Op-Ed: A detour in the debate

A detour in the debate
By Robert (Bob) Sather

For the past month, it’s been difficult to keep ethanol out of the news as Congress continues to debate the merits of support for the renewable fuel.  But while opponents of ethanol insist on painting tax credits for ethanol as fiscally irresponsible, but tout that by reducing tax credits for oil companies would be un-American.  Where is a fair and even playing field by competing industries?

Ethanol is good for America, and it’s good for Wisconsin. We rank ninth in the nation in ethanol production with overall capacity of more than 500 million gallons. There are nine large-scale ethanol plants in the state. In 2010, Wisconsin’s $1.168-billion ethanol industry produced 462 million gallons of ethanol.

That’s why Wisconsin’s ethanol producers have been keeping a close watch on the events taking place in Washington, in the votes of our elected officials and their comments to the media. Furthermorre, nationally, ethanol producers provide more motor fuel last year than we imported from Saudia Arabia.

In mid-June, the Senate voted twice on whether or not to continue the existing Volumetric Ethanol Excise Tax Credit (VEETC) for ethanol producers. Though the first attempt to end VEETC was not successful, a second amendment was passed.

Last week’s proposal in the Senate, introduced by Senators Dianne Feinstein (D-Calif.), John Thune (R-S.D.) and Amy Klobuchar (D-Minn.), is an even sharper attack on the industry. The effort would not only repeal VEETC and the existing 54-cent-per-gallon tariff on ethanol imports, but they would make this repeal effective July 31. Funding saved by the elimination of these programs would be earmarked toward national debt reduction.

While Wisconsin’s ethanol producers do feel a responsibility to share in the fiscal sacrifices that we all must make to get America back on the right track, these efforts are myopic. If tax credits are the real target, then we believe that our elected officials must also consider the more than $100 billion in subsidies that oil companies receive.

Eliminating ethanol tax credits without concurrently addressing incentives available to ethanol’s competitive energy producers is sending the wrong message to those who are actively pursuing energy independence for our country. These recent efforts do not level the playing field. In fact, they discourage American innovation at a time when we really need it.

There is some room for optimism. Senate leaders have recognized the need to continue support for next-wave bio fuels through the continuation of three smaller, existing programs. Under the most recent proposal, a tax credit for cellulosic bio fuel production that was set to expire at the end of 2012 would be extended for another three years under this proposal.

An extension is also proposed for the Alternative Fuels Infrastructure Tax Credit program, which provides tax credits for alternative fueling equipment. This program was set to expire at the end of 2011, and under this proposal, would continue for another three years. A third program provides for a one-year extension to a small producer tax credit. With this proposal, both of these programs would continue at a reduced rate.

Members of the Wisconsin Bio Industry Alliance are open to and seek proactive, constructive debate on the issue of subsidies and welcome a dialogue with our elected officials. A vote to discontinue this subsidy without equal consideration for long-time subsidies in place for Big Oil is very troubling. From a fiscal standpoint, the attack on ethanol is arbitrary and shows a lack of long-term vision for the American bio fuel industry.

The ethanol industry welcomes the opportunity to operate on a level playing field with Big Oil. For that to happen, however, all subsidies must be addressed. We import nearly $1 billion in oil each day, meaning that in one week, we spend more on imported oil than on an entire year of biofuel-related tax incentives. On an international level, global-fossil fuel subsidies reached $312 billion in 2009.

It’s time to bring the debate back to a collaborative discussion between ethanol producers, industry representatives and our elected officials. This is not the time for knee-jerk reactions based on short-term impacts. Investing in ethanol production through producer subsidies requires a longer-term view, and we look forward to working with our state’s elected officials on this issue.

Bob Sather is president of the Wisconsin Bio Industry Alliance, a diverse group of businesses, environmental groups and statewide and local organizations that have come together to build both public and legislative awareness of the Bio Industry in Wisconsin. He is the director of government relations and member of Ace Ethanol LLC, based on Chippewa Falls, Wis.