Obama touts ethanol as vital piece of rural economic recovery

President Barack Obama on Wednesday touted ethanol – both the current variety and next-wave fuels – as a key part of his energy strategy and a way to revive rural economies.

Obama endorsed expanded ethanol production during a speech at a Macon, Missouri plant owned by POET, the country’s largest ethanol producer.

“I believe in the potential of what you are doing right here to contribute to our clean energy future but also to our economy,” Obama said at the plant that produces 46 million gallons per year.

Obama noted funding for ethanol projects and research in last year’s stimulus law, and also cited his interagency biofuels working group. The administration wants to see ethanol production tripled over the next 12 years, he said.

Obama called ethanol part of a larger energy strategy that he said is a top administration priority, arguing it is finally time to curb reliance on oil imports.

“For decades we have talked about doing this, for decades we have talked about how that dependence on oil from other countries threatens our economy, but usually our will to act kind of rises or falls depending on the price of gas at the pump,” he said.

Obama’s speech steered clear of policy specifics. But it comes ahead of a Capitol Hill battle later this year over the renewal of expiring tax credits that are vital to the domestic ethanol industry.

Lawmakers including Kent Conrad (D-N.D.) and Charles Grassley (R-Iowa) are pushing for a multi-year extension of the 45 cent-per-gallon blender’s credit and other incentives.

But the president’s full-throated endorsement of ethanol puts him at odds with some environmental groups, who say the fuel has harmful effects and want subsidies for corn-based ethanol phased out.

Environmentalists fear that current corn-based production is prompting deforestation in other countries and other land-use changes that release carbon dioxide, thus adding to global climate change.

POET and other companies are also seeking to develop next-generation fuels made from materials such as crop wastes, algae and grasses.