Mr. President, I have introduced legislation, with my colleague Senator Webb, to repeal corn ethanol subsidies and reduce ethanol tariffs. This legislation has two major provisions. First, it repeals…
Mr. President, I have introduced legislation, with my
colleague Senator Webb, to repeal corn ethanol subsidies and reduce ethanol tariffs.
This legislation has two major provisions.
First, it repeals the 45 cent per gallon corn ethanol blender subsidies--26 U.S.C. 6426(b) and 26 U.S.C. 40(h)--as of July 1, 2011, eliminating the corn ethanol subsidy six months early and saving approximately $3 billion for American taxpayers.
The bill would not affect the credit for noncorn, second generation ``advanced biofuels'' through 2011.
Second, the bill would lower the tariff on imported ethanol to the per gallon level of ethanol subsidies, to reestablish parity between the subsidy and the offsetting tariffs.
This removes the real trade barrier on imported ethanol, but also prevents foreign producers from benefitting from U.S. subsidies.
This legislation is necessary because the 54 cent-per-gallon tariff on ethanol imports and the 45 cent-per-gallon corn ethanol subsidy are fiscally irresponsible and environmentally unwise.
And their recent, 1-year extension in December 2010 made our country more dependent on foreign oil.
Subsidizing blending ethanol into gasoline is fiscally indefensible.
If the current subsidy were to exist through 2014 as the industry has proposed, the Federal Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol that the Federal Renewable Fuels Standard already requires them to use under the Clean Air Act.
We cannot afford to pay industry for following the law.
According to this month's Government Accountability Office report on ``Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue'':
The ethanol tax credit and the renewable fuel standard can
be duplicative in stimulating domestic production and use of
ethanol, and can result in substantial loss of revenue to the
Treasury.
GAO found that the ethanol tax credit, which will cost about $5.7 billion in 2011, is largely unneeded to ensure demand for domestic ethanol production.
The agency recommends that Congress reconsider the necessity of the tax credit, given the effectiveness of the renewable fuel standard, which is administered by EPA.
This legislation would simply implement the GAO's recommendation by repealing this wasteful subsidy 6 months early.
In addition, this legislation would address the tariffs on ethanol that make our country more dependent on foreign oil.
The combined tariffs on ethanol are 11 to 15 cents per gallon higher than the ethanol subsidy it supposedly offsets, and this lack of parity puts imported ethanol at a competitive disadvantage against imported oil.
This discourages imports of low carbon biofuel from Brazil, India, Australia, and other sugar producing countries, and it leads to more oil and gasoline imports from OPEC countries that enter the United States tariff-free.
Reducing the ethanol tariff will diversify our fuel supply, replace oil imports from OPEC countries with low carbon biofuel from our allies, and expand our trade relationships with democratic states.
The data overwhelmingly demonstrate that the costs of the current corn ethanol subsidy and tariff far outweigh the benefits.
The Center for Agricultural and Rural Development at Iowa State University recently estimated that a 1-year extension of the ethanol subsidy and tariff would lead to only 427 additional direct domestic jobs at a cost of almost $6 billion, or roughly $14 million of taxpayer money per job.
According to a July 2010 study by the Congressional Budget Office, ethanol tax credits cost taxpayers $1.78 for each gallon of gasoline consumption reduced, and $750 for each metric ton of carbon dioxide equivalent emissions reduced.
The ethanol subsidy and the ethanol tariffs also threaten our environment.
They support and protect significantly more corn production in the Mississippi River watershed, which experts believe is a primary cause of a ``dead zone'' in the Gulf of Mexico.
The current ethanol subsidy lacks any requirement that the subsidized fuel lead to a reduction in greenhouse gas pollution.
And the tariff on ethanol imports also prevents greater use of imported ethanol made from sugarcane.
Both the U.S. Environmental Protection Agency and the California Air Resources Board agree that putting sugarcane ethanol in our current cars and trucks results in the least greenhouse gas pollution, of all widely available options.
In contrast, the legislation I am introducing would--for the first time--limit subsidies only to ``advanced biofuels'' that reduce pollution at least 50 percent and are produced from noncorn biomass, such as cellulose, switchgrass, or algae.
And it would level the playing field for low carbon biofuel imports, which must compete against dirty oil from OPEC.
Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use.
To my knowledge, corn ethanol is the only product receiving all three forms of support from the U.S. government at this time.
By eliminating ethanol subsidies and trade barriers, this legislation would produce a smaller budget deficit; a healthier Gulf of Mexico ecosystem; less global warming pollution; and reduced dependence on imported oil.
I look forward to working with my colleagues to advance responsible energy tax policies that reduce pollution, create jobs, and improve our international relationships.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
