If the bipartisanship that manifested itself in the recent
lame-duck session is prologue, 2011 can be the year when folks who have grown
hoarse shouting at each other can finally reason together about
barrier-breaking approaches to America’s future. American biofuels provide one
By extending the incentives for producing and using
ethanol for one year, Congress has set the stage for a wide-ranging debate
about public policies to encourage American biofuels.
Now that we need not worry about our short-term survival, the American biofuels industry can take the long view and craft a comprehensive
proposal that reflects fiscal realties as well as our nation’s energy needs. We
hope our critics will respond in a similar spirit.
The discussion of biofuels’ future should be founded upon
an appreciation for three fundamental facts:
First, the federal government has spurred private
investment in energy sources of all kinds. Oil, natural gas, coal, nuclear,
wind, solar, geothermal, and hydroelectric – all have benefited from tax or
Many of these subsidies have lasted much longer than those
for ethanol. All pale in comparison to the estimated $280 billion-a-year in
federal subsidies for the highly lucrative petroleum industry that resulted in
oil’s virtual monopoly over the U.S. transportation fuel market.
Nor is energy the only sector that benefits from public as
well as private investment. Promising technologies, from railroads to the
Internet, have been spurred by government support, particularly during their
early years. With all these subsidies, the question is whether the nation is
reaping returns commensurate with the magnitude of the investment.
Second, public investment in ethanol is reaping returns,
now and for the future: 10.75 billion gallons of the biofuel produced in 2009
alone; nearly 400,000 non-exportable, direct and indirect high-paying green
jobs; $53.3 billion added to the Gross Domestic Product and $15.9 billion in
federal, state and local tax revenues; a 20 to 60 percent reduction in
greenhouse gas emissions, compared to gasoline; and the replacement of more
than 360 million barrels of imported oil, much of it from unfriendly or
With efficiency improvements in today’s industry and
technological advances in new processes and feedstocks, American biofuels are
the only viable replacement for declining oil resources.
But ethanol producers and public policymakers need to face
up to the third fact: When it comes to incentives, the status quo is no longer
sustainable, whether in terms of the nation’s fiscal realities or biofuels’
With the current condition and growing concern about the
federal deficit, the biofuels industry recognizes that we are not exempt from
belt-tightening. We need to develop a 21st century tax policy for a 21st century
Yes, the members of the Renewable Fuels Association were
committed to extending the current tax incentive structure during 2010. We
understood that some underlying market certainty was required to set the stage
for responsible reforms that allow the industry to continue to innovate, grow,
Now, let’s consider not only how we can sustain existing
biofuel technologies, but also how we can support the development of new and
emerging biofuel technologies. Let’s provide the incentives that the private
sector needs to install the essential infrastructure to provide consumers with
options at the pump. And let’s produce the vehicles that are needed to use
In short, we need a comprehensive energy policy that
recognizes the differences between energy sources that are depleting and those
that are developing and between aging technologies and advanced technologies.
We must not allow foreign competitors to seize growing markets at America’s
As the debate resumes, there is no shortage of ideas about
new policies on tax incentives and other issues. Some are more fully
thought-out. Others lack essential details. But none should be rejected
Those who have been critical of ethanol should take a
fresh and objective look at the industry today. Those within the industry
should be willing to work with our critics. Just as maintaining the status quo
should not be an option, neither should simply allowing the ethanol industry to
wither on the vine, leaving a 10 percent void in the market that can only be
filled by increased and significantly more costly oil imports. That course is
neither fiscally responsible nor environmentally sustainable.
In extending ethanol incentives, Congress did the right
thing. It’s time for the ethanol industry and our critics to do the right
thing, too, and define the future, instead of dwelling on the past.
Bob Dinneen is president and CEO of the Renewable Fuels
Association, the national trade association for the U.S. ethanol industry.