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If Senate repeals ethanol subsidies, what happens at the gas pump?

The Senate vote on repealing tax subsidies for ethanol producers has big political ramifications, but the impact on the industry could be minimal. A continuing federal mandate that requires refiners to blend ethanol into gasoline provides adequate support for producers, experts say.

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Ethanol industry advocates, however, charge Senator Coburn with "political gamesmanship," noting oil industry contributions to his campaign coffers – and the pass he took earlier this year on cutting oil tax breaks, which remain in place.

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"If this were truly about sound policy and concerns over energy-tax subsidies, then this amendment would include efforts to repeal the billions of taxpayer dollars oil and other mature energy industries receive each year while posting tens of billions of dollars in profits quarterly," said Bob Dinneen, president of the Renewable Fuels Association in a statement.

He goes on to defend ethanol as "the only alternative to imported oil available today" – although that neglects new electrified cars.

But it was Coburn's latter point – that supporting ethanol is "bad environmental policy" – that has environmental groups joining him.

"A lot of environmentalists supported corn ethanol five years ago because the best science at the time showed it could be a stepping stone," says Nathanael Greene, director of renewable energy policy for the Natural Resources Defense Council. "The science changed and policies intended to get that industry off the ground didn't change."

Studies have since shown corn-based ethanol produces far more greenhouse gas emissions than earlier believed, making gains in that area only slightly better than gasoline, he says. Other environmental damage – deforestation and farm fertilizer runoff, for example – meant it was not the silver bullet many had hoped.

"For us, part of this is about not wanting to see more corn ethanol," Mr. Greene says. "But the larger part is just wanting to move on – and move to cleaner fuels. It's hard enough fighting the oil industry. Now we have to fight them and corn ethanol to get anything good done."

The nation is three to five years behind where it was expected to be on producing biofuel from noncorn feedstocks, he estimates. Instead of full-scale production, only a few pilot facilities produce 3 to 4 million gallons a year of advanced low-carbon biofuels.

But he and others are not fighting the RFS, which includes a mandate to produce other biofuels.

"The Renewable Fuel Standard provides the stable, market-based policy mechanism that advanced biofuel producers and investors have been looking for," stated Brent Erickson, a senior official with the Biotechnology Industry Organization, a biofuel industry trade group. "Any effort to undo the existing RFS will have a negative impact on development of advanced biofuels, the nation’s energy security and efforts to revive job growth.”


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