Feinstein renews bid to end ethanol tax subsidy

Ethanol subsidies are coming under attack on two fronts in the Senate.

In addition to Sens. Tom Coburn (R-Okla.) and Ben Cardin (D-Md.) floating legislation Wednesday to strip a key tax credit, Sen. Dianne Feinstein (D-Calif.) floated a somewhat different measure that also takes aim at billions of dollars' worth of federal ethanol supports.

Feinstein’s plan — like the other bill — would repeal the 45 cents-per-gallon credit refiners and fuel blenders receive for each gallon of ethanol purchased and mixed into gasoline.

But Feinstein's bill — which revives her unsuccessful attempts last year to end the tax credits — would leave the incentive intact for next-generation “advanced biofuels” that aren’t made from corn.

“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. It’s time we end this practice once and for all,” Feinstein said in a statement Wednesday.

Feinstein’s bill, which Sen. Jim Webb (D-Va.) co-sponsored, would also reduce the tariff on imported ethanol — her office notes that the per-gallon tariffs are currently higher than the domestic tax credits.

“This lack of parity puts imported ethanol at a competitive disadvantage against imported oil, which discourages ethanol imports from Brazil, Australia and India. It also encourages oil imports from OPEC countries that enter the U.S. tariff-free,” according to Feinstein’s office.

The U.S. ethanol industry is pushing back against the bills.

Tom Buis, CEO of the ethanol trade group Growth Energy, said in a statement that Feinstein’s plan “does nothing” to help reduce reliance on oil imports, and cast ethanol as a way to help insulate consumers against price increases that stem from unrest in North Africa and the Middle East.

“The price of gasoline for U.S. consumers has skyrocketed and resulted in consumers paying an additional $70 billion annually in higher gas prices. The U.S. ethanol industry produces the equivalent of a million barrels of oil a day and we are the second largest supplier of fuel to our nation,” Buis said.

“Therefore, risking the production of U.S. ethanol would be even more disruptive and more costly to our consumers and to our economy,” he added.