With a $4.7 billion subsidy from the federal government set to expire at the end of the year, the nation’s ethanol industry is on pins and needles.
Producers have relied on a 45-cent per gallon tax credit for refiners making the ethanol-blended fuel, but many observers say it might not be renewed. Josh Morby of the Wisconsin Bio Industry Alliance says that would be a crushing blow to the industry.
Morby says there are nine ethanol plants in Wisconsin producing about 500-million gallons.
For a glimpse at the potential peril the industry faces if the subsidies dry up, one need only look at the state’s struggling bio-diesel industry. The Feds cut off their $1 per gallon tax credit last year and Morby says the two large scale plants in Wisconsin are now facing challenges. He says that scene could repeat itself in the ethanol industry if the tax credit goes away.
Morby says his group, and others, were in Washington last week lobbying for an extension. They’ve made some headway with Congress, but lawmakers like Wisconsin’s Jim Sensenbrenner are dead set against the credits.
Morby says ethanol represents a $1 billion industry in our state, using about 178-million bushels of corn. Critics will quickly point out that corn could be used for food.
Plus, with governments strapped for cash, it’s unclear how much patience the voting public will have with the ethanol industry because it’s received so much government help already. For example, Governor Jim Doyle recently announced $595,000 in federal stimulus money will go to Ace Ethanol to expand its operations in Stanley and retain 40 jobs.
If an extension is going to happen, Morby says it would likely be taken up in the lame duck session of Congress after the midterm elections.
