Reforming Ethanol in a Responsible Way

June 20, 2011
As the second largest ethanol-producing state, Nebraska knows firsthand how ethanol benefits our economy and energy production. About 50 percent of U.S. oil is imported from other countries, many of which do not share our beliefs and values. Nebraska does more than its fair share in easing this dependence through ethanol production, which makes up about 10 percent of our country's gasoline supply. Ethanol helped keep $34 billion of our money at home last year instead of going to other countries for foreign oil. Because of ethanol, studies conclude a gallon of gas was about 89 cents cheaper, saving families an average of $800 annually. Though these benefits are significant, today's fiscal realities require us to rethink our approach to every incentive program, including ethanol, in a thoughtful, measured way that preserves the benefits yet lessens their reliance on taxpayers.
Producing ethanol once required taking tremendous financial risks to build an ethanol plant. The future of ethanol was far from guaranteed, so to support the industry the federal government provided incentives to make these financial risks feasible. Nebraska now employs more than 1,300 employees in 24 ethanol plants, all of whom help to boost our economy and ease our dependence on foreign oil.
I did not support last week's effort in the Senate to virtually walk the industry off a cliff by ending the ethanol tax credit with no warning. This short-sighted measure is simply irresponsible. Yet there's no question we face fiscal realities today that didn't exist when the ethanol industry was young. It's also true that technological advances and increased usage have allowed the industry to mature. It's time, in light of our daunting budget challenges, to carefully weigh the costs of all federal initiatives.
Last week's measure was an amendment to a larger piece of legislation and is still a long way from becoming law. There is ample opportunity to reform ethanol responsibly. One such measure, offered by Senator John Thune of South Dakota, acknowledges the realities of both our ethanol industry and our budget challenges. It would reform the ethanol tax credit in a measured way to allow the industry time to adjust. Yet in doing so, it would encourage investment in blender pumps and cellulosic ethanol. It would also contribute $1 billion to deficit reduction, ensuring that it not only properly reforms ethanol policy but does so in a way that lowers the national debt. This legislation has my support.
A measured approach like this is the right policy for ethanol. I look forward to working with my colleagues to advance this legislation. It would avoid pulling the rug out from under ethanol producers while also charting a course that allows the industry to continue to help meet our energy needs.