WASHINGTON – The biodiesel and ethanol campaigns took a major step forward July 31 when the U.S. Senate approved an energy bill that contained a number of incentives designed to encourage the use of the fuels, including a biodiesel tax incentive.
After weeks of heated debate, the Senate voted 84 to 14 in favor of the 2002 version of the energy bill that provided a 1-cent reduction of the excise tax per percentage of biodiesel blended with diesel up to 20 percent.
The comprehensive energy bill includes the original renewable fuels standard introduced last year by Sens. Tom Daschle, D-S.D., and Richard Lugar, R-Ind.
The renewable fuels standard will triple U.S. usage of biofuels such as ethanol and biodiesel to 5 billion gallons by 2012.
Provisions. The bill would also ban the additive MTBE, a compound used to meet oxygenate requirements that has been found to contaminate drinking water.
Other provisions in the Senate bill include removing the current oxygenate standard for reformulated gasoline and enhancing air quality anti-backsliding provisions.
The energy package also includes tax incentives for renewable energy sources such as biomass and wind, in addition to tax incentives for increased domestic oil and gas production and a natural gas pipeline from Alaska to the lower 48 states.
The bill also requires the federal government to use ethanol and biodiesel in its transportation fleets when possible and to provide tax credits for renewable fuel production.
Incentives increasing biodiesel and ethanol demand will also boost the need for soybeans and corn, which in turn will raise the price of those crops.
Good move. The National Corn Growers Association and American Soybean Association hailed the vote, along with other proponents of ethanol and other renewable fuels.
“These provisions will be paramount in gaining more U.S. energy independence and over the long term, will be extremely beneficial to America’s farmers and ranchers,” said Bob Stallman, president of the American Farm Bureau Federation.
“There are significant deficiencies in the current energy policy, and this is having serious impacts on American agriculture and the U.S. economy as a whole.
‘Great victory.’ National Farmers Union president Dave Frederickson also gave a thumbs-up to the bill, calling it a “great victory for farmers and rural America.”
“This legislation is better for the environment and could increase market opportunities for farmers by tripling the domestic demand for renewable fuels,” Frederickson said.
Biodiesel. Biodiesel is made primarily from soybean oil originating in the United States, so it lessens U.S. dependence on foreign oil, said soybean association president and National Biodiesel Board director Ron Heck from his farm in Perry, Iowa.
More than 55 percent of the oil consumed in the United States comes from the Middle East.
Ethanol. The ethanol industry is expected to produce more than 2.7 billion gallons in 2003, up from a record annual production of 2.13 billion gallons in 2002.
Currently, 73 ethanol plants have the capacity to produce over 2.9 billion gallons annually. Thirteen ethanol plants are under construction.
“Increasing fuel usage from farm products will not only help protect the nation’s environment and energy independence, but also will help provide a better price for our commodities and new economic opportunities in rural communities,” Frederickson said.
Refined. The Senate approved the same bill it passed last year, substituting it for the bill reported from the Senate Energy Committee this year.
Senate approval followed a drawn-out debate over contentious amendments. The House passed its energy bill in April.
Energy Committee Chairman Pete Domenici, R-N.M., will chair the Senate-House conference committee, where the differences between the two chambers’ bills will be reconciled.
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