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Apr 13, 2010 1:23 PM by Melissa Canone

Corn-Based Ethanol: Wave Of The Future?

WASHINGTON (AP) - Is corn-based ethanol fuel the wave of the
future, creating domestic jobs and vital to the nation's energy
supply? Or is it a taxpayer boondoggle responsible for higher food
prices?
For some in Washington, the answers to those questions have
changed.
For years, ethanol fuel derived from corn was almost politically
untouchable, thanks to powerful advocates on Capitol Hill. The
ethanol industry has consequently exploded over the last decade,
thanks to government subsidies and incentives.
But skepticism about ethanol is rising, prompted by fluctuating
food prices and an organized campaign by anti-ethanol advocates to
discredit the industry.
"The old saying is that if you aren't at the table, you're on
the menu," says Tom Buis, lobbyist and CEO of Growth Energy, a new
ethanol industry group formed in 2008 as some ethanol companies
grew worried that their political clout was waning. The
organization's largest member is Poet LLC, one of the country's top
two ethanol producers.
At stake are billions of dollars in tax credits for ethanol
companies that expire at the end of the year and a pending action
at the Environmental Protection Agency that could raise the amount
of ethanol in every driver's fuel tank.
Once a slam dunk, Buis says the industry now has to work harder
to convince an increasingly skeptical public and Congress that
ethanol continues to deserve government money. A series of
television ads launched this week are part of the group's efforts.
There's evidence that Congress is weary of giving money to an
industry that critics say should be able to stand on its own after
getting its start in the early 1980s with powerful congressional
advocates like Sens. Bob Dole of Kansas and Tom Daschle of South
Dakota.
"It is our view that after 30 years we should declare
success," says Scott Faber, a lobbyist for the Grocery
Manufacturers Association, which represents food companies that say
they have seen their prices rise because of the high use of corn
for ethanol.
GMA is part of a growing patchwork of food companies, livestock
producers, environmental groups and oil companies who have spent
millions of dollars in the last few years framing ethanol's success
as "food vs. fuel." They argue that the increase in production of
corn and its diversion for ethanol is making animal feed more
expensive, raising prices at the grocery store and tearing up the
land.
The diversion of corn has been particularly tough on the meat
industry, which uses corn for animal feed. But the ethanol industry
disputes that the fuel has a substantial effect on food prices,
saying corn prices only affect a small portion of each dollar
overall spent at the grocery store.
Ethanol's opponents galvanized in 2008 as food prices
skyrocketed and lawmakers debated whether ethanol was to blame. On
Capitol Hill, money that may have once been used to boost the
ethanol industry began to be diverted to what are called
"advanced" biofuels, or other non-food plant materials that could
be used to make fuel. That industry is still in its infancy, but
lawmakers, along with President Obama, often say they are the way
of the future.
As ethanol's political stock began to drop, Growth Energy hired
some of the top farm lobbyists in town. Buis, a former Daschle
aide, left his post as the president of the powerful National
Farmers Union to work for the group, and Growth Energy signed on
Retired Army general and former presidential candidate Wesley Clark
as a co-chairman. They have petitioned the EPA to increase the
concentration of ethanol in gasoline and this week are launching
the $2.5 million television ad campaign aimed at changing people's
perception of the fuel.
The series of short ads the group is launching have no dialogue
but just simple phrases on a green background and pointed digs at
the oil industry. One ad says "no beaches have been closed due to
ethanol spills" while another displays the phrase, "No wars have
ever been fought over ethanol." Another makes the point that
"Ethanol has contributed $0 to the governments of Iran, Saudi
Arabia and Venezuela."
The formation of Growth Energy means the industry has now
doubled its efforts in Washington. Together with a rival trade
group, the Renewable Fuels Association, the industry spent more
than $1.5 million on lobbying last year.
It's still unclear whether the increased efforts will pay off.
After Growth Energy filed its petition last year to increase the
amount of ethanol in gasoline from 10 to 15 percent, the EPA said
in December it needed more tests to determine if car engines could
handle it. A decision is expected later this year.
With that decision and congressional debate over the tax credits
approaching, Growth Energy is now positioning the ethanol industry
as the underdog.
"We have to step up our game," says Buis. "A lot of people
don't want to see us succeed."
Ethanol's rivals aren't backing down. The Brazilian ethanol
industry, which is pushing Congress to reduce tariffs that protect
the U.S. ethanol industry, launched its own rival campaign Monday
to promote the benefits of sugarcane ethanol, which they argue is
more environmentally friendly than ethanol made from corn.
Sugarcane ethanol is widely produced and used in Brazil.
"We have every intention of staying in this fight," says Craig
Cox of the Environmental Working Group, a member of the
anti-ethanol coalition. "This is a big issue for us. Our goal is
to really get a federal policy that moves us toward biofuels that
truly are sustainable."

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