U.S. Sen. Jim Webb, D-Va. joined Sens. Dianne Feinstein, D-Calif., and Jeanne Shaheen, D-N.H., yesterday in introducing an amendment to pending tax legislation which would save billions of dollars and redirect funding from ineffective ethanol subsidies and tariffs toward advanced energy technologies and U.S. deficit reduction.
“Reducing the ethanol subsidies and trade barriers would reduce the overall cost to taxpayers, while allowing Congress to support the vitally important development of our manufacturing sector through the Advanced Energy Manufacturing Tax Credit,” Webb said.
Currently, the United States has a 54 cent-per-gallon tariff on ethanol imports and a 45 cent-per-gallon subsidy on blending ethanol into gasoline. In addition, the Federal Renewable Fuels Standard mandates an annually increasing usage of corn ethanol. These protections are expensive and redundant. The amendment would lower the tariff and subsidy to 36 cents-per-gallon. The resulting $2 billion in savings would be used to reduce the deficit and to renew the Advanced Energy Manufacturing Tax Credit, which was created under the 2009 economic stimulus law to spur renewable technology advancement. The tax credit would fund the advancement of projects such as smart grid technology, energy storage capabilities, and geothermal energy technologies.
In a 2009 letter, Sen. Webb recommended the Environmental Protection Agency examine more closely the negative effects ethanol protections have on other sectors of the economy. Ethanol subsidies have led to steep increases in the price of corn and other sources of feed, which have negatively affected beef cattle, dairy and poultry producers and driven up the cost to consumers of commodities like milk and eggs. He also sent a letter to Secretary of State Hillary Clinton and U.S. Trade Representative Ron Kirk expressing concerns over the ethanol tariff.
Edited by Chris Graham. Chris can be reached at [email protected].
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