Election Impacts on Ethanol, Biofuels Policy

2010 Election Impacts on Ethanol, Biofuels Policy
Bob Dinneen, President and CEO
Renewable Fuels Association

As expected, Republicans made tremendous gains last night. While some races are not yet final, it is clear that Washington will be a more Republican town in January.

Will that have a meaningful impact on the U.S. ethanol industry? I believe the answer to that is No. Ethanol is not now, nor has it ever been a partisan issue. There were strong ethanol proponents that lost last night – Earl Pomeroy, Stephanie Herseth Sandlin. But there were many more ethanol advocates that won last night too – Chuck Grassley, Mark Kirk, and John Shimkus. And, more importantly, for the most part those that may have been defeated were replaced with equally strong advocates for value added agriculture and ethanol. Does anyone believe that Kristy Noem (R-SD) will not be a strong voice for ethanol?

Lawmakers of all stripes support America’s push for domestic renewable energy. Over the past three decades, the RFA has worked with the industry and Congress to implement thoughtful policy that has moved America’s domestic renewable fuels industry forward. Under a Democratic Congress and Republican Administration, we helped to pass important amendments to the Clean Air Act in 1990 that meaningfully opened the market for ethanol. In 2005, with federal government under Republican control, we helped pass the first Renewable Fuels Standard requiring the use of renewable fuels. In 2007, with a Republican in the White House and Democrats in control of Congress, we expanded the RFS five-fold. And time and again, we have worked with both parties to secure responsible tax policies to ensure ethanol and other renewable fuels could compete with the oil industry in the market. That’s because energy security, rural economic development and fuel choice are not partisan issues, they are priorities for all Americans. None of that changed last night.

What is clear to me is that this election was about the economy and jobs. Like James Carville said in 1992, “it’s the economy, stupid!” More than half of the electorate went to the polls believing the economy was the single most important issue. No other issue – the environment, the deficit, the wars in Iraq and Afghanistan – polled in double digits.

That will have impacts for the 112th Congress. It will likely have an impact on the Lame Duck. It will most certainly have an impact on future ethanol policy. If concern about the economy and jobs drove this election, can Congress risk failing to extend the ethanol tax incentive and losing even more jobs?

Another obvious conclusion from last night is that the industrial Midwest and rural America, the places where ethanol plants are located, are among the most frustrated with Washington. The sea of red between the coasts should send an unmistakable signal to policymakers that rural America has felt under siege and abandoned. Their voice was heard last night. They will be listening now for Washington to address their concerns. That will most certainly have an impact on farm and fuel policies that will be debated in the weeks and months ahead.

In two weeks, Congress returns to Washington for a Lame Duck session. While there are several things that congressional leaders have previously indicated they would like to do, ONE thing must be done. Congress must pass legislation to fund the government. The continuing resolution that passed in September expires December 3rd. There is a great deal of interest, as well, in addressing the Bush tax cuts that are set to expire the 1st of the year. There will also be discussion about passing a host of other tax extenders that failed to pass earlier this year. As this work evolves, I am confident there will be discussions about how and whether to extend the ethanol tax incentive.

Anyone would be foolish to predict with certainty what will happen with the ethanol tax incentive. It remains an uphill battle. But, again, last night’s overwhelming message appears to be voters want Congress to do something about the economy and jobs. Allowing the tax incentive to expire would risk jobs in a very important domestic energy sector and across rural America. It would halt and reverse investments in clean energy technology. I believe, strongly, Congress must extend the incentive before adjournment.

Looking ahead to the 112th Congress, it is clear there will be a renewed focus on reigning in spending and reducing taxes. In that context, there will have to be a robust debate about how best to assure the continued growth and evolution of the ethanol industry, how to effectively attract capital to cellulosic ethanol technologies, how to commercialize other advanced biofuels like algae and butanol. This conversation ought to include whether and how we address tax policy for all fuels, including petroleum. The ethanol industry, and the domestic biofuel industry as a whole, ought not be asked to unilaterally disarm while extensive government support continues for petroleum companies.

Beyond the legislative agenda, much of the Lame Duck session will inevitably be focused on organizing the 112th Congress. The presumptive new Speaker, John Boehner of Ohio, has been a strong voice for farmers and a proponent of ethanol over his career. We look forward to working with the new House Leadership team. There will also be several new Chairmen, and while it is not clear today who they may be, again we will continue to work constructively with them to pursue policies that will allow the continued evolution in the biofuels industry.

Will it be a challenging climate for ethanol in the 112th Congress? Sure. But there will be opportunities as well. If we keep the focus on jobs; if we make the connection between increased ethanol use and reduced energy imports and a growing economy; if we demonstrate how ethanol production and use saves taxpayer dollars by increasing tax revenues and reducing farm program costs; then the 112th Congress and the American public will continue to support our industry and policies to assure its continued growth and evolution.

Working together, the entire biofuels industry can educate new and veteran lawmakers alike on the importance of domestic renewable fuel production and help ensure sound public policies open markets and allow biofuels to compete against entrenched fossil fuels that currently dominate our energy, economic and environmental landscape.

These are exciting times and we are eager to get to work.

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