Senators one-up Bush with ethanol goal

When the Senate passed an ethanol-friendly energy bill last month, there was no particular scientific or economic reason for setting 36 billion gallons — six times what is used today — as America's renewable fuel

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buy this photo Corn growing to produce ethanol in a field in London, Ohio. Because of the rising demand for ethanol, farmers are growing more corn, which needs more nitrogen fertilizer than other crops, which could increase water pollution. (AP file photo)

WASHINGTON — When the Senate passed an ethanol-friendly energy bill last month, there was no particular scientific or economic reason for setting 36 billion gallons — six times what is used today — as America’s renewable fuels requirement within 15 years.

But there was a political reason for that number: Senators wanted to one-up President Bush, who had called for 35 billion gallons in his State of the Union message.

The ethanol bandwagon was speeding so swiftly that even the industry was stunned by the lofty numbers.

Fueled by adroit politicking, potent themes and farm-state clout, ethanol may get the opportunity to reach that number — if a nearly 30-year run of luck doesn’t run out.

For ethanol, the next step in Congress could be trickier, given other energy priorities and its growing list of adversaries. But for now, ethanol and corn growers are still riding high, their political successes prompting envy even from enemies.

“We may or may not be addicted to oil, but we sure are addicted to the politics of ethanol,’’ said Charlie Drevna, an official with the National Petrochemical and Refiners Association.

Those politics were on display when the new year dawned, as presidential aspirants began arriving in Iowa, where one of their first orders of business was bowing to the ethanol gods. The Hawkeye State holds the first contest of the presidential primary season and produces nearly one-third of the nation’s ethanol.

Two leading contenders, Sens. Hillary Clinton of New York and John McCain of Arizona, had some explaining to do.

“I was never against using ethanol,’’ Clinton asserted, although she had voted against pro-ethanol initiatives after arriving in the Senate in 2001.

McCain, who in 2002 had described ethanol as “a giveaway to special interests in corn-growing states,’’ added humor to his contrition, telling Iowans: “I’ve had my glass of ethanol this morning, and I’m feeling good.’’

Two Democratic hopefuls, Sens. Barack Obama of Illinois and Joe Biden of Delaware, positioned themselves at the helm of the ethanol bandwagon before formally declaring their candidacies. They joined Sen. Tom Harkin, D-Iowa, in sponsoring legislation requiring 30 billion gallons of ethanol and biodiesel by 2020 — and 60 billion by 2030.

It would be foolhardy for anyone hoping to get political traction in Iowa to sound a discordant note on ethanol, just as candidates in the Florida primary wouldn’t advocate dealing with Castro’s Cuba. Politics in those states lock in aspirants and color the broader political process.

In Iowa, “There don’t seem to be any competing views here at all as far as ethanol,’’ said Drake University political science professor Dennis Goldford.

When Bush laid plans for his State of the Union address, he saw a political establishment in lockstep on ethanol and the chance to stake out a popular issue in the aftermath of his party’s electoral whipping in November. His advisers saw the number 30 billion in the Democratic initiative.

The president is an oilman by trade, but had embraced ethanol subsidies when he ventured to Iowa in 2000 to run for president. A year later, his administration decreed that California had to use ethanol to meet clean air rules, prompting Sen. Charles Grassley, R-Iowa, to say Bush had removed one of the Democrats’ biggest political advantages in the Midwest.

Administration officials say they had a rationale behind picking the number 35 billion as a mandate: It would be the equivalent of 15 percent of projected fuel use a decade hence.

“It is a policy that is more ambitious in size, scope and timetable than anything ever proposed before,’’ Andy Karsner, Energy Department assistant secretary, said in a recent interview.

Endorsements from the White House and would-be presidents were helpful. But it was the Democratic-run Congress that would determine ethanol’s future. And the shape of the ethanol provisions remained unresolved when the Senate got down to business this spring.

In picking the mandate, “several senators said there was no way we could be less than the president’s 35 billion. There was that political realism going on,’’ one congressional aide said.

But senators disagreed about how that number would be divided and in some quarters if there should be a mandate at all.

More than a year ago, the National Corn Growers Association, which has its headquarters in St. Louis, had begun saying that 15 billion gallons of ethanol could come from corn — with the rest from materials converted to fuel when second-generation ethanol technology arrived. But 15 billion seemed too high to groups such as the Grocery Manufacturers Association, the National Cattlemen’s Beef Association and allies in the livestock and poultry business who were blaming ethanol for raising the price of corn used in food and feed.

They wanted to reduce that number to 12 billion but were “too late to the game,’’ one Senate staff member said of Senate Energy Committee negotiations.

Environmental advocates had more success. They succeeded in committee with an amendment giving the Environmental Protection Agency more authority to regulate ethanol plant pollution and prohibiting the EPA from further relaxing air quality standards for ethanol plants, as it did earlier this year.

A coalition of 12 environmental groups lobbying on the energy bill still opposes the renewable fuels provisions out of fear that growing so many crops for fuel puts lands and forests at risk.

“If we’re going to clear-cut the forests to feed the biorefineries, that’s not where we should be. There is a long way to go to turn this from a pretty significant negative impact to a positive impact,’’ said Jim Presswood, a Natural Resources Defense Council lobbyist.

When the energy bill reached the floor last month, Sen. Judd Gregg, R-N.H., proposed an amendment to do away with the 54-cent tariff on ethanol from Brazil, where it is made cheaply from sugar cane. The U.S. would have more alternative fuel, cheaper gasoline and fewer greenhouse gas emissions, he said.

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“This tax, and that is what it is, on American consumers on a product we should be using is totally inappropriate and cannot be justified on the basis of protecting a domestic industry, corn production, which is doing extraordinarily well,’’ Gregg said, noting the recent doubling of corn prices.

The ethanol industry leapt into action. The Renewable Fuels Association warned in a letter signed by a half-dozen allies that lifting the tariff would let Brazil tap into the lifeblood of the American ethanol industry — government subsidies.

The letter said refiners in the U.S. get a 51-cent tax credit for every gallon of ethanol blended into gasoline — regardless of where that ethanol comes from. Congress imposed a roughly equivalent tariff “to prevent U.S. taxpayers from subsidizing foreign ethanol companies,’’ the letter said.

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In a procedural vote June 23, Gregg’s amendment was crushed, 56-36.

But similar amendments began to surface, triggering indignation from ethanol supporters accustomed to getting their way.

“I don’t know what happened in four or five months that all of a sudden everything is bad about renewable fuels and farmers are being blamed for everything — food prices going up, energy prices going up,’’ Iowa’s Sen. Grassley said.

Ethanol suffered a setback a day later when a tax package with benefits for renewable fuels was blocked.

On the following day, the ethanol industry might have been fortunate when Senate factions reached a compromise on fuel efficiency standards and, just before midnight, passed the energy bill with the landmark 36 billion-gallon mandate intact.

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But there were disturbing rumblings sounding in the House about ethanol, and the old farm group unity had dissolved.

“There’s another team on the field,’’ said Renewable Fuels Association President Bob Dinneen, referring not to old adversaries in the oil industry but to farm groups worried about ethanol.

Old friends in the farm alliance representing the beef, chicken, poultry and pork industries had a common lament: The rising price of corn was making it more expensive to feed animals. They formed the Coalition for Balanced Food and Fuel and began running full-page, confusing ads that sounded as though they supported ethanol but advised against government mandates.

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Meanwhile, as the House Energy and Commerce Committee gathered June 27 to take up its version of an energy bill, Rep. John Shimkus, R-Mo., was feeling double-crossed.

He had been assured that the committee members would seriously consider provisions in the bill for alternative fuels — ethanol and coal-to-liquids, a favorite of Shimkus and many in his coal-rich Illinois district. But something had happened.

“This bill does zippo, nil, very little to affect energy independence,’’ Shimkus said, previewing the contentious mark-up.

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Ethanol politics, which so often had prevailed in Congress, had gotten caught up in other types of politics — of coal and fuel efficiency. Pro-environment sentiments were stronger in the House. House Speaker Nancy Pelosi, D-Calif., had let it be known that she was not a fan of the alternative fuels provision because coal was included.

Meanwhile, Rep. John Dingell, D-Mich., a protector of the automobile industry, was doing his best to prevent stringent auto mileage requirements from advancing. So the decision was made to fight the big fights another day and have the committee report a streamlined House bill that dealt primary with energy efficiency — dubbed the Good Tires and Light Bulbs Bill by its detractors.

In the Energy Committee, Shimkus’ amendment increasing the use of alternative fuels to 35 billion gallons by 2025 lost 29-23 in a party-line vote. So the House bill likely to pass soon probably will do little for ethanol.

The ethanol industry says it never expected much from the House and will rely on its time-tested political strength in the Senate later this year when the Senate and House meet in conference to decide what stays in the final energy bill and what goes.

“I can see a growing chorus of opposition because of rising prices and poultry, meat and things like that going up because of increased corn prices,’’ said former Sen. Bob Dole, a Kansas Republican and old ethanol warrior.

“I don’t know how long the ethanol honeymoon is going to last.’’

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