A politically diverse group of senators on Tuesday introduced a bill to roll back the federal tax credit for blending ethanol into gasoline.
Led by California Democrat Dianne Feinstein and Republican Tom Coburn of Oklahoma, the senators called for the elimination of the 45 cents/gal tax credit for refiners who blend ethanol, officially the "volumetric ethanol excise tax credit."
The bill combines elements from bills targeting ethanol subsidies Feinstein and Coburn each introduced separately earlier this year. The pair called the credit and other preferences for ethanol a waste of federal resources.
"Ethanol is the only industry that benefits from a triple crown of government intervention: its use is mandated by law, it is protected by tariffs, and companies are paid by the federal government to use it," Feinstein said. "Ethanol subsidies and tariffs sap our budget, they're bad for the environment, and they increase our dependence on foreign oil."
According to Feinstein and Coburn, eliminating that credit would save an estimated $6 billion/year.
Ethanol producers have defended the credit as a way to encourage domestic energy production, reduce gasoline prices and cut oil imports, the American Coalition for Ethanol wrote in a March 29 policy brief.
The bill would also eliminate the 54 cents/gal tariff and a 2.5% ad valorem tax on imported ethanol, which also protects US ethanol producers.
"The ethanol subsidy and tariff is bad economic policy, bad energy policy and bad environmental policy," Coburn said. "As our nation faces a crushing debt burden, rising gas prices and the prospect of serious inflation, continuing our parochial ethanol policy that increases the cost of energy and food is irresponsible."
The bill's co-sponsors include Democratic Senators Ben Cardin of Maryland and Jim Webb of Virginia, and Republican Senators Richard Burr of North Carolina, Susan Collins of Maine, and James Risch of Idaho.
