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Hope rises for congressional boost to ethanol

Agriculture.com Staff 05/16/2006 @ 1:32pm

With gasoline prices around $3 a gallon and a congressional election looming next November, it's not surprising that you're hearing more interest from elected officials in ethanol.

Senator Chuck Grassley, an Iowa Republican who has long championed home-grown fuel, conceded Tuesday that part of this is just politics.

"To be quite honest, when you have $3-a-gallon gas you're going to have more political posturing than when you don't have $3 gas," Grassley told reporters. But he added that more than ever, interest in alternative fuels from his colleagues seems genuine.

Grassley said that his finance committee, which is in charge of introducing any legislation that would extend tax credits for ethanol and biodiesel, is one of several in the Senate that are already looking into ways to give a boost to energy independence.

That might include extending the federal 51-cent-a-gallon tax credit for ethanol beyond 2010, he said. And he's considering tax incentives to encourage automobile manufacturers to make every vehicle flex-fuel and capable of burning 85% ethanol, or E-85.

The Senate's Energy Committee is looking at ways to find bipartisan support for increasing domestic oil and natural gas production, too, Grassley said. That includes looking at drilling for oil and gas on the continental shelf off U.S. coasts and in the Arctic National Wildlife Refuge, which so far has been blocked in the Senate. "There are some that are politically less sensitive than others," Grassley added. Finding agreement on those would be the route to a compromise.

"There are maybe 10 bills out there that increase ethanol production and flexible fuel vehicles," Brian Jennings, executive vice president of ACE, told Agriculture Online.

ACE has its own plan and the group is hoping that Senators Tom Harkin (D-IA) and Richard Lugar (R-IN) will introduce something similar.

"We're hoping bipartisan support will coalesce around that bill," Jennings said.

The ACE proposal does five things:

It would increase the Renewable Fuel Standard (RFS) from 7.5 billion gallons by 2012 to 12 billion gallons. The RFS is the amount of renewable fuels, mostly ethanol, that the government requires oil companies to use. It would require at least 10.5 billion gallons to be made from grain.

ACE would make existing renewable fuel tax incentives permanent.

ACE also wants a mandate to require that all new cars sold in the U.S. be flexible fuel vehicles by 2017. Harkin and Lugar have already introduced a bill that would do this.

It supports a bigger, 60-billion gallon renewable fuel standard for ethanol made from a variety of sources, including 12 billion gallons from grain. The deadline for this RFS would depend on the technical and economy feasibility of making ethanol from cellulose.

And it would require half of the stations owned by major oil companies to sell E-85 by 2017. Independent stations seem more willing to sell E-85 than stations owned by oil companies, he said.

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