WASHINGTON -- Out of  nowhere, uncertainty has come to cloud the future of congressional support for biofuels, industries with hundreds of thousands of workers spread over dozens of states.
    
Critics charge that nurturing ethanol and biodiesel through subsidies is a woefully inefficient means of reducing carbon emissions. Some estimates put the cost to the government and consumers at more than $30 billion a year when tax credits and other support costs are considered.
    
Tax credits not extended
Existing since 1978 for ethanol, the subsidies were long thought to be politically unassailable. But the 111th Congress has so far failed to extend tax credits for either ethanol or biodiesel.
   
“The continued evolution of the industry is most assuredly [in danger],” Matt Hartwig, spokesman for the Renewable Fuels Association, told Capitol News Connection.
     
Ethanol and biodiesel, also called “green fuels,” are both motor fuels. Ethanol comes from capturing the sugars in starchy plants such as corn. Biodiesel is distilled from oils and fats, with soybeans and restaurant grease serving as common sources. Both products can be a stand-alone fuel or an additive to petroleum-based varieties -- ethanol to gasoline and biodiesel to regular diesel.
     
Doubts about subsidies
Doubts about continuation of federal subsidies come as continued development of both promise to magnify economic development for the “Grain Belt” states stretching from Kansas, Nebraska and Iowa eastward to Delaware, a new Department of Agriculture study contends. Ditto for southeastern states, where long growing seasons and lush pine forests provide ample “biomass” for the next generation of biofuels, ones that can reduce greenhouse gas emissions by at least 50 percent compared to petroleum-based fuels.
   
Meeting the government goal set in 2007 of producing 36 billion gallons of biofuels by 2022, including 21 billion gallons of advanced fuels, the study added, will require capital investments of more than $150 billion to build hundreds of new “biorefineries” in those regions.
  
Production of ethanol, far and away the nation’s main biofuel, is expected to reach 12 billion gallons this year and 15 billion gallons by 2015. But much depends on Congress extending ethanol tax credits that expire Dec. 31.
           
$7 billion a year in tax breaks
No less a figure than Sen. Jeff Bingaman, D-N.M., the chairman of the Senate Energy and Natural Resources Committee said earlier this month Congress needs to reevaluate tax breaks for ethanol, which by themselves cost about $7 billion a year. Bingaman said the industry has become so mature it may no longer needs subsidies
   
Not long after Bingaman made his remarks, Rep. Collin Peterson, D-Minn., chairman of the House Agriculture Committee, told the National Corn Growers Association that Congress may no longer be in the mood to extend the ethanol program as it becomes caught in the maw of deficit concerns.
       
“In an almost unprecedented development, Congress has balked at writing the corn ethanol industry a blank check,” said the environmental website greentechmedia.com.
   
Declining production
The picture is even more dreary for biodiesel. After production peaked at nearly 800 million gallons in 2008, it declined to around 500 million gallons last year and this year’s figures are expected to be “de minimis,” said a spokesman for the National Biodiesel Board.
  
Congress is the culprit, the biodiesel industry contends. Lawmakers let a key tax credit for biodiesel producers expire at the end of 2009 and still haven’t renewed it, making investors skittish and depriving most plants of any chance for profits. And the 36 billion gallon target for biofuel production by 2022 projects only 2 billion will come from biodiesel.
   
While Congress drags its feet on extending tax credits, the Environmental Protection Agency equivocates over a possible increase in its required ethanol content for gasoline. The EPA standard is now 10 percent; the ethanol lobby wants to increase that to 15 percent or “E15.” Such a jump would provide a huge stimulus to the ethanol market and corn growers.  A decision is expected this fall, but some lawmakers from corn-growing states accuse the agency of studying the issue “to death.”
   
More ethanol opposed
Opposing the increased ethanol percentage are special interests ranging from the National Association of Convenience Stores to Tyson Foods. The latter warns it will drive up corn prices.
   
It also isn’t clear yet whether cars can handle “E15” without incurring engine damage. “So far the studies show that it doesn’t [cause damage],” said Stephanie Dreyer of Growth Energy, a pro-ethanol lobbying group.
 
For long-standing critics of ethanol, including many academicians and environmentalists, reconsideration of biofuels subsidies is long overdue.
       
“We have been subsidizing corn ethanol for 30 years.  Is it not enough time for it to get on its own feet?” said David Pimentel, biofuels expert at Cornell University.
  
Importing oil and gas to produce ethanol
“We estimate that it takes 46 [percent] more fossil energy to produce a gallon of ethanol than the energy in a gallon of gasoline.  This is if you count all the energy inputs and the ethanol output.  We are actually importing oil and natural gas to produce ethanol.”
   
Other comparisons note a gallon of ethanol has only two thirds the energy of a gallon of gasoline.
   
Total federal support for ethanol and biodiesel, including not only tax credits but various research programs and other support, comes close to $24 billion annually, Pimentel said. And that doesn’t count $6 billion to $9 billion worth of higher annual food costs due to the diversion of crops to fuels, the Cornell scholar added.
  
Congressional Budget Office report
Similarly, a new Congressional Budget Office analysis questions whether biofuel subsidies are an efficient means of curbing greenhouse gases. Among other things, it points out, clearing vegetation to grow energy crops reduces the carbon-absorption potential of the acreage.
  
In addition, a new study by Iowa State University researchers concludes that much of the current ethanol production would continue, with or without subsidies.
 
And if these developments were not enough, Sen. James Inhofe, R-Okla., promises legislation that would allow states to opt out of requirements for selling ethanol-blended gasoline. Inhofe has long been an ethanol critic, citing its impact on food costs. Ethanol lobbying groups contend Inhofe is carrying water for oil and gas interests who don’t want ethanol reducing their profits.
  
Ethanol state senator
A staunch ethanol advocate who rails against the influence of “big oil” is Sen. Chuck Grassley, R-Iowa, the ranking Republican on the Senate Finance Committee. His home state is  No. 1 in ethanol production.

"The ethanol tax incentive has been enormously successful in developing a homegrown, renewable fuel.  In light of the hundreds of billions of dollars shipped abroad as a result of foreign oil dependence, ethanol is a relative bargain," the Iowa senator said in a statement.
          
Grassley blames Democratic congressional leaders for allowing the biodiesel tax credit to lapse, costing 47,000 jobs nationwide in 44 states.  He fears lawmakers making the same miscalculation with ethanol, which would cost “hundreds of thousands” of jobs. There are 201 ethanol plants in 28 states.
       
“Corn ethanol is the only renewable fuel that is substantially displacing crude oil and working to reduce U.S. dependence on oil,” the Iowa Republican added. “Domestically produced ethanol displaces millions of barrels of imported oil every year.”
        
Waning support in Washington
Hartwig, the Renewable Fuels Association, spokesman said:  “Between Congress and the administration’s delay on E15 and loan guarantees for new technologies, Washington isn’t doing as much as it could to make sure” renewable fuels succeed.
      
Hartwig’s organization said the Congressional Budget Office report painted an unfair picture of biofuels by “assuming worst-case scenarios” and not considering the environmental impact of continued reliance on petroleum.
  
Despite delays, a continuation of the ethanol tax credit “in some form” is expected before this year, said Stephanie Dreyer, spokesman for Growth Energy, another ethanol lobbying group. She also acknowledged: “There is talk of cutting it.”
   
As it works now, blenders get a credit of 45 cents for every gallon of ethanol mixed with gasoline. The subsidy helps farmers because it increases demand for their crops. Growth Energy, however, has proposed eliminating the subsidy and using the money instead to enhance the infrastructure for distributing ethanol.
 
Supporters demand mandated production
Ethanol supporters are also pushing for mandated production of “flex-fuel” vehicles, also called alternative-fuel vehicles that can run entirely on ethanol or a mixture of ethanol and petroleum. Out of the more than 250 million cars currently on the road in the United States, only about 8 million are flex fuel.
 
The Agriculture Department says the states with the most ethanol consumption – California, Texas and Florida - are likely to become “primary targets” for marketing flex-fuel cars as well as special “blender pumps” needed to dispense fuels with high concentrations of ethanol.
  
Advanced biofuels, also referred to as “cellulosic ethanol,”  are expected to be made from non-edible vegetation, such as forest slash and switchgrass. But the refining process has yet to become commercially viable.
   
Agriculture Department
In order to meet the goal of  21 billion gallons of advanced biofuels by 2022 – to go with 15 billion gallons of ethanol –  the Agriculture Department foresees southeastern and  “east central” states playing leading roles.
  
It lists the Southeastern states as Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas. The department sees this region providing at least 50 percent of advanced biofuels, requiring
at least $83.4 billion in investment to build 263 new refineries.       
    
The east central states that are expected to provide another 43 percent of advanced biofuels include many that already dominate ethanol production. The complete list is Delaware, Iowa, Illinois, Indiana, Kansas, Missouri, Ohio, Oklahoma, Maryland. Minnesota, Nebraska, North Dakota, Pennsylvania, South Dakota, Wisconsin and Virginia.
     
Biofuel's local economic impact
Even critics acknowledge biofuel plants can enrich communities. In addition to providing jobs at the plants themselves, biofuel facilities increase demand for “mechanical, technical and service inputs” from nearby communities and increase the prices that local growers receive for their crops, Doug Koplow of Earth Track, a Massachusetts environmental consulting firm, wrote in a 2008 book.

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Biofuel snapshots for selected states. Figures in parentheses equal share of nationwide totals. Production and consumption are annual. Sources: Energy Information Administration, Nebraska Department of Energy, Renewable Fuels Association, U.S. Department of Agriculture.

California: ethanol  -  seven plants with capacity of 194.5 million gallons; statewide consumption of 23.9 million barrels (10.4 percent); 117,000 alternative fuel vehicles (15 percent); biodiesel - 16 plants.

Wyoming: ethanol  – two plants with capacity of 6.5 million gallons; statewide consumption of 354,000 barrels (0.2 percent); 1,834 alternative fuel vehicles (0.2 percent); biodiesel -  no plants.

Utah: ethanol – no plants; statewide consumption of 1.08 million barrels (0.5 percent),  alternative fuel vehicles 8,022  (1 percent); biodiesel – no plants.

Colorado: ethanol –  four plants with capacity of 125 million gallons; statewide consumption of 2.12 million barrels (0.9 percent);  alternative fuel vehicles 17,292 (2.2 percent); biodiesel -  three plants.

New Mexico: ethanol  –  one plant with capacity of 30 million gallons; statewide consumption of 804,000 barrels (0.3 percent); alternative fuel vehicles 13,739 (1.8 percent);  biodiesel -  two plants.

Nebraska: ethanol –  26 plants with capacity of 1.74 billion gallons; statewide consumption of 1.37 million barrels (0.6 percent);  alternative fuel vehicles 3,302 (0.4 percent); biodiesel  - two plants.

Oklahoma: ethanol – no plants; statewide consumption of 3.8 million barrels (1.6 percent);  alternative fuel vehicles 8,131 (1 percent); biodiesel – three plants.

Texas: ethanol – four plants with capacity of 250 million gallons; statewide consumption of 18.39 million barrels (8 percent); alternative fuel vehicles 100,393 (12.9 percent); biodiesel - 23 plants.

Iowa: ethanol – 40 plants with capacity of 3.53 billion gallons; statewide consumption of 5.7 million barrels (2.5 percent); alternative fuel vehicles 5,978  (1.9 percent); biodiesel – 14 plants.

Missouri: ethanol – six plants with capacity of 261 million gallons; statewide consumption of 5.708 million barrels (2.5 percent); alternative fuel vehicles 14,867  (1.9 percent); biodiesel – 11 plants.

Mississippi: ethanol – one plant with capacity of 54 million gallons; statewide consumption of 812,000 barrels (0.4 percent); alternative fuel vehicles 8,365 (1.1 percent); biodiesel – five plants.

Ohio: ethanol – seven plants with capacity of  538 million gallons; statewide consumption of 10.2 million barrels (4.4 percent); alternative fuel vehicles 17, 518 (2.3 percent); biodiesel - 11 plants.

Kentucky: ethanol – two plants with capacity of 35.4 million gallons; statewide consumption of 4.4 million barrels (1.9 percent); alternative fuel vehicles 8,365 (1.1 percent); biodiesel - four plants.

Tennessee: ethanol – two plants with capacity of 177 million gallons; statewide consumption of 6.3 million barrels (2.7percent); alternative fuel vehicles 11,870 (1.5 percent); biodiesel - six plants.

Connecticut: ethanol – no plants; statewide consumption of 2.9 million barrels (1.3 percent); 5,288 alternative fuel vehicles  (0.7 percent); biodiesel - one plant.

Pennsylvania: ethanol – 1 plant with capacity of 110 million gallons; statewide consumption of 8.64 million barrels (3.7percent); alternative fuel vehicles 13,307 (1.7percent); biodiesel - one plant.

Maryland: ethanol – no plants; statewide consumption of 4.43 million barrels (1.9 percent); alternative fuel vehicles 16,278  (2.1 percent); biodiesel - six plants.

West Virginia:  ethanol – no plants; statewide consumption of 1.22 million barrels (0.5 percent); alternative fuel vehicles 2,256  (0.3 percent); biodiesel - one plant.

Virginia: ethanol – one plant (capacity not available); statewide consumption of 6.73 million barrels (2.9 percent); alternative fuel vehicles 21,505 (2.8 percent); biodiesel - three plants.

North Carolina: ethanol – one plant (capacity not available); statewide consumption of 7.01 million barrels (3 percent); alternative fuel vehicles 33,133 (4.3 percent); biodiesel - one plant.

Florida: ethanol – no plants; statewide consumption of 13.56 million barrels (5.9 percent); alternative fuel vehicles 32,497 ( 4.2 percent); biodiesel - four plants.