(The Hill) -- President-elect Obama’s support for biofuels faces a few early tests, including a decision on whether to provide more aid to the corn ethanol industry, which critics say already gets too big a piece of the money pie.
The corn ethanol industry receives $2 out of every $3 the government spends to support renewable energy, according to a new report from the left-leaning Environmental Working Group (EWG) based on data from the Energy Information Administration. The Renewable Fuels Association (RFA), which represents corn ethanol makers, submitted a proposal to the Obama transition team for inclusion in the economic stimulus package that asks for $50 billion in loan guarantees and $1 billion in immediate credit to finance ongoing operations.
Corn ethanol producers have fallen on hard times recently. One major producer has declared bankruptcy. “Any stimulus package in part designed to spur clean, green economy has to recognize the importance of renewable fuels,” said Matt Hartwig, a spokesman for RFA. Hartwig said a number of ethanol projects have been delayed because of the difficulty in getting credit. Government help would allow construction to begin again. But a spokesman for EWG said ethanol mandates have led to more corn production, which has further polluted streams and rivers with fertilizer runoff. A better way to spend the money that now goes to support ethanol would be to increase support for solar and wind power to produce electricity, the environmental group said.
A few tricky policy questions likely will await the Obama administration as well. RFA and other ethanol makers want the EPA, for instance, to lift a limit on the amount of ethanol that can be blended with traditional gasoline. The current limit is 10%. Ethanol makers want it raised to at least 12% in part to accommodate the production increases required under the Renewable Fuel Standard (RFS) that was included in the energy bill of 2007. A group of manufacturers, including automakers, worry that higher ethanol content could damage engines. The ethanol industry disputes that contention. Other key issues include the 2007 energy bill's call for corn ethanol production to reach 15 billion gallons annually by 2015. (An additional 21 billion gallons of “advanced biofuels,” like cellulosic ethanol, would have to be blended with gasoline by 2022.)
As a candidate, Obama pledged to support the development of 60 billion gallons of biofuels annually by 2030. But environmentalists say biofuels of all stripes don’t provide the environmental benefits once thought. Another looming issue is sugarcane ethanol from Brazil. Brazilian sugarcane producers argue they are unfairly kept out of the U.S. market because of a tariff on ethanol imports. The 54 cent ethanol tariff expires in 2010.
The corn ethanol industry receives $2 out of every $3 the government spends to support renewable energy, according to a new report from the left-leaning Environmental Working Group (EWG) based on data from the Energy Information Administration. The Renewable Fuels Association (RFA), which represents corn ethanol makers, submitted a proposal to the Obama transition team for inclusion in the economic stimulus package that asks for $50 billion in loan guarantees and $1 billion in immediate credit to finance ongoing operations.
Corn ethanol producers have fallen on hard times recently. One major producer has declared bankruptcy. “Any stimulus package in part designed to spur clean, green economy has to recognize the importance of renewable fuels,” said Matt Hartwig, a spokesman for RFA. Hartwig said a number of ethanol projects have been delayed because of the difficulty in getting credit. Government help would allow construction to begin again. But a spokesman for EWG said ethanol mandates have led to more corn production, which has further polluted streams and rivers with fertilizer runoff. A better way to spend the money that now goes to support ethanol would be to increase support for solar and wind power to produce electricity, the environmental group said.
A few tricky policy questions likely will await the Obama administration as well. RFA and other ethanol makers want the EPA, for instance, to lift a limit on the amount of ethanol that can be blended with traditional gasoline. The current limit is 10%. Ethanol makers want it raised to at least 12% in part to accommodate the production increases required under the Renewable Fuel Standard (RFS) that was included in the energy bill of 2007. A group of manufacturers, including automakers, worry that higher ethanol content could damage engines. The ethanol industry disputes that contention. Other key issues include the 2007 energy bill's call for corn ethanol production to reach 15 billion gallons annually by 2015. (An additional 21 billion gallons of “advanced biofuels,” like cellulosic ethanol, would have to be blended with gasoline by 2022.)
As a candidate, Obama pledged to support the development of 60 billion gallons of biofuels annually by 2030. But environmentalists say biofuels of all stripes don’t provide the environmental benefits once thought. Another looming issue is sugarcane ethanol from Brazil. Brazilian sugarcane producers argue they are unfairly kept out of the U.S. market because of a tariff on ethanol imports. The 54 cent ethanol tariff expires in 2010.
