US senate votes to cut ethanol subsidies

Three-quarters of the US Senate approved an ethanol subsidy-slicing measure. Both the tax credit and the tariff are scheduled to expire at the end of this year. Producing ethanol from corn is much less efficient than making it from sugarcane.
By: Rory Fontaine
 
June 27, 2011 - PRLog -- Those in the corn ethanol industry tout their product as an environmentally friendly venture that strengthens national security, creates jobs that can't be outsourced, reduces fuel prices and lays the groundwork for fuels crafted from cellulosic biomass. Despite this, almost three-quarters of the US Senate approved a subsidy-slicing measure co-sponsored by Sen. Dianne Feinstein, a liberal-leaning California Democrat, and Sen. Tom Coburn, a debt-obsessed Oklahoma Republican. The move will save taxpayers an estimated $6 billion annually by voting overwhelmingly to repeal a tax credit on corn ethanol. The Volumetric Ethanol Excise Tax Credit, the VEETC for short, pays 45 cents for each blended gallon. The ethanol vote was on an amendment attached to an unrelated economic development bill that may not pass the Senate, but likely foreshadows that ethanol tax breaks won't be extended when they expire this year. The amendment also eliminates a 54-cent-per-gallon tariff on imported ethanol. Critics have maintained that the tariff protects the industry from cheaper-to-produce and cleaner-burning sugar-cane ethanol that can come from Brazil. Both the tax credit and the tariff are scheduled to expire at the end of this year. The Feinstein-Coburn measure is designed to put a halt to the payments June 30. Ethanol producers will remain favored by a government mandate that refiners by 2022 must blend 36 billion gallons of biofuels into auto fuel, guaranteeing an artificial demand for the product.

Ethanol is a viable and even economical alternative to gasoline if it is produced from sugar cane. But it is highly inefficient to make ethanol from corn because it has lower sugar content, and the starches need to be converted into sugars that are fermentable. It takes almost as much energy to make ethanol from corn as is retrieved from the ethanol. Producing ethanol from corn is five to six times less efficient than making it from sugar cane.  For every unit of energy put into production of ethanol from corn, only 1.3 units of energy are produced. With sugar cane, for every unit of energy that goes into making ethanol, eight units of energy are produced. Because of the huge federal subsidies, about 40 percent of America's corn production (which is 41 percent of the world's) is now being used for ethanol. The result is that corn prices have skyrocketed in the United States and other nations that buy U.S. exports. To receive subsidies, many American farmers have switched from growing wheat to growing corn, thus driving up the price of wheat as well.

Under a 2007 energy law, the United States was supposed to use 500 million gallons of cellulosic ethanol in gas tanks in 2012. This ethanol comes from renewable sources such as switchgrass, waste products and woody pulp -- but it hasn't been made in significant quantities. The Environmental Protection Agency has again proposed slashing next year's advanced ethanol requirements, citing "market availabilityā€¯. They have proposed requiring no more than 12.9 million gallons next year. It's the third consecutive year the EPA slashed the requirement, which Congress had set at 100 million gallons for 2010 and 250 million for 2011; EPA reduced them to 6.5 million gallons each year. In 2013, America is supposed to use 1 billion gallons of cellulosic ethanol and by 2022, the United States is supposed to be using 16 billion gallons annually. Many government-supported cellulosic biorefineries have been stalled or delayed. In March, President Obama called for four new cellulosic ethanol refineries by 2013 as part of a strategy to cut imported oil use.

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About Southeast Asian Ethanol:

Southeast Asian Ethanol is a private group that is dedicated to supporting the development of localized sugar cane based ethanol production throughout the Asian Region.
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Source:Rory Fontaine
Email:***@sea-ethanol.com Email Verified
Tags:Corn Ethanol, Us Senate, Volumetric Ethanol Excise Tax Credit, Imported Ethanol, Biofuels, Corn Production, Wheat
Industry:Energy, Environment
Location:Hong Kong
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