Thune says ethanol deal stalled

Talk about it

A plan to end the ethanol blenders tax credit early in exchange for other forms of help for the biofuels industry isn’t likely to be part of any debt-ceiling deal passed by Congress, Sen. John Thune, R-S.D., said Wednesday.

The senator said he sees little hope that the proposal will get a hearing or vote, let alone pass.

Thune said negotiations over raising the nation’s debt ceiling are consuming all of the time and attention on Capitol Hill, leaving no time for any other business.

More importantly, none of the current debt-ceiling proposals include any plans to close tax loopholes or raise taxes. That means there won’t be a “tax title” to which the ethanol proposal could be attached.

“We had hoped to be able to hitch a ride on whatever the big debt package was going to be. We assumed there would be a tax title in that,” Thune said. “That unraveled.”

The plan would end the blenders tax credit early, months before the schedule expiration date of Dec. 31. Under congressional rules, Thune and Klobuchar would need to attach their plan to legislation that already deals with taxes.

Thune said members of Congress are generally hostile towards ethanol, making it difficult for the plan to pass as a standalone bill.

He held out some hope because the plan offers $1 billion in savings, and said he and Klobuchar continue to work on ways to pass their plan.

“Any time you have the types of savings we’ve included in our proposal and you’ve got leaders looking for savings, I don’t think anything is ever dead,” he said.

At the same time, he said it would be “very complicated” to pass the plan through the House and Senate on its own.

“There was a time when ethanol was very much viewed favorably by people who didn’t represent ethanol-producing states,” Thune said. “It was viewed as the fuel of the future.”

Thune blamed oil companies for working to build up opposition to ethanol, which now spans from environmentalists to food companies to cattle ranchers to, well, oil companies.

The arguments against ethanol are largely unsupported by facts, Thune said, but people have made up their minds. “People have formed their opinions, and it’s really hard to reverse them,” he said.

“A lot of people out there have been spreading misinformation on this for a long time.”

He said that the Renewable Fuels Standard, a mandate that requires ethanol to be blended into gasoline, will help support the industry. However, he said smaller independent ethanol producers are likely to be hurt when the blenders tax credit expires.

The Thune-Klobuchar plan would do the following:

• Provide incentives for gas stations to install “blender pumps” the offer gasoline with various levels of ethanol, up to 85 percent.

• Extend tax credits for small ethanol producers.

• Would promote the development of advanced biofuels not based on corn grain, such as cellulosic ethanol.

Tags: news, thune, congress, ethanol, energy, agriculture, nation