Growing the economy and reducing our dependence on foreign oil

While campaigning during summer 2007 then-candidate Barack Obama toured a new ethanol plant in Charles City, Iowa.  As he cut the ribbon, Obama told the assembled crowd that America’s ethanol use “ultimately helps our national security, because right now we’re sending billions of dollars to some of the most hostile nations on earth.”  His message was plain: America’s oil dependence “makes it more difficult for us to shape a foreign policy that is intelligent and is creating security for the long term.” 

Today (April 28), President Obama  travels to the POET- Biorefining ethanol plant in Macon, Missouri – member plant of Growth Energy, a group of America’s ethanol supporters which I am proud to lead.  This visit confirms his administration’s support for ethanol producers and rural America is stronger than ever – at a time when it is needed most. 

From his first days in office, President Obama has steadfastly supported enacting sound policies that will grow our rural economy and reduce dependence on foreign oil.  The Obama administration’s commitment to ethanol runs deeper than a tour or campaign appearance. 

Less than five months into his presidency, President Obama announced the creation of the Biofuels Interagency Working Group to accelerate the development of the nation’s biofuels industry.  At the agency level, the group has subsequently made significant financial investments to research, develop and deploy advanced biofuels, including cellulosic ethanol.

The Environmental Protection Agency’s completion of the expanded Renewable Fuel Standard this February marked an important step in to ensure that we meet Congress’  goal of 36 billion gallons of biofuel production by 2022.  To meet the new standards, the Department of Agriculture is researching new biomass feedstocks for the production of advanced biofuels.

The Department of Energy is testing higher ethanol blends in order to support an increase of up to 15 percent for consumers’ cars and trucks.  Increasing the blend level will create more than 136,000 jobs, inject $24.4 billion into the U.S. economy, displace seven billion gallons of imported gasoline per year and reduce greenhouse gas emissions by 20 million tons per year.  A decision on Growth Energy’s E15 Green Jobs Waiver is expected from EPA this summer.

The progress is impressive. Ethanol production is revitalizing America’s rural areas – some of the hardest hit by the economic downturn – creating high-paying jobs and stimulating economic growth.  In 2009, the ethanol industry created and supported more than 400,000 jobs across the country, contributed $53.3 billion to the nation’s GDP and generated $8.4 billion in federal tax revenues.

Domestic production of nearly 10.6 billion gallons of ethanol in 2009 eliminated the need to import at least 364 million barrels of oil to manufacture gasoline, keeping $21.3 billion in the U.S. economy instead of sending it overseas.

While ethanol continues to create American jobs and strengthen our energy independence, we can do more with more innovative policies from Congress and a regulatory environment that fosters additional growth.

The President’s visit to Macon could not come at a more important time for the ethanol industry. The ethanol blender’s tax credit, a provision designed to level the playing field with well-subsidized oil, is set to expire at year’s end.  As is the tariff on imported ethanol, necessary to ensure U.S. taxpayers do not subsidize a foreign product. 

The President’s 2011 Budget request contains renewals of both the blender’s credit and tariff.  Congress should heed his example and move quickly to pass legislation in support of clean, renewable energy.

Studies have shown that failure to continue these policies will have a devastating impact on American jobs and the economy as a whole.  According to a recent study published by the University of Missouri, allowing the tariff to lapse would send crippling job losses across economic sectors, including financial services, manufacturing and retail trade.  Further, preliminary results of a new Growth Energy-commissioned study on the impact of the blender’s credit shows that the U.S. taxpayer realizes a $19.2 billion annual return from the tax credit. Both the tariff and the tax credit are essential components to ensure a stable market that will draw continued investment in next-generation ethanol.

The ethanol industry and America have come a long way since the ribbon-cutting in Charles City.  There is much left to be done.  America cannot squander the significant progress made in achieving energy independence and economic growth by failing to act on these important policies.

America’s ethanol supporters thank the President for visiting POET- Biorefining and for his continued leadership on these vital issues here in Washington.  We’ve come a long way toward the goal of energy independence and look forward to working together with President Obama and Congress in addressing our nation’s economic and energy challenges.

Tom Buis is the CEO of Growth Energy