Policymakers in California are once again attacking its ethanol industry. Led by California Senator Dianne Feinstein (D-CA), she has plans in the works to limit incentives for production and use of biofuels that would cause taxes to be raised, an increase in use of foreign oil, reduce jobs, and increase pollution. According to the California Ethanol Vehicle Coalition (CEVC), Sen. Feinstein has “long harbored what many observers feel is an irrational vendetta against ethanol.” This despite the fact that the state consumers 20 percent of the nation’s gasoline and more than 60 percent of the gas comes from imported oil.
Feinstein’s goal is to reduce, if not end, California’s as well as the country’s use of corn-based ethanol. On a national level she co-authored legislation that ended support for current ethanol programs. Less than two weeks ago, the Senate came to a compromise to end ethanol incentives via the Ethanol Reform and Deficit Reduction Act, sponsored by Feinstein, John Thune (R-SD) and Amy Klobuchar (D-MN). The compromise included an end to the ethanol tariff as well as to the Volumetric Ethanol Excise Tax Credit (VEETC) that gave the ethanol blender of record a 45 cent incentive to blend the fuel. Should the house pass the same measure, it would take effect on July 31, 2011.
The California Senator’s ire is not limited to corn-based ethanol, although the California Ethanol Producer Incentive Program is under fire and she is lobbying to increase gas taxes and ethanol blended fuel taxes in the state. In addition, she is gunning to limit funds dedicated to building biofuel infrastructure including the installation of E85 or blender pumps. If this isn’t enough, she is also attacking incentives for cellulosic and algal biofuels.
One industry that would suffer a dramatic setback should the federal legislation be signed into law, are those retailers who sell E85 (eighty five percent ethanol, 15 percent gasoline). In California, the 50 plus retailers who sell E85 are looking at shutting off the pumps because they won’t be able to sell the fuel at competitive prices.
“If you were trying to stifle biofuel technology, increase reliance on imported oil, eliminate jobs, and increase pollution, you could not have done a better job than this,” said Joe Irvin, executive director of CEVC. “Senator Feinstein continues to talk about saving taxpayers money when she just pushed through this $1.1 billion increase in the federal fuel tax to California consumers by raising tax on ethanol blends from $13.6 cents to 18.1 cents.”
“We knew Congress was responsive to the oil industry’s needs, but even this surprises us – all of the petroleum industry’s subsidies remain intact. It makes one wonder why, if this is really about reducing the deficit, the Senator does not put this kind of effort into reducing petroleum subsidies and pollution. She could probably be every effective,” added Irvin.
It should come as no surprise that earlier this year, Feinstein voted to keep current oil subsidies in place, while voting to end ethanol subsidies. According to a 2010 study by the Environmental Working Group, estimated cumulative ethanol subsidies between 2005 and 2009 were US$17 billion. Yet each year, U.S. oil subsidies are more than $100 billion give or take, while fossil fuels subsidies worldwide were more than $312 billion as reported by the International Energy Agency. One must ask that if you are trying to balance the budget, ending oil subsidies is a no-brainer but our legislators have proven time and time again they have no brains.
Another issue with Feinstein’s attack of biofuels is how will California meet the Low Carbon Fuels Standard if it eliminates ethanol from the mix? It would take decades to move to an electric vehicle society, and most of us won’t be alive to see a hydrogen economy, while biofuels are here today.
In addition, her state efforts to kill ethanol will also help to kill Californians – ethanol helps to reduce carcinogens contained in gas including BTX (benzene, toluene and xylene). She apparently doesn’t care for research, or anyone’s health – the California Environmental Protection Agency’s Air Resources Board (CARB) recently released a report that determined Californians most pressing health threat could be ultra-fine particulates (UFP’s), with the majority of UFP’s being emitted from gasoline with high BTS levels. CARB has also released a study authored by Mang Zhang that show ethanol blends offer significant reductions in UFP emissions.
While no fuel is perfect, including biofuels, despite what Feinstein and other anti-ethanol pundits believe, over the long-term, supporting the development of biofuels will save us money while improving our health. On the flip side, over the long-term, the continued support of fossil fuels will cost us money, jeopardize our security and threaten our health. I think consumers in California, as well as throughout the country, need to send Feinstein and our other pro fossil fuel subsidy policy makers a clue. Start writing – they’re going to need millions.