Washington, D.C. – U.S. Senator Dianne Feinstein (D-Calif.) introduced legislation today that would repeal the 45-cent-per gallon subsidy for corn ethanol blenders, saving the nation approximately $6 billion a year.

In addition, the bill would lower the tariff on imported ethanol to match the 45-cent-per gallon subsidy that will remain in place under Senator Feinstein’s legislation for non-corn, second generation “advanced biofuels.”

“Ethanol is the only industry that benefits from a triple crown of government intervention: its use is mandated by law, it is protected by tariffs, and companies are paid by the federal government to use it. It’s time we end this practice once and for all,” said Senator Feinstein.

“Ethanol subsidies and tariffs sap our budget, they’re bad for the environment, and they increase our dependence on foreign oil. My bill would save taxpayers $3 billion just in the first six months, money that would help bridge the divide in today’s budget dispute.

In addition, by lowering the import tariff to match the non-corn ethanol credit, we allow refiners to purchase cheaper, environmentally-friendly ethanol from foreign sources while at the same time preventing foreign producers from benefitting from U.S. subsidies.”

          Sen. Jim Webb (D-Va.) is an original cosponsor of the legislation.

          Background:

The Energy Independence and Security Act requires that 13.95 billion gallons of ethanol be blended into gasoline in 2011 under the Renewable Fuels Standard. Most of this blending is performed by large oil companies.

Ethanol blenders are subsidized for complying with the Renewable Fuels Standard. They claim a 45-cent-per-gallon tax credit for every gallon of ethanol they use, which has cost U.S. taxpayers more than $20 billion since 2006. Repealing the corn ethanol subsidy would save taxpayers approximately $3 billion in just six months.

Repealing subsidies for the corn industry does not require repealing incentives for next generation “advanced biofuels,” which are not produced from corn and reduce greenhouse gas pollution more than 50 percent when compared to gasoline.

Reducing import tariffs will serve to reduce U.S. dependence on foreign oil. Current tariffs are 11 to 13 cents-per-gallon higher than the ethanol subsidy they supposedly offset. This lack of parity puts imported ethanol at a competitive disadvantage against imported oil, which discourages ethanol imports from Brazil, Australia, and India. It also encourages oil imports from OPEC countries that enter the U.S. tariff-free.

Senator Feinstein in November authored a bipartisan letter signed by 17 senators that called for an end to ethanol subsidies and tariffs. She also led a group of senators in December in calling for an amendment on tax legislation that would lower tariffs.

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