May 11, 2010
(The Capital Times) Corn biofuel: Where’s the love?
For the Wisconsin ethanol industry, the photos of dead sea turtles washing ashore from the huge oil spill in the Gulf of Mexico couldn’t come at a better time.
With a federal tariff on imported ethanol expiring this year and congressional budget hawks like Rep. Paul Ryan, R-Janesville, targeting government subsidies in general, biofuels boosters are working overtime to pitch the benefits of homegrown energy.
They’ve even found a supporter in California Gov. Arnold Schwarzenegger, who last week came out against off-shore drilling, saying the environmental impact is not worth any potential economic gain.
“You turn on the television and see this enormous disaster, you say to yourself, ‘Why would we want to take on that kind of risk?’ ” Schwarzenegger says.
The question for ethanol backers is whether the BP oil spill — which is still spewing 210,000 gallons of crude into the gulf each day — will increase political support for alternative energy.
“It’s a good time for us to point out there’s never been an ethanol spill,” says Josh Morby, executive director of the Wisconsin Bio Industry Alliance.
Scott Schultz, executive director of the Wisconsin Farmers Union, notes the oil spill came too late to rally support in the state Legislature for the Clean Energy Jobs Act. The sweeping renewable energy initiative failed to pass last month despite a Democratic majority and the support of the state’s electric utility industry.
“If this spill had happened three weeks ago it might have changed the whole tone of the debate,” says Schultz.
The Clean Energy Jobs Act would have required that 25 percent of the motor fuels and electricity in Wisconsin come from renewable sources by 2025, giving a major boost to the state’s fledgling biofuels industry.
A fuel additive produced by distilling corn into 200-proof alcohol, ethanol is now blended into most motor fuels in the U.S. to help meet air emission standards. Ethanol has been around for decades, but its use has fluctuated with oil prices.
Today, Iowa is by far the nation’s largest ethanol-producing state, with a capacity of 3.5 billion gallons. Wisconsin, although somewhat late to the game with its first plant not opening until 2002, has since climbed to No. 7 in the nation in ethanol capacity.
The industry has long benefited from protective government policies, including an ethanol tax credit and a tariff on imported ethanol. In part because of these policies, a record 10.6 billion gallons of ethanol were produced in 2009, a five-fold increase since 1999. Still, that is just a drop in the bucket compared to the 126 billion gallons of gasoline consumed last year in the U.S.
But the subsidies that have made ethanol a player at the pump are facing increased pressure on several fronts. As part of the 2008 Farm Bill, the ethanol tax credit was lowered from 51 to 45 cents per gallon. That measure also allows the tariff on imported ethanol to expire this year. And the tax credits themselves are set to expire at the end of this year.
Losing the tariff on imported ethanol, the industry maintains, would be devastating to domestic biofuels development. One study from the University of Missouri estimates that lifting the tariff would cost 316,000 jobs and $72.3 billion in lost revenue over the next three years,
The same study says Wisconsin would lose over 13,000 jobs and nearly $2.4 billion in economic output as a result of direct and indirect damage to the state ethanol industry. Most significantly...
