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Bodman Hints Change Coming For Ethanol Tariff

posted on February 1, 2008

The Federal Government has always been a friend to start-up businesses especially ones that help drive the economy. A case in-point are subsidies and tariffs associated with the ethanol industry. On track to make more than 6 billion gallons this year a governmental economic shot in the harm has helped pay for infrastructure and start up costs while tariffs have kept lower priced competitors out of the market.

But the size of the Federal booster shots may be getting smaller. At a U.S. Chamber of Commerce meeting this week, Secretary of Energy Samuel Bodman updated conference attendees on cellulosic energy research and then let slip that plans are a-foot to make changes to ethanol tariffs.

Bodman Hints Change Coming For Ethanol Tariff As part of the research mandate in the 2007 Energy Bill, $330 million is being devoted to finding more ways of squeezing ethanol out of plants, plastics, and wood pulp. According to Secretary Bodman there were so many viable applicants for the cellulosic research money there are now plans to award a second set of grants.

During the question and answer period following his speech, Bodman let slip that there may be changes coming for ethanol industry protections and supports.

Secretary Samuel Bodman, Department of Energy.

"There are advantages to both subsidies and tariffs that have helped protect this industry. I believe, as best I can tell, this industry is pretty close to being able to stand on its own but I would rather not go a lot further than that."

Bodman would not elaborate beyond implying all would be revealed when the Federal budget was released next week.

The news there might be a change to the 54-cent per gallon import tax did not sit well with farm state lawmakers like Republican Senator Charles Grassley of Iowa. Grassley believes lifting the tariff would be the same as subsidizing Brazilian ethanol producers and would increase the risk of the U.S. becoming dependent on yet another foreign country for energy.

Tags: biofuels ethanol news renewable fuels