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Sen. Max Baucus (D., Mont.), chairman of the finance committee, introduced legislation on Dec. 3 that would cut the U.S. ethanol subsidy from 45 cents per gallon to 36 cents per gallon and extend the tariff on imported ethanol at its current rate of 54 cents per gallon for one year.
The proposed level by Baucus is the same level contained in the House Ways & Means Committee bill unveiled earlier this year. The bill also proposes a one-year extension of the biodiesel tax credit and retroactively pays for the lag seen in 2010 since it expired in 2009.
A statement from the Renewable Fuels Assn. called Baucus' approach a "good one" as it would provide some "market stability as good-faith efforts to responsibly reform ethanol tax policy continue."
Brazil's sugarcane industry association UNICA criticized the proposal and especially took aim at the lack of parity between the blenders credit and the export tariff. Historically, the export credit offsets the blenders tax credit so America does not subsidize foreign ethanol producers.
Joel Velasco, UNICA's chief representative in North America, said Congress is trying to change the "rules by making the tariff a true trade barrier rather than a subsidy offset." He added, "The ethanol import tariff shouldn't exist at all, but if it must, the tariff should be a direct offset of the tax credit that protects Americans from subsidizing foreign production, not a punitive trade barrier."
Jim Wiesemeyer, senior vice president of Informa Economics, said "every government program has and should have a shelf life." Earlier this summer, some in the ethanol industry recognized that, referencing the decision by Growth Energy chief executive officer Tom Buis and House Agriculture Committee chairman Collin Peterson (D., Minn.) to transition ethanol support away from blenders and instead toward producers and also move funds into infrastructure development, including blender pumps and loan guarantees for pipelines.
Speaking Monday at the National Grain & Feed Assn. Country Elevator Conference, Wiesemeyer said he expects there to be an extension passed in the next week to six months, with the transition of payments eventually to the domestic producers instead of blenders as it currently stands. | 
