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Harkin frustrated by ethanol infighting

DANIEL LOOKER 05/05/2011 @ 4:27pm Business Editor

All of the major ethanol groups backed a bill introduced in the Senate this week that would extend ethanol tax credits for a few more years after the current 45 cent-a-gallon credit expires in December.

But the industry is still struggling to find agreement on the best ways to support expanding ethanol production, with major ethanol groups and the National Corn Growers Association meeting Thursday afternoon to talk about possible changes to the tax credit.

Most people don’t expect the bill introduced Wednesday by Senators Chuck Grassley (R-IA) and Kent Conrad (D-ND) to become a law by itself. But they’re hoping it might be part of comprehensive energy bill if the Senate passes one this year.  And the smaller 20-cent credit Grassley proposes for next year might stave off efforts by others in the Senate to completely kill the 45-cent Volumetric Ethanol Excise Tax Credit.

But when Senator Tom Harkin was asked about his sense of support for the Grassley-Conrad Bill on Thursday, he said that it has some risks. Harkin supports Grassley’s bill, and is one of the original co-sponsors.  But if the bill fails, it could leave the ethanol industry with less room to grow.

“They could lose the tax credit, and they could lose it very quickly,” Harkin told Agriculture.com.

If that happens, then Harkin says it would be harder to bargain with members of Congress for another bill Harkin has introduced, the Biofuels Market Expansion Act of 2011.

Unlike the Conrad-Grassley bill, which deals with tax credits, Harkin’s bill provides support for the industry to reach more consumers, by mandating that a large majority of cars sold in the U.S. be flex-fuel (able to burn up to 85% ethanol), by requiring that over six years major fuel distributors must install blender pumps to dispense varying levels of ethanol blends, and by offering federal loan guarantees for ethanol pipelines.

Harkin has introduced versions of that bill for several years, and the industry has backed it in the past, he said, but it seems to be less actively supporting it now.

“Believe me, if we have market access, ethanol will really take off,” Harkin said.

Officially, ethanol groups do back the Harkin bill.

“Growth Energy is a strong supporter of Harkin’s legislation,” Growth CEO Tom Buis told Agriculture.com.  “He’s right on target. The most important thing for our industry and the nation is to get these infrastructure barriers removed.”

Buis said he thinks all of the ethanol groups also favor expanding the infrastructure needed to get more than 10% ethanol to consumers, but “different people have different views on how you get there.”

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