July 22, 2010
Creating an Open Market through the Fueling Freedom Plan
UNICA, the Brazilian Sugarcane Industry Association, is trying to stir up controversy where none exists by taking two recent statements of Growth Energy’s co-chairs and trying to make them appear at odds with one another. The first was from Growth Energy co-chair and POET CEO Jeff Broin. In an interview on POET TV, Broin said that in an open U.S. market with tens of thousands of blender pumps and tens of millions of flex fuel vehicles (FFVs), the secondary tariff on foreign ethanol is less important.
What Mr. Broin was advocating was Growth Energy's Fueling Freedom plan that would redirect the ethanol tax credit to fund the development of ethanol infrastructure that would open the market and give consumers fuel choice. In an open market, government supports for ethanol are unnecessary. Obviously, we aren’t in an open market today.
That brings us to the second statement which was from Growth Energy co-chair Gen. Wesley Clark who said in a USDA hearing yesterday that Growth Energy supports an extension of the secondary tariff on foreign ethanol. We do because today we don’t have an open market. We have a market where ethanol is capped at ten percent of the nation’s fuel supply. To remove the tariff would not replace a single gallon of foreign oil, it would simply shut down domestic production and make us more dependent on foreign energy. This was exactly the point that Gen. Clark made, and had the UNICA video included the question Clark responded to, the context would have made that clear.
We can’t afford to ignore the primary lesson of Brazil’s ethanol experience. They started their ethanol industry long before we did and they did it through significant government support and protection. Then, once ethanol pumps and FFVs were widely available, they removed the supports and allowed the fuels to compete in an open market.
Growth Energy’s position on the tariff has been consistent: it makes no sense to remove the tariff when all we will do is shut down domestic ethanol production. However, if lawmakers implement the Fueling Freedom plan and we transition to an open market, the tariff becomes less important.
Today, if we want to import anything from Brazil, it should be the same resolve they have shown to become energy independent.
