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Another Ethanol Earmark: Bringing Home the Bacon

Thursday, December 2, 2010

By Sheila Korth, Environmental Working Group Legislative and Policy Analyst

On Wednesday (Dec 1), 15 senators from Corn Belt states sent a letter to Senate Majority Leader Reid and Minority Leader McConnell asking them to extend the ethanol tax credits and tariff protection that expire at the end of the month. The request, coming from senators representing nine states that account for 75 percent of all corn ethanol production and 71 percent of all corn subsidies, looks more like an earmark for a handful of Midwestern states than anything resembling a meaningful contribution to U.S. energy policy.

On the table is an extension of the ethanol import tariff and the Volumetric Ethanol Excise Tax Credit (VEETC). The tariff puts up a 54-cent per gallon barrier against ethanol imports from abroad. The VEETC reduces by 45 cents per gallon the taxes that refiners who blend ethanol with gasoline must pay to the government. These giveaways come on top of the federal mandate (the Renewable Fuel Standard) that forces gasoline blenders to buy ethanol in the first place.

Led by Senator Chuck Grassley (R-Iowa) and Kent Conrad (D-N.D.), the senators’ letter claimed, “Allowing the provisions to expire or remain expired would threaten jobs, harm the environment, weaken our renewable fuel industries and increase our dependence on foreign oil.” All of these arguments have been discredited by various government, academic and non-profit organizations, including Environmental Working Group (EWG). Visit AgMag tomorrow (Dec 3) for a list of the ten top reasons why it makes no sense for Congress to extend the VEETC.

The letter was also signed by Senators Byron Dorgan (D-N.D.), Kit Bond (R-Mo.), Debbie Stabenow (D-Mich.), Sam Brownback (R-Kan.), Tom Harkin (D-Iowa), Mike Johanns (R-Neb.), Tim Johnson (D-S.D.), John Thune (R-S.D.), Ben Nelson (D-Neb.), Amy Klobuchar (D-Minn.), Al Franken (D-Minn.), Claire McCaskill (D-Mo.) and Mark Kirk (R-Ill.).

Senator State Percentage of Total Corn Subsidies from 1995-2009 2010 Corn Ethanol Annual Installed Capacity (Millions of Gallons) % of Installed Capacity
Tom Harkin Iowa 18.6% 3748 26.6%
Chuck Grassley Iowa      
Mark Kirk Ill. 15.6% 1392 9.9%
Sam Brownback Kan. 3.5% 445.5 3.2%
Debbie Stabenow Mich. 2.8% 265 1.9%
Amy Klobuchar Minn. 9.7% 1104.5 7.8%
Al Franken Minn.      
Kit Bond Mo. 3.3% 261 1.9%
Claire McCaskill Mo.      
Byron Dorgan N.D. 1.4% 378.5 2.7%
Kent Conrad N.D.      
Mike Johanns Neb. 11.4% 1832 13.0%
Ben Nelson Neb.      
Tim Johnson S.D. 4.4% 1000.3 7.1%
John Thune S.D.      
TOTALS   70.7% 14093 74.0%





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