Ethanol industry's big stand on Capitol Hill

Ethanol industry has lost its tax credit and tariff. Now, as opponents target the renewable fuel standard for elimination, the ethanol industry beefs up its presence on Capitol Hill.

Jim Gehrz/The Star Tribune/AP/File
In this 2009 file photo, Greg Schwarz complete chores at his farm in LeSeur, Minn. A decade ago, Mr. Schwarz, secretary of the Minnesota Corn Growers Association, pledged much of his corn crop and family savings to an ethanol plant in Winthrop, Minn. Since then the industry has lost two of its three federal subsidies and is now fighting hard to save the third one: the Renewable Fuels Standard.

The ethanol industry has seen its position in Washington severely weakened over the last year. This is important because the modern ethanol industry is really a creation of Congress; the Renewable Fuels Standard (RFS), the ethanol tax credit, and a tariff on imported ethanol were all responsible for creating the ethanol industry we see today. We should note that this industry has seen some remarkable successes: It has replaced almost 10 percent of the country's gasoline fuel supply, with an impact on prices that is marginal at best.

Now, with the tax credit and the tariff having been eliminated at the end of last year, the sole remaining support for the fuel is the RFS. With opposition starting to build among ethanol's usual opponents, like the American Petroleum Institute on one side and food consumers groups like the American Meat Association on the other, ethanol supporters realize that the RFS will be in the cross hairs next year. As Congress returned this week, the ethanol industry was trying to flex its muscles to head off any challenge.

The Advanced Ethanol Council held a "fly-in" this week to have its members meet with the Administration (including the White House) and members of Congress. Growth Energy is also bringing in farmers to support the RFS on the Hill.

Even more interesting is a report that some major players in the industry have hired the Glover Park Group to craft a long-term communications campaign to support ethanol. Ironically, GPG is the lobbying/communications firm responsible for a 2008 campaign, supported by the Grocery Manufacturers Association, that demonized ethanol for pushing food prices up. GPG is a strongly Democratic firm, and this is a clear signal that the ethanol lobby sees Republicans moving away from the RFS (even though the Romney Campaign does not support a repeal), and they are looking to shore-up support among Democrats. 

This article was written for Energy Trends Insider, a free subscriber-only newsletter that identifies and analyzes financial trends in the energy sector, published by Consumer Energy Report. To sign up for a free subscription, click here.

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