Recent Op-Eds

JOINT OP-ED: A New Way Forward for Biofuels

By: Senator John Thune (R-S.D.) and Senator Amy Klobuchar (D-Minn.)

July 21, 2011

Possibly the most revolutionary change in American agriculture in recent decades is the rise of a biofuels industry, which is currently the only competition to oil. By supporting farmers, creating jobs and generating local tax revenue, ethanol is a powerful driver of economic development for rural communities.

Our two states' economies have benefited enormously from this homegrown energy revolution. Today Minnesota and South Dakota rank fourth and fifth respectively for ethanol production. 

Ethanol plays an important part in reducing our dependence on foreign oil.  It accounts for nearly 10 percent of America's gasoline fuel supply. In fact, ethanol provides more transportation fuel for this country than what we refine from imported Saudi Arabian oil. And most consumers may not know it, but ethanol has helped hold down gas prices. By one estimate, average gas prices last year were lower by 89 cents per gallon thanks to ethanol.

Ethanol is a great success story not only for farmers and the rural economy, but for U.S. consumers and our whole economy, too. It has resulted in more stable commodity crop markets for farmers and jobs for Midwest workers, not the oil cartels of the Mideast.

As a Democrat and Republican, both of us are strong advocates for American made biofuels.  But we also recognize that times have changed. Ethanol is no longer a new industry, and our country is facing serious fiscal challenges. Given the shifting tides in Congress, we felt it was important to get ahead of the curve so that ethanol could determine its own future.

Despite divisions in Congress, we worked with Senator Feinstein of California to map out a compromise that balances the need for deficit reduction with the need to continue promoting domestic renewable fuels as an essential pathway to energy independence.

The outcome of our efforts is a bipartisan agreement reached on July 7th that is supported by ethanol industry groups, as well as the American Farm Bureau Federation and the National Farmers Union. 

In summary, this is what our compromise proposes:

It eliminates the Volumetric Ethanol Excise Tax Credit (or VEETC) at the end of this month instead of the end of 2011. This change would result in savings of just over $2 billion.

Under the bipartisan agreement, $1.3 billion from the remaining credit will be dedicated to reducing the federal budget deficit. 

And unlike many legislative proposals which would have eliminated any support for biofuels, the remaining $668 million of the 2011 VEETC savings will go to targeted incentives for small ethanol producers, infrastructure like electric charging stations and blender pumps that are needed to bring greater competition to the fuel market, and cellulosic incentives. Our agreement gives consumers a real choice at the pump and is good for all families struggling with high fuel prices.

Our agreement was the product of good faith efforts to work across the aisle with one another on an issue that transcends partisan politics.