Peoria Journal Star

June 4, 2003

Renewable energy bill fuels ethanol debate
Corn-based gas additive's supporters claim early victories

of Copley News Service

WASHINGTON, D.C. - In an early victory for ethanol supporters, the Senate on Tuesday defeated two amendments that threatened to weaken a measure that would require the nation's gasoline refiners to double the amount of ethanol and other renewable fuels used by 2012.

The renewable fuels standard is a top legislative priority of the National Corn Growers Association, which earlier in the day released a report citing the consumer benefits of increasing ethanol usage.

Theresa Schmalshof, a farmer from Adair, Ill., and vice chairman of the NCGA's ethanol subcommittee, joined forces with Sen. Dick Durbin and other ethanol supporters at a news conference to urge Senate passage of the renewable fuels measure.

Durbin and others predicted the renewable fuels measure would pass by a strong, bipartisan majority possibly by the end of the week and be included in a massive energy bill - just as it was last year. However, the energy bill last year died when House and Senate conferees couldn't reach a compromise.

Schmalshof said she is more optimistic about this year's chances.

"The dynamics are different this year. Everybody sees the need for the energy bill because of our dependence on foreign oil. If the war didn't bring that to our attention, what would?" said Schmalshof, who is involved in a farmers' co-op ethanol plant that expects to break ground outside Canton this summer.

The renewable fuels standard will expand the ethanol market for farmers, reducing the need for federal farm aid.

"We can do things to help ourselves and not depend on government," Schmalshof said of the benefits the renewable fuels standard will bring. Also, unlike last year, the House has included a renewable fuels standard in its energy bill.

Illinois now has five ethanol plants, including plants in Peoria and Pekin, and three more under construction. Six more are being planned, she said. One out of every five rows of corn in the state is sold to make ethanol, which is blended with gasoline to make it less polluting.

The renewable fuels standard would require 5 billion gallons of ethanol or other renewable fuels to be used by the nation's refiners by 2012. The ethanol industry produced 2.1 billion gallons last year.

The bill also calls for a ban on MTBE, a petroleum-based gas additive that competes with ethanol, which has been found to pollute ground water.

The amendments defeated Tuesday, 60-35 and 62-34, were aimed at giving states the ability to opt out of the "ethanol mandate."

The renewable fuels standard "is almost certainly going to add to the prices of consumers," said opponent Sen. Dianne Feinstein, D-Calif., who authored the amendments.

The reason lawmakers from California, New York and other states are fighting the ethanol mandate is "uncertainty on its future," Durbin said.

However, Durbin said, "Establishing the renewable fuels standard, I think, is going to unleash ethanol production nationwide. You are going to find our friends on the East Coast and West Coast will have plentiful supplies."

The study commissioned by the National Corn Growers' Association concluded that blending ethanol with gasoline would reduce the retail price of gasoline by about 6.6 cents per gallon, for an annual savings for all consumers of $3.3 billion.

In addition, the average net cash income for farmers is expected to increase by 6 percent, or $3.3 billion, over the next decade because of the increased demand, the study by LECG Director John Urbanchuk found.

The ethanol debate is one of many contentious issues surrounding the energy bill. Debate on the energy bill could stretch out through the summer as Senate Majority Leader Bill Frist, R-Tenn., has said he will set it aside to bring up debate on a Medicare drug benefit and other priorities.