Ethanol groups seek unity at critical time for industry

Sen. Amy Klobuchar (D-Minn.) has taken the reins in the Senate on working on a plan.
 
The four groups also made joint visits to about 10 other congressional offices — mostly in the Senate — a couple of weeks ago. “This is the first time in recent memory that all four have gotten behind a common agenda and agreed to go up to the Hill en masse,” one ethanol industry official said.

The legislative blueprint includes an extension of a volumetric ethanol excise tax credit that is expiring this year, along with a move towards a new four-year production tax credit based on the greenhouse-gas emissions needed to produce ethanol-blended fuel.

The credit would be only available to domestic producers, eliminating the need for the current per-gallon import tariff on ethanol — most notably from the sugarcane ethanol from Brazil. The tariff next year would be reduced from the current 54 cents to 36 cents before being eliminated outright in 2012.

The blueprint also highlights the need to expand flex-fuel vehicles and pumps.

“It’s all sort of a work in progress,” said Growth Energy spokeswoman Stephanie Dreyer. “We’re discussing ways of moving forward as one.”

“We may disagree on individual tactics and strategy but overall the goals are the same,” RFA spokesman Matt Hartwig said. “That’s what you see in this document.”

One ethanol industry official said that the conflicting messages sent by industry groups in the past were “confusing and, I think, frustrating for Hill staff.”
 
For example, Growth Energy — the upstart ethanol trade group whose board includes retired Gen. Wesley Clark and former Rep. Jim Nussle (R-Iowa) — has at times been more aggressive in pursuing its goals than other players in the industry.
 
In July, Growth Energy introduced its Fueling Freedom Plan, a proposal that would eventually phase out government support of ethanol. The plan also called for a five-year extension of the excise tax credit.
 
Dreyer acknowledged that the group’s announcement led to “public reports saying there was dissension between the industry leaders.”
 
Dreyer noted, however, that other ethanol groups such as RFA did not disagree substantively with Growth Energy’s proposal. RFA instead questioned the timing of the announcement, which coincided with the rollout of an energy policy package in the Senate.
 
“The view was we were throwing too much into the mix at one time,” Dreyer said.
 
RFA’s Hartwig said it was the “timing and manner” of Growth Energy’s announcement, not their position, that was the issue.
 
“It created, probably unjustly, the air of confusion, the air of dissension, the lack of unity from inside the industry,” he said.
 
Dreyer downplayed any substantial division between the ethanol groups, saying they are akin to different small-town affiliations of the Church of Christ. “All the churches are leading their congregations toward the same goal,” she said.
 
Nonetheless, about a year ago, NCGA began bringing the four groups together to start bridging the gap between their strategies and to come up with defined set of principles. “They’ve really been the glue, they’ve worked to hold us together,” Jennings said of NCGA.
 
The four groups brought their draft blueprint to a Sept. 30 meeting at the White House with Pete Rouse, now the interim chief of staff, and White House climate and energy czar Carol Browner. The meeting was focused mainly on extending tax incentives and increasing flex-fuel vehicles and pumps, sources said.
 
Rouse has shown particular interest in the ethanol industry as part of a fraternity of former senior aides to Sen. Tom Daschle (D-S.D.) that also includes Growth Energy CEO Tom Buis and Eric Washburn, ACE’s Washington, D.C., representative.
 
Buis was at the Sept. 30 meeting with Rouse and Browner. The other industry representatives were Jennings, RFA President and CEO Bob Dinneen and NGCA CEO Rick Tolman.
 
A White House spokesman did not respond to an inquiry about the meeting.
 
But sources said it also included Browner deputy Heather Zichal, who wrote a blog post in October indicating the Obama administration “believes in continued financial support for biofuels.”
 
Industry groups, she wrote, have offered proposals for helping ethanol and biodiesel, and the White House is exploring options. “At this point, no final policy decisions have been made, and we believe that the evaluation of any proposals should be informed and guided by a thorough understanding of what has been successful in the past as well as what is needed for the future,” she wrote.
 
But the discussion at the White House meeting was the need to reduce the federal cost of the current 45-cent-per-gallon excise tax credit, which this year totaled about $5 billion. While no numbers were discussed, according to industry sources, the House Ways and Means Committee has proposed a one-year extension at 36 cents per gallon, an idea that the White House is rumored to favor. That would bring the annual cost down about $1 billion, to $3.8 billion.
 
“We recognize the budget constraints,” Jennings said.