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Grassley says unity is vital to ethanol interests

Grassley says unity is vital to ethanol interests

Des Moines Register   |   By: Philip Brasher   |   Published: December 21, 2010

Washington, D.C. - The ethanol industry needs to stop its infighting to preserve its government support beyond next year, says Sen. Chuck Grassley, R-Ia.

"We can't stand any more division within biofuels," said Grassley, who led a successful fight in the Senate to extend the 45-cent-per-gallon ethanol subsidy and import tariff through next year.

The industry was split this summer when one trade group, Growth Energy, proposed to phase out the subsidy and shift the money into retrofitting service stations and building ethanol pipelines. Growth Energy eventually endorsed an extension of the subsidy after the infrastructure proposal was set aside, but the group plans to push the idea again next year.

Grassley said he'll look at the plan in 2011 but hasn't committed to supporting it. "We'll have to discuss these things next year and see what direction we go," he said in an interview.

He said the ethanol industry can't afford to be divided in face of the growing opposition it faces.

"When it was Big Oil fighting biofuels, I don't think there was a problem. But when you have Big Oil, Big Food, environmental groups, some ag groups up against biofuels, it's pretty common sense that you can't have much division in biofuels or you're in trouble. Or in more trouble, I should say," he said.

The 45-cent tax credit would have expired at the end of the month had Congress not included it in a $858 billion bill that extended unemployment benefits and Bush-era income tax rates. Also extended was the 54-cent-per-gallon tariff on imported ethanol.

Growth Energy argues that the infrastructure funding is needed to ensure that there is a expanding market for ethanol in the future. The group wants to subsidize the installation of "blender" pumps that can dispense varying mixtures of ethanol and gasoline. The plan also calls for requiring that automakers equip cars and trucks to run on ethanol as well as gasoline.

In Iowa, ethanol producers think the subsidy is still needed but also believe that the alternative fuel cars are needed as well as the ethanol infrastructure, said Monte Shaw, executive director of the Iowa Renewable Fuels Association, which represents 26 of the state's 41 plants.

"We don't know what the magic mix is going to be," he said. "There's going to have to be a consensus built that reflects the will of the United States Congress."

Grassley will no longer have the top Republican post on the Senate Finance Committee next year, which means that his staff of tax specialists will shrink from five or six to one. But he said that shouldn't hurt his ability to protect the ethanol and biodiesel industries.

He said he was "recognized as the champion for biofuels a long time before I became chairman, particularly after Bob Dole left the Senate." The former Kansas senator resigned during his 1996 presidential campaign.

Grassley served as chairman of the tax-writing committee briefly in 2001 and again from 2003 to 2007. Since 2007 he has been the panel's senior Republican. Because of Republican term limits, Grassley is giving up the senior Finance post to take the top GOP seat on the Judiciary Committee.

With the subsidy and tariff now extended for a year, the ethanol industry is hoping to preserve a decision by the Environmental Protection Agency to allow higher amounts of ethanol in gasoline sold for conventional vehicles.

Car manufacturers, boat makers and power equipment manufacturers announced Monday that they are suing in a federal appeals court to try to block the EPA from permitting the sale of gasoline with 15 percent ethanol, or E15, in 2007 or newer cars and trucks. The American Petroleum Institute and food industry groups already are challenging the EPA's E15 decision.

The current ethanol limit is 10 percent for conventional vehicles.

Opponents of the EPA decision say that E15 could harm engines it is not intended for and that the agency doesn't have an adequate plan to prevent misfueling.

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