US governor at odds with federal pushback against biofuels credit

15 July 2010 23:32  [Source: ICIS news]

HOUSTON (ICIS news)--A governor of a key biofuels producing state in the US pushed back on Thursday against a federal agency’s report stating that subsidies for ethanol and biodiesel were no longer needed.

Iowa Governor Chet Culver said the Congressional Budget Office (CBO) report did not take into account broader economic benefits of biofuels.

“This CBO report is deeply flawed because it fails to take into account the economic benefits to our farmers who grow the corn and soybeans that go into these clean, renewable biofuels,” Culver said in a prepared statement. “The report also gives insufficient consideration to the national security benefits of cutting free from our dependence on foreign oil.” 

Representatives of Culver’s office did not immediately respond to calls for comment.

Blenders received tax credits worth 45 cents/gal for adding ethanol and $1/gal for adding biodiesel to transportation fuels. The biodiesel credit expired at the end of 2009 and has not yet been reinstated despite lobbying from the industry.

The CBO released a report on Wednesday saying that the tax credits cost the federal government $6bn in 2009. But with the US Environmental Protection Agency (EPA) implementing renewable fuel requirements this month, biofuel producers no longer need subsidies to help boost production, the CBO said.

The EPA’s renewable fuel standards call for 36bn gal of biofuels to be blended into the US fuel supply by 2022.

“To the extent that the mandates determine levels of production in the future, the biofuel tax credits would no longer be increasing production,” the report stated. “But they would still be reducing the costs borne by producers and consumers of biofuels and shifting some of those costs to taxpayers.”

($1 = €0.79)

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