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USDA Pushes Advanced Biofuels But Clings to Corn

Thursday, October 21, 2010

By Nils Bruzelius, EWG Executive Editor.

Even as it announced several initiatives to promote development of advanced biofuels, the Obama Administration made clear Thursday (Oct. 21) that it’s not prepared to let go of corn ethanol and other first-generation fuels whose existence relies heavily on expensive tax breaks and tariffs.

In a speech and press conference at the National Press Club, Agriculture Secretary Tom Vilsack outlined a handful of programs that would, among other measures, help finance the planting of new biofuel crops, construction of five “biorefineries” across the country and installation of 10,000 pumps and storage systems to dispense blends of biofuels and gasoline.

Vilsack said the effort to promote biofuel development and speed its widespread adoption is essential to reducing the nation’s dependence on imported oil and fossil fuels. It is also “at the heart” of President Obama’s “vision for a revitalized rural economy” that could reverse decades-long patterns of high unemployment, poverty and declining population, the secretary said.

Although he focused most of his remarks on the prospects for “advanced” biofuels that would be made from something other than corn and soybeans, Vilsack said the administration supports “a fiscally responsible short-term extension” of the tax credit that currently pays 45 cents per gallon to plants that blend ethanol with gasoline for the automobile market. That Volumetric Ethanol Excise Tax Credit (VEETC) is due to expire at the end of the year, but Congress is expected to take up a measure to extend it in a lame duck session following next month’s elections.

Vilsack also called for reinstatement of a lapsed tax credit for biodiesel.

“The continued unwillingness of the Administration to make a clean break with first-generation biofuels is a real disappointment,” said Craig Cox, Senior Vice President for Agriculture and Natural Resources at the Environmental Working Group. “It comes at a time when it has become crystal clear that corn ethanol is becoming a barrier to, rather than the much ballyhooed bridge to, truly sustainable and advanced biofuels.”

Cox, who heads EWG’s Ames, Iowa, office, added that “it is painfully clear that the environmental costs in terms of lost soil and polluted water from the misguided, policy-driven expansion of first generation biofuels far outweighs the benefit from the slight reductions in fossil fuel use and oil imports. A one-mile-per-gallon increase in fuel efficiency by America’s cars and trucks would get us as much reduction in gasoline use as the total supply of corn ethanol got us in 2009.”

Vilsack’s announcement capped a week that saw the Environmental Protection Agency (EPA) approve the use of a 15 percent ethanol blend in newer vehicles built from 2007 and the release of two letters by diverse coalitions of environmental groups and food processors opposing measures proposed by the corn ethanol industry to advance its growth. The EPA is studying whether to allow the higher ethanol blend in cars made as far back as 2001.

The ethanol industry has reportedly been seeking White House support for a “deal” that would phase out the blenders’ tax credit and the tariffs, which were imposed to block competition from Brazilian sugar-based ethanol, and substitute longer-term support to build pipelines and other infrastructure to help the industry expand.

EWG’s Cox noted that the USDA’s Economic Research Service, in a report released on the same day as Vilsack’s speech, “would suggest a much different path toward advanced biofuels than the one the nation is currently on under the federal Renewable Fuels Standard that has set a goal of producing 36 billion gallons of biofuel a year by 2022, including 21 billion gallons of advanced biofuels.

“It’s hard not to conclude that the Renewable Fuels Standard has put us on the wrong track,” Cox said. “Instead of charting a course to advanced biofuels, the standard is instead locking us into a dependence on first-generation biofuels at great cost to the environment and taxpayers. We need to steer a very different course to have any hope of realizing whatever promise there might be in advanced biofuels.”

 

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