Ethanol Credit for ADM May Be Target as Republicans Seize House

By Alan Bjerga

 (Bloomberg) — Republican election victories yesterday may spell trouble for U.S. subsidies that benefit ethanol producers including Archer Daniels Midland Co., after the party pledged to cut government spending.

Democrats were projected to lose their majority in the House of Representatives while likely maintaining control in the Senate, according to television networks including CNN, CBS and MSNBC. That would prompt leadership changes that may include Frank Lucas of Oklahoma taking over as chairman of the House Agriculture Committee from Collin Peterson of Minnesota. Senate farm-panel chairwoman Blanche Lincoln’s defeat may lead to fellow Democrat Debbie Stabenow taking over the position.

New Tea Party and conservative lawmakers who made federal deficit reduction a campaign theme may make it more difficult to maintain money for farm programs, which have been criticized as wasteful, said Saxby Chambliss of Georgia, the top Republican on the Senate Agriculture Committee. An early cost-cutting test will be whether a lame-duck Congress extends a 45-cent-a-gallon tax credit for blenders of ethanol that added more than $4.7 billion to the deficit last year, he said.

“There are folks who ideologically don’t want to see the tax credit,” and those legislators will be emboldened by the public support at the polls, Chambliss said in a telephone interview last week.

Tax Compromise

Before the new lawmakers take office in January, Congress may seek a short-term extension of the tax credit at 36 cents a gallon, said Kevin Book, the managing director of Clearview Energy Partners LLC. That’s less than extensions supported by the industry, including Poet LLC, the top biofuels maker; Decatur, Illinois-based Archer Daniels, the largest U.S. grain processor and the second-biggest producer of ethanol; and smaller companies including Green Plains Renewable Energy Corp.

Biofuels will retain support in Congress because ethanol remains important to the economies of rural, farm-state Republicans, Book said. The U.S. is the world’s largest producer and exporter of corn, the main crop used to make ethanol. Still, the long-term prognosis of federal support for the fuel is “grim,” he said.

full article at

Our Take:
We challenge elected officials on both sides of the aisle to return to the most important goal for America’s energy future–energy independence. The Volumetric Ethanol Excise Tax Credit has been a very effective way to get more ethanol and less foreign-sourced gasoline into our gas tanks.

Cutting VEETC would be penny-wise and pound foolish.

The farm-based renewable energy industry keeps jobs and dollars in America–even with the credits paid out to gasoline blenders for the ethanol they use, the US Treasury sees billions of dollars of net gain from the growth of the ethanol industry. And by using less foreign oil we simultaneously decrease the pressure to conduct overseas wars on behalf of cheap energy. Less money in the pockets of dictators returns them to their deserved tin pot status, and significantly reduces their ability to harm the United States. This is an agenda that both Republicans and Democrats should be able to get behind.


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