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Energy bill less likely to pass without ethanol included, Harkin says

The U.S. Senate begins its August recess next week without passing even a scaled down energy bill. If the bill comes up when it returns in September, a bipartisan group of midwestern senators will try to amend it to include requirements for more flexible fuel vehicles, blender pumps and ethanol pipelines.

"If an energy bill passes, this is going to be in it," Senator Tom Harkin (D-IA) told Thursday.  Senate Majority Leader Harry Reid has pulled his own stripped-down version of an energy bill. Harkin wouldn't speculate on whether or not the Senate will pass an energy bill before the November election. But Harkin and others clearly didn't like Reid's bill, which would have ended a cap on oil company liability for spills as well as including incentives for other alternatives for transportation, natural gas and electricity.

"Four billion for natural gas, $400 million for electric vehicles and nothing for biofuels? What? Come again?" Harkin asked with a trace of sarcasm.

"I'm all for electric vehicles," he added later, "but that's way down the road." Harkin believes ethanol is the only alternative fuel that can have an immediate impact on further reducing the nation's dependence on imported oil.

Harkin has said several times that he won't support an energy bill without support for biofuels. Wednesday he announced that he and a group of senators that includes two Republicans, Indiana's Dick Lugar and Iowa's Chuck Grassley, will introduce an amendment to the energy bill that would include these steps to boost ethanol consumption:

  • mandating auto makers to build more flex-fuel cars and trucks for sale in the U.S., starting at half of all vehicles in 2013 and ramping up to 90% by 2015 and beyond
  • requiring major fuel distributors to install blender pumps that dispense several levels of ethanol content, with one pump required on a tenth of their outlets by 2013 and on half by 2019 and later.
  • authorizing the Department of Energy to guarantee 80% of loans for building renewable fuel pipelines.

The amendment would also provide grants to smaller fuel distributors for up to half of the cost of putting in blender pumps.

The amendment is similar to bills that Harkin and Lugar have already introduced. "Senator Lugar and I have been on this for a long time," Harkin said.

Harkin said he's talked to Reid about the amendment.

"I think we're going to be able to wedge this in, get this into a bill before it passes," he said.

Harkin is also optimistic that the EPA will take steps to help the industry by approving 15% ethanol blends for regular unleaded gasoline for cars made for 2007 and later in September. Approval of E15 for 2001 model year cars and newer ones is likely in November, he said, and even E20 may be approved sometime after that.

Harkin said the reason for cutting off higher blends on 2007 and 2001 model year cars was due to changes in catalytic converters made in cars in both years. One of the things the Department of Energy (DOE) is testing with higher blends is the effect of burning ethanol on catalytic converters.

Advocates for the ethanol industry, including the Renewable Fuels Association, have said they're worried that cutting off E15 sales to cars older than 2001 models will confuse the public and that warning signs required at gas pumps could have a negative effect on ethanol sales.

At a meeting on Monday of this week with EPA Administrator Lisa Jackson and officials from the DOE, that came up, Harkin said.

"We discussed that with Lisa Jackson and the Department of Energy people and the fact is that we don't see any bad signs at pumps," Harkin said. Even if there is some confusion at first, Harkin believes the industry will see greater ethanol sales as a result of the EPA's expected approval of E15, which won't be available to consumers until sometime in 2011.

Although Harkin isn't certain if the energy bill will come up for a vote when Congress gets back to work in September, National Farmers Union president Roger Johnson believes pressure from voters over the August recess will make a difference.

One of the reasons Reid delayed a vote on his energy bill may have been that he didn't have enough support in his own party. Johnson cited reports that Reid had 60 votes for the bill if it could be changed to include a renewable electricity standard that would require utilities to buy 15% of their power from sources like wind and solar. He also may have had 60 votes for the biofuel support that Harkin and others are promoting. But it's not the same 60 votes for both, Johnson said.

But support for biofuels from Republicans might be enough to cobble together the required 60-vote majority to block a filibuster in the Senate.

Republicans like Lugar, Grassley and Sam Brownback of Kansas have long supported ethanol and biofuels, Johnson said. And while he doesn't know exactly how they would vote on an energy bill this fall, "I think there will be a fair number of Republicans" who vote for it, Johnson said.

"To get to 60, what we need is a larger number of Republicans that support it than Democrats that oppose it," he said.

"If people out in the country raise enough Cain about this when their members go home, it may be enough to switch a vote or two and that's probably enough to get it done," he told Thursday.

Johnson isn't certain whether the energy bill will have anything like the climate legislation passed by the House last year that included carbon trading. Most observers think that's virtually dead in the Senate this year.

National Farmers Union is one of just a few farm groups that haven't been strongly opposed to carbon trading in recent months. NFU supports trading, as long as USDA  sets standards and farmers have a chance to benefit."

Not having carbon trading in the Senate energy bill could make it harder to get the kinds of programs for ethanol that Harkin and Lugar rolled out this week, Johnson argues. That's because any new programs have to be paid for with new taxes or budget cuts. Some of the Harkin-Lugar amendment programs, such as Flexible Fuel Vehicles, would be paid by the auto industry and consumers. Harkin contends the cost is modest, a little over $100 per car to allow it to burn different levels of ethanol up to 85%. Blender pumps are more expensive and the grants to help smaller retailers put them in would cost the federal government $50 million in 2011 and $350 million by 2015, modest by federal standards but not free.

Johnson said that earlier in the climate change debate part of the money generated by carbon trading was going to go to support biofuels. That support was also needed to extend the 45 cent-a-gallon tax credit for ethanol, which expires this year. The tax credit won't be part of the Energy Bill and Harkin has said that it may not come up in the Senate until December. Ethanol industry lobbyists remain confident that it will be extended at least for 2011, but it may be at a lower rate of 36 cents a gallon.

Johnson often hears from farmers that they like ethanol but don't want climate legislation. But a climate bill would level the playing field for biofuels by requiring fossil fuels to pay the cost of their pollution, Johnson said.

"Ethanol is going to be much less competitive if you don't have a climate bill along with it," he said. 

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