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Stick with ethanol tax credit, Grassley says

DANIEL LOOKER Updated: 07/20/2010 @ 2:12pm Business Editor

Senator Chuck Grassley (R-IA) said Tuesday that he doesn't support a proposal to shift federal support for ethanol from a tax credit to building ethanol pipelines, blender pumps and more flexible fuel vehicles.

That idea was offered last week as a way to generate more support in Congress for the ethanol industry but Grassley, the top Republican on the Senate Finance Committee, said it's important for all farm and ethanol groups to stick to lobbying for maintaining a 45 cent-a-gallon tax credit for the fuel. The credit runs out at the end of the year.

Already, Grassley said, the tax credit "is once again being attacked by groups that have no viable alternative to big oil." As an example, he mentioned a press conference held Monday to call for an end to the tax credit. The opponents of the tax credit who want the credit killed are the American Meat Institute, Environmental Working Group, Grocery Manufacturers of America, Natural Resources Defense Council and Taxpayers for Common Sense.

Those groups don't support Growth Energy's proposal either, but cited it as an example of the ethanol industry recognizing that the tax credit is in trouble. 

Grassley said that over the long term there's nothing wrong with Growth Energy's ideas, but that Congress has only six months left to renew the tax credit and that's what groups need to focus on now.

"Divided, we will fall. United, we will stand, as we have for 30 years," he said.

Other ethanol groups, including the Renewable Fuels Association and the American Coalition for Ethanol, favor trying to extend the  tax credit for up to five years. So do two farm groups, the National Corn Growers Association and American Farm Bureau Federation. 

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