No premature end to US ethanol tariff - Bodman

14 February 2007 17:31  [Source: ICIS news]

HOUSTON (ICIS news)--The US will not end government support and protections for the ethanol industry before it is appropriate to do so and certainly not before the end of 2008, Energy Secretary Samuel Bodman said on Wednesday.

"No-one in the administration is looking to end the tariff [on imports] or subsidy prematurely," Bodman told reporters. 

In particular, the administration of President George Bush will leave the existing tariff on imported ethanol in place at least until the measure authorising the levy expires at the end of next year, he said.

"We will look at it at the time to see what makes sense," Bodman said.

The tariff mainly affects imports from Brazil, creating a source of friction between the world's two biggest ethanol producers. Bush is to visit Brazil next month.

Bodman defended the tariff and subsidy as being necessary to nurture the rapid development of the biofuels industry in the US. In January, Bush set an ambitious target of lifting US ethanol capacity to 35bn gal/year by 2017.

Earlier on Wednesday, Bodman told delegates at a major energy conference in Houston that the biggest threat to global energy security is the risk that investment in alternative energy sources would not happen.

Addressing critics - including some in the oil industry - who question whether the US could really expand its ethanol production capacity to meet the 2017 target, Bodman said that setting the bar high "is exactly the point".

"We must bet on technology...and signal markets that the government will support sustained investment," Bodman said.

Private investment is indeed flowing in large quantities into biofuels projects, said Bodman. "This is real money, and they are not doing it for Sam [Bodman]," he said. 

The energy secretary emphasised that the cellulosic process, which can produce ethanol from virtually any plant matter, will be the key to meeting the 2017 goal, and will be met in part by smart policy and investment decisions by the government sector.

Bodman also took a swipe at naysayers in the oil industry who insist that ethanol and biodiesel should be forced to compete with conventional transportation fuels on level economic terms.

"It is time for all to choose to be part of the solution or not," he said.

Bodman was speaking at the annual conference in Houston, organised by Cambridge Energy Research Associates, known as CERA Week.

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