Battle brewing over corn ethanol subsidies

Amanda Carey Contributor
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When former Vice President Al Gore, who was recently dubbed a “modern day patron saint” — “St. Al of Green” —  by the Wall Street Journal, reversed his position on corn ethanol subsidies last week, not many thought it would foreshadow a contentious debate in Congress’ lame duck session.

But ethanol subsidies, a decades-old source of revenue for corn farmers, are up for renewal on December 31. Yet what has been a relatively easy “yes” vote in the past, is now facing some major opposition.

On Tuesday, a bipartisan group of 17 senators (9 Democrats and 8 Republicans) sent a letter to their respective party leaders, urging them to end the ethanol subsidy. Authored by Democratic California Sen. Diane Feinstein and Republican Arizona Sen. Jon Kyl, the letter proclaims, “Eliminating or reducing ethanol subsidies and trade barriers are important steps we can take to reduce the budget deficit, improve the environment and lessen our reliance on imported oil.”

The letter also argues that if the current subsidy – 45 cents per gallon of gasoline with blended ethanol – were renewed for another five years, $31 billion would be paid out to oil companies. The senators additionally called for an end to the 54-cent tariff on imported ethanol from places like Brazil and Australia.

While at a green energy conference in Europe, Gore candidly admitted that the only reason he originally supported the subsidies was a political one. “One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee,” said Gore, “and I had certain fondness for the farmers in the state of Iowa because I was about to run for president.”

But Gore isn’t the only environmentalist that has turned against corn ethanol. Friends of the Earth (FOE), an international environmental organization, has also publicly come out against ethanol subsidies. Ethanol campaign leader at FOE, Kate McMahon, recently admitted that ethanol actually produces more greenhouse gases than regular gasoline.

“We have this idea in our heads that corn ethanol is good for the environment and good for climate but when you actually look at the numbers that’s just not the case,” said McMahon.

But the battle over ethanol subsidies is likely to become not only bigger, but also more bitter, as it could drive an uncomfortable wedge between lawmakers in the same political party. Last week, for example, Iowa Republican Sen. Chuck Grassley took to Twitter to criticize two fellow Republicans — Sens. Jim DeMint of South Carolina and Tom Coburn of Oklahoma — for suggesting Congress end ethanol subsidies.

“WashPost reports 2 of my colleagues want sunset ethanol tax credit R they ready sunset tax subsidies oil AND gas enjoys?” read Grassley’s tweet.

Grassley is joined in his support for ethanol subsidies by his colleagues in both chambers of Congress that represent the Midwestern farm belt. But Iowa holds probably the tightest grip on presidential candidates who inevitably voice support of ethanol subsidies right before the enormously important Iowa Caucus. As one energy insider put it in a recent conversation with The Daily Caller, “Every president wants to woo the Iowa Caucus”.

While Congress has a month to debate the merits of the ethanol subsidy program, the issue could cause a sharp divide within the Republican Party in particular. Ethanol subsidies, just like earmarks, may very well become the litmus test for Republicans who say they are serious about cutting spending, pitting veteran lawmakers like Grassley and DeMint against each other.