Peoria Journal Star

June 6, 2003

Senate OKs ethanol plan
Additive's opponents say measure could lead to gas shortages, price surges

of Copley News Service

WASHINGTON, D.C. - In a move praised by Illinois farmers, the Senate on Thursday approved a measure requiring gasoline refiners to double their use of corn-based ethanol and other renewable fuels by 2012.

The measure was approved, 67 to 29, as an amendment to a massive energy bill still pending before the Senate.

The measure would give a major boost to struggling corn growers, while benefiting the public through reduced air pollution, supporters say.

"I'm cautiously optimistic," said Illinois Corn Growers Association President Steve Pigg after the Senate vote. But he noted that other contentious issues remain in the energy bill.

"Hopefully, they can get those other differences worked out so it doesn't stop the whole thing," Pigg said.

Illinois is the largest ethanol-producing state in the country, but may soon lose the title to Iowa. The Illinois state legislature has approved a package of financial incentives for ethanol plants that could encourage new producers by helping with the start-up costs of new plants.

If the renewable fuels requirement receives final approval by Congress, it would provide long-term stability for farmers, Pigg said.

The measure requires refiners to use at least 5 billion gallons of ethanol a year by 2012. The ethanol industry produced 2.1 billion gallons last year. Illinois has five ethanol plants, including plants in Peoria and Pekin. Three more are under construction.

Ethanol is a corn-based fuel that reduces polluting emissions from automo- biles when added to gasoline.

The measure also would ban the use of MTBE, a gasoline additive that has been found to contaminate drinking water supplies and has been banned in 17 states including Illinois. In addition, the measure also would give refiners more flexibility in blending gasoline by eliminating certain oxygen requirements.

The Senate approved an ethanol provision last year only to see it die in a House-Senate conference. In April, the House approved an energy bill that for the first time included an expansion of ethanol usage. But the House rejected the MTBE ban.

Senators from California and New York led the opposition to the measure this week. They argued that the concentration of ethanol production in the Midwest would leave their states vulnerable to gasoline price spikes if supply were disrupted. But the Senate defeated efforts to allow states to opt out of the ethanol requirement.

The ethanol measure has strong, bipartisan support. It was backed by Senate Majority Leader Bill Frist, R-Tenn., and Minority Leader Tom Daschle, D-S.D. The Bush administration also supports the ethanol provision.

The measure is supported by a diverse coalition of groups including farmers, environmentalists and oil companies.

Agriculture Secretary Ann Veneman praised the Senate action, saying it would "boost prices of corn and other crops, raise income for farmers and create more rural processing businesses. This in turn will create or maintain an estimated 13,000 rural jobs with 23 percent of them arising in farming, 21 percent in food processing and 56 percent in the nonfood sectors."