feinstein (D-CA), Congressional Record, March 18, 2009

“In light of ethanol’s five-fold growth in this decade alone, it no longer makes sense to keep giving gasoline refiners $5 billion-a-year in federal tax dollars to blend corn ethanol.  A surge in ethanol production from corn is one of many factors contributing to volatile commodity prices and a sustained period of food inflation."
— Rep. Joe Crowley (D-NY), Press Release, July 16, 2009

“... the need for inexpensive and cleaner-burning fuels continues to grow. And yet U.S. refiners are forced to pay a 54-cent tariff on ethanol imported from Brazil and other foreign sources. This makes no sense, given the record oil prices and the limited supplies of domestic ethanol. This bill would essentially level the playing field and ensure that U.S. refiners are able to purchase cheaper and more climate-friendly ethanol, no matter where it comes from.”
— Sen. Diane Feinstein (D-CA), Congressional Press Release, June 4, 2008

“The tariff on imported ethanol is an unfair barrier to affordable, environmentally-friendly alternative fuels.”
— Sen. Susan Collins (R-ME), Congressional Record, March 18, 2009

“ ... At a time when we are transferring billions of U.S. dollars to Venezuela and other hostile parts of the world that supply us oil, expanding access to inexpensive, plentiful ethanol from Brazil and other friendly nations is a better alternative.”
— Sen. Judd Greg (R-NH), Congressional Record, March 18, 2009

“To demonstrate leadership, the United States should lift its tariff on Brazilian ethanol that now shelters the United States industry.”
— Sen. Richard Lugar (R-IN), July 2, 2008, Keynote speech at American Enterprise Institute seminar

“Why is it that we have a 54 cents-per-gallon tariff on every gallon of ethanol we would import from Brazil? It doesn't make sense. Why would we not want to import ethanol made from sugarcane, the most energetic, the most productive kind of ethanol, into this country from Brazil to offset the loss from importing oil from there as we build up our own capacity for ethanol?”
— Representative David Scott (D-GA), July 8, 2008, Congressional Record

“My policies coming into this administration have been to redouble efforts here in the United States to pursue a similar path of clean energy development. And I think we have a lot to learn from Brazil.”
— President Barack Obama, March 14, 2009

“Last year when I met with President Lula of Brazil, I noted that Brazil had made enormous progress around clean energy, sugar cane-based ethanol, the possibilities of real energy independence in the region.”
— President Barack Obama, July 12, 2010

Leading Newspapers

"There have to be cuts, the president could say, in unaffordable pension commitments, in biofuel subsidies and useless tax breaks."

— The New York Times columnist David Brooks, “The Next Two Years,” October 28, 2010

"Congress should end tax breaks for corn ethanol, which can stand on its own and is of dubious environmental benefit… There are many more useful ways to spend taxpayer dollars."
— The New York Times editorial board, “Energy Subsidies – Good and Bad,” July 29, 2010

“At this point, the question should not be whether to allow corn ethanol's tax incentives and trade protections to expire. The debate should be about why corn ethanol deserves any federal protection at all.”
— Washington Post editorial board, “It’s time to end the excessive subsidies for corn ethanol”, July 24, 2010

“It's time to eliminate the tax credit… [Congress] needs to lift the protectionist barriers so ethanol brewed from foreign sugar can compete... When it comes to ethanol, heavy subsidies and protectionism have proved to be a bad mix.”
— Chicago Tribune editorial board, “Enough ethanol,” July 24, 2010

“The best refutation of the theory of the survival of the fittest is probably the corn ethanol lobby, whose annual $6 billion in federal subsidies have managed to outlive both its record of failure and all evidence and argument.”
— The Wall Street Journal editorial board, “Survival of the Fattest,” July 26, 2010

"For many environmentalists, Brazilian ethanol is preferable: It is made from sugarcane and according to most scientific studies has a more benign environmental footprint than U.S. ethanol. And for most U.S. drivers, the main concern is simply keeping pump prices in check."
— The Wall Street Journal, July 29, 2009

Over 50 papers across the country are calling for ethanol policy reform – see recent editorial coverage in your area.

Makers of Sugarcane Ethanol

“Brazil has taken an important first step to build an open and global biofuels marketplace by eliminating its tariff on imported ethanol, and we urge the United States to do the same. 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 the renewable fuels market where competition will create a race to the future and generate better alternatives for consumers.”
— Joel Velasco, Chief Representative of North America, Brazilian Sugarcane Industry Association (UNICA)

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