Friday, March 11, 2011

The Week Ahead...House Energy Committee To Take Up Inhofe-Upton Bill on Monday

Next Monday, the House Energy Committee will begin markup of the Inhofe-Upton Energy Tax Prevention Act. The bill was reported out of the House Energy and Power Subcommittee this week. Inhofe welcomed the news, stating “The subcommittee took an important step today in passing bipartisan legislation to stop President Obama’s cap-and-trade agenda, which aims to make gasoline and the energy we use more expensive. The Energy Tax Prevention Act would stop the Obama EPA from imposing new carbon dioxide regulations that drivers, truckers, and anyone who uses energy will ultimately have to pay for. Removing these regulations will allow for greater American energy production, more jobs, and a growing economy.”

Also on the agenda for next week:

On Wednesday, March 16 at 10:00, the Senate Committee on Environment and Public Works will hold a hearing on the "Report to the President form the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling." The witnesses include:

Senator Bob Graham, Co-Chair, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

The Honorable William Reilly, Co-Chair, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

On Thursday, March 17 at 10:00, the EPW Subcommittee on Clean Air and Nuclear Safety and Subcommittee on Green Jobs and the New Economy, will hold a joint hearing entitled, "Clean Air Act and Jobs."   

Both hearings will be held in Room 406 of the Dirksen Senate Office Building. 

All EPW hearings are available to watch online and the written testimony for each witness will be posted a few minutes before the hearings start at http://www.epw.senate.gov/.

VIDEO: Inhofe Speech: Ending the Obama Administrations Attack on Affordable Energy

Link to Video 

Senator Inhofe delivered a Senate Floor speech on Thursday on President Obama’s cap-and-trade agenda and its role in pushing energy prices higher. The following are excerpts from the speech:

“But what I call the Obama Administration's cap-and-trade agenda is also playing a major role in pushing prices higher-and not just for gasoline.  This agenda hurts families, truckers, and farmers-basically, anyone who drives, uses diesel, or flips a light switch.  In a word: everyone.

“My message today is simply this: higher gas prices-indeed, higher prices for the energy we use - are an explicit policy goal of the Obama Administration.  Let me put it another way: the Obama Administration is attacking affordable energy.

“By stopping the President's costly cap-and-trade rules, we will also remove a significant barrier to developing America's energy resources.  You see, the cap-and-trade agenda is also about energy austerity.  The hope is that if we restrict enough supply, the price will increase, and we can then simply shift to less costly alternatives.  Yet this is wishful thinking. 

“We have, in fact, 163 billion barrels of recoverable oil-nearly six times higher than what President Obama and the Democrats like to claim.  Let's think about 163 billion barrels for a moment: that is enough to maintain our current levels of production and replace our imports from the Persian Gulf for more than 50 years.  

“But oil resources offer only a glimpse of the full picture. As I noted earlier, CRS found that America's combined recoverable natural gas, oil, and coal endowment is the largest on Earth.  It's far larger than that of Saudi Arabia, China, and Canada combined.”

Full text of speech

Additional Coverage

Red State: CRS Report: U.S. is Leader in Fossil Fuel Resources 

Hot Air: CRS Report Shows Much Higher US Oil, Gas Reserve Levels than Previously Thought  

Daily Caller: New Report Says U.S. has Largest Fossil Fuel Reserves in World  

CNSNews.com:  High Energy Prices Are Obama’s ‘Explicit Policy Goal,’ Inhofe Says   

Newsmax: Inhofe: Obama Trying to Kill Oil and Gas, Force Green

 

Government Report: Americas Combined Energy Resources Largest on Earth

Senator Inhofe this week joined Sen. Lisa Murkowski (R-Alaska), Ranking Member of the Senate Energy and Natural Resources Committee, today to release an updated government report from the Congressional Research Service (CRS) showing America's combined recoverable oil, natural gas, and coal endowment is the largest on Earth.  America's recoverable resources are far larger than those of Saudi Arabia (3rd), China (4th), and Canada (6th) combined.  And that's not including America's immense oil shale and methane hydrates deposits.

Link to CRS Report: U.S. Fossil Fuels Resouces  

Senator Murkowski: "It comes as no surprise that we are once again estimated to have the largest conventional energy resource endowment on Earth. As we debate ways to reduce gas prices and provide relief to American families and businesses, this report should be required reading for every member of Congress.  For the sake of our national security, our economy, and the world's environment, we need to explore and develop more of our own resources."

Senator Inhofe: "The Obama Administration has made a conscious policy choice to raise energy prices, accomplished in good measure by restricting access to domestic energy supplies.  Those supplies are, according to the Congressional Research Service, the largest on Earth.  We could help bring affordable energy to consumers, create new jobs, and grow the economy if the Obama Administration would simply get out of the way so America can realize its true energy potential." Here's what CRS says about America's tremendous resource base:

Oil

CRS offers a more accurate reflection of America's substantial oil resources.  While America is often depicted as possessing just 2 or 3 percent of the world's oil - a figure which narrowly relies on America's proven reserves of just 28 billion barrels - CRS has compiled US government estimates which show that America, the world's third-largest oil producer, is endowed with 163 billion barrels of recoverable oil.  That's enough oil to maintain America's current rates of production and replace imports from the Persian Gulf for more than 50 years.  

Natural Gas

Further, CRS notes the 2009 assessment from the Potential Gas Committee, which estimates America's future supply of natural gas is 2,047 trillion cubic feet (TCF) - an increase of more than 25 percent just since the Committee's 2006 estimate.  At today's rate of use, this is enough natural gas to meet American demand for 90 years.

Coal

The report also shows that America is number one in coal resources, accounting for more than 28 percent of the world's coal.  Russia, China, and India are in a distant 2nd, 3rd, and 5th, respectively. In fact, CRS cites America's recoverable coal reserves to be 262 billion short tons. For perspective, the US consumes just 1.2 billion short tons of coal per year.  And though portions of this resource may not be accessible or economically recoverable today, these estimates could ultimately prove to be conservative.  As CRS states: "...U.S. coal resource estimates do not include some potentially massive deposits of coal that exist in northwestern Alaska.  These currently inaccessible coal deposits have been estimated to be more than 3,200 billion short tons of coal."    

Oil Shale 

While several pilot projects are underway to prove oil shale's future commercial viability, the Green River Formation located within Colorado, Wyoming, and Utah contains the equivalent of 6 trillion barrels of oil.  The Department of Energy estimates that, of this 6 trillion, approximately 1.38 trillion barrels are potentially recoverable.  That's equivalent to more than five times the conventional oil reserves of Saudi Arabia. 

Methane Hydrates

Although not yet commercially feasible, methane hydrates, according to the Department of Energy, possess energy content that is "immense ... possibly exceeding the combined energy content of all other known fossil fuels."  While estimates vary significantly, the United States Geological Survey (USGS) recently testified that: "the mean in-place gas hydrate resource for the entire United States is estimated to be 320,000 TCF of gas."  For perspective, if just 3% of this resource can be commercialized in the years ahead, at current rates of consumption, that level of supply would be enough to provide America's natural gas for more than 400 years.

Inhofe: EPA Overreaches in Oklahoma

Senator Inhofe criticized the Environmental Protection Agency this week for rejecting Oklahoma’s State Implementation Plan for Regional Haze and moving forward with a federal plan.

“State officials in Oklahoma did the right thing: they worked with state utilities to devise a plan that will continue progress in cleaning the air while ensuring affordable, reliable electricity for consumers," Senator Inhofe said.  "But that was too much for the Obama EPA, which rejected the Oklahoma-led plan in favor of their preferred scheme to put Washington bureaucrats in charge and, ultimately, to make fossil-fuel-based electricity more expensive for consumers.

“Oklahoma’s consumers, including families, farmers, and manufacturers, will bear the brunt of this regulatory power grab.  Through my leadership position on the Senate Committee on Environment and Public Works, I will do everything I can to work with Oklahoma officials to protect consumers from EPA’s attack on affordable electricity.”  

Read Coverage in Oklahoma Newspapers:

Oklahoman: EPA Plan to Clean Air Could Cost Oklahoma Residents  - The result could be a hefty increase in electric rates if utilities are forced to install expensive scrubbers to their oldest power plants. An industrial consumers group in November estimated Oklahoma Gas and Electric Co. customers could see their rates rise more than 15 percent. The EPA on Monday proposed its own plan to reduce emissions of sulfur dioxide by about 95 percent over the next three years at three coal-fired power plants in Oklahoma. The plants have helped power the state since the late 1970s. ...OG&E has estimated installing scrubbers at its coal plants in Red Rock and Muskogee could cost as much as $1.5 billion, plus another $150 million a year for operations and maintenance. PSO officials estimated it would cost about $800 million for scrubbers at its plant northeast of Tulsa. Bud Ground, the company's manager of governmental and environmental affairs, said the EPA's timetable for cutting emissions is "unreasonable." Ground said further study of the EPA's 122-page proposal will help state officials decide how to proceed.  "We think they're wrong, but we don't know just yet what their assumptions were to get to that point," he said.  Attorney General Scott Pruitt said he is willing to litigate the issue, if necessary.  "Let the EPA be put on notice, as attorney general, I plan to do all that I can to protect and preserve the state's authority and responsibility under the Clean Air Act to craft and implement solutions for our state," Pruitt said.  Sen. Jim Inhofe, R-Tulsa, condemned the EPA plan on Monday, as well.  "State officials in Oklahoma did the right thing: They worked with state utilities to devise a plan that will continue progress in cleaning the air while ensuring affordable, reliable electricity for consumers," Inhofe said. "But that was too much for the Obama EPA, which rejected the Oklahoma-led plan in favor of their preferred scheme to put Washington bureaucrats in charge and, ultimately, to make fossil-fuel-based electricity more expensive for consumers."

Tulsa World: Oklahoma Panel Says EPA "Haze" Plan too Costly   - The cost burden could raise utility customers' bills by 10 percent to 12 percent, according to some estimates.  "Oklahoma had a plan in place that would have met the federal mandates without sudden price shock," Commission Vice Chairman Jeff Cloud said in a statement. "As an entity charged with ensuring affordable and reliable utility service to Oklahoma, the commission will work with all the stakeholders and others in government against such misguided federal requirements."  ... The proposal, which was crafted by the state Department of Environmental Quality with the input of AEP-PSO and Oklahoma Gas & Electric, would reach the same reductions in emissions but over a longer time frame, state officials say.  "I am very disappointed the EPA failed to work with Oklahoma and disregarded the devastating impact the EPA's plan would have on Oklahoma electricity customers," Commission Chairman Dana Murphy said. "Now that EPA has released its proposed mandate, we need to move quickly to protect Oklahomans' pocketbooks."  U.S. Sen. Jim Inhofe, R-Okla., has criticized the EPA mandate, describing it as a "regulatory power grab."  The EPA's plan calls for pollution reductions at AEP-PSO's coal-fired units in Oologah and OG&E coal-fired plants in Muskogee and Noble County.  "These three power plants emit greater than one-third of all the (sulfur dioxide) from the hundreds of industrial and utility sources in Oklahoma,'' the EPA stated.  Scrubbers cost $350 million each, while nitrogen oxide controls would add at least $100 million more at the Oologah facility, AEP-PSO officials said.

Journal Record: Lawmaker, Utilities Decry EPA Plan  - OKLAHOMA CITY The Oklahoma Department of Environmental Quality submitted an air quality plan to the EPA last year that would have asked utility companies to reduce emissions more gradually over a longer period of time, but the federal agency rejected most of that plan. "We believed that the State Implementation Plan provided the best opportunity to meet the long-term goal of the regional haze provisions of the Clean Air Act while mitigating its impacts on economic growth," said Steve Thompson, executive director of the Department of Environmental Quality. "We are disappointed that it has been rejected." U.S. Sen. James Inhofe, R-Okla., ranking member of the Senate Committee on Environment and Public Works, issued a statement on Monday vowing to fight the new EPA plan. "State officials in Oklahoma did the right thing: They worked with state utilities to devise a plan that will continue progress in cleaning the air while ensuring affordable, reliable electricity for consumers," Inhofe said. "But that was too much for the Obama EPA, which rejected the Oklahoma-led plan in favor of their preferred scheme to put Washington bureaucrats in charge and, ultimately, to make fossil-fuel-based electricity more expensive for consumers."

Upton, Inhofe Question Process for Reconsidering EPAs Ozone Standards

Tulsa World  

Inhofe questions EPA process for beefing up ozone standards

by JIM MYERS World Washington Bureau

Wednesday, March 09, 2011

Link to Article  

A signed copy of the letter can be found HERE

WASHINGTON - U.S. Sen. Jim Inhofe accused a federal agency on Tuesday of violating its own process on a much-anticipated revision of ozone standards that could put Tulsa County and others in the state on the so-called dirty-air list.

In a letter to U.S. Environmental Protection Agency Administrator Lisa Jackson, the Oklahoma Republican joined a key House member in expressing concern that the EPA's scientific advisers are using information outside the evidence used to set the current standards.

"This is difficult to square with EPA's assertion that it is basing the reconsideration solely on the 2008 record," stated Inhofe and Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee.

In what appeared to be an effort to ensure a fair process, the two lawmakers asked Jackson whether the EPA plans to give others, including states, a chance to comment on any new information her agency is compiling.

The EPA announced late last year that it once again was delaying its decision on beefing up ozone standards.

Inhofe, a major player on such issues as the top Republican on the Senate Environment and Public Works Committee, had welcomed that development.

Previously he had warned that the revision in ozone standards proposed by the EPA would have been devastating to Oklahoma's economy.

In addition to Tulsa County, Inhofe has said Canadian, Cherokee, Comanche, Creek, Kay, Mayes, Oklahoma and Ottawa counties also could end up on the dirty-air list.

Critics of the EPA's move to toughen the standards say areas found out of compliance on ozone, a key component of smog, face challenges in keeping existing industries and recruiting new ones.

The EPA has defended its proposal on ozone, saying it is necessary to protect the public's health. When it announced its latest delay on the new standards, the EPA said it was asking its scientific advisers for further interpretation of studies they used earlier.

The EPA did not comment on the letter from Inhofe and Upton.

EPW POLICY BEAT: THE MYTH OF CO2 AND PUBLIC HEALTH

"The Clean Air Act is one of the best public health success stories of the past four decades...”  True enough.  This success should continue.  But it won’t by making knowingly false claims about carbon dioxide emissions and public health.

 

Exhibit A is Earth Justice. It opposes the Energy Tax Prevention Act of 2011, which would stop EPA from issuing job-destroying carbon dioxide regulations.  This is fair game.  But denouncing the bill for allowing “the nation's biggest polluters a way out of limits to their carbon dioxide pollution that's likely to exacerbate asthma and lung diseases by worsening smog,” is not.  That’s because it’s a myth.

 

This myth is predicated on a ridiculously attenuated argument, which goes as follows: the Energy Tax Prevention Act will allow more carbon into the air; more carbon into the air will cause higher greenhouse gas concentrations; higher greenhouse gas concentrations will cause higher temperatures; higher temperatures will cause more ozone; more ozone will cause more asthma. 

 

This is the best opponents can deliver, as no one, not even Earth Justice (we hope), would dare assert in public that carbon dioxide, something we exhale, and something necessary for life on Earth, would directly cause or exacerbate asthma. 

 

Hence the myth.  The following charts very clearly repudiate Earth Justice and the public health-asthma-CO2 myth. 

 

Chart number 1 comes from the Environmental Protection Agency, and shows ozone emissions steadily dropping from 1998 to 2008.  In fact, ozone emissions have been dropping for two decades. 

 

 

 

 

The U.S. national ozone trend is the average of the ozone trends from 166 ozone monitoring sites (111 urban, 55 rural). The map below shows their locations.

 

 

Now, chart number 2, from the Energy Information Administration, delineating carbon emissions.  The chart shows carbon emissions increased slightly from 1990 to 2006.  In 2007, they start to decline, and continue to decline through 2009, thanks to the recession.

 

 

 

 

So what is happening to asthma?  Here’s the kicker.  Chart number 3, again from EPA, shows “lifetime asthma diagnosis prevalence in children and adults in the U.S.” from 1997 to 2008.  As is evident from the charts, asthma diagnosis prevalence has, for the most part, increased over the period for children and adults. 

 

Earth to Earth Justice: carbon emissions have gone down and ozone has gone down, yet asthma prevalence has gone up.  Go figure. 

 

But this is not a startling revelation.  That’s because carbon dioxide emissions don’t cause asthma, either directly or indirectly, and don’t harm public health.  The Energy Tax Prevention Act is not about asthma or public health, but about protecting jobs and helping the economy grow. 

Hearing Statement on Presidents Proposed FHWA Budget for FY 2012

This week the EPW Committee heard from Sec of Transportation Ray LaHood about President Obama's highway budget for 2010. Below is Senator Inhofe's written statement: 

In my 20 plus years of service in Congress, this is the most unusual budget request for the Federal Highway Administration I have reviewed.   What is unusual is not the amount requested, although significant, nor is it that it overstates the need; some may argue it is not enough.  What is unusual is that it ignores the fact that there is no money to fund it.  Because the Highway Trust Fund (HTF) is all but insolvent, we cannot proceed with a bill unless we have a serious discussion about where the money is coming from.   Unfortunately, the President's budget chooses to ignore that.

The budget includes $70.4 billion for highways in 2012, which represents a 71% increase above the current funding of $41 billion.  $27.7 billion of this request is considered a one-time frontloading of the bill ($50 billion spread across all modes of transportation).  Funding drops down to $47.4 billion in 2013 then grows from there.

While it is good to see an increased interest in our nation's roads and bridges, the truth is that the funding levels requested in this budget and in the reauthorization proposal are reckless when one considers we have a national debt of over $14 trillion.  The President's failure to specify how he would pay for his $556 billion proposal makes me wonder how seriously he wants Congress to consider it.  Instead of  punting and including a placeholder tax increase of $231 billion over 6 years ($435 billion over 10 years), I think it would have been more useful to provide suggestions on how to achieve his goal along with legislative language that lays out the specifics of his proposal.  This is an enormous amount of money to simply assume can be raised.  To put it in perspective, it would mean more than doubling the gas and diesel taxes.  That is a staggering hole. 

The whole purpose of a budget is to make tough choices.  This budget proposal does neither.  It doubles spending, but does not pay for it.  This is irresponsible-especially given the fact that this year's budget deficit will be over $1.6 trillion dollars.  Putting aside the lack of attention to the funding shortfalls, from what I am able to tell about the reauthorization proposal, there are some good ideas that I wish we had more information on. 

The proposed elimination of 55 programs within the overall Federal-aid Highway Program is a much-needed and appreciated move.  These programs are replaced with greater flexibility, allowing states and localities to better address their individual and unique needs.  This consolidation is politically difficult to do, and we in Congress will have to follow your example of leadership on this.  

Summary documents indicate your proposal moves the program from being focused on bureaucratic processes to focusing on outcomes and ensuring our motorists' tax dollars are well spent.  This is obviously a major change, but one that is needed. 

The President's budget also proposes rebasing spending from the Highway Trust Fund as 100% mandatory.  Currently, it is accounted for as both mandatory and discretionary.  Rebasing the program to the mandatory side of the budget would provide a great deal of added certainty to state DOTs and contractors.  This certainty would increase the likelihood that large, multi-year projects would make it off the drawing board and actually get built.

In addition to a lack of a funding mechanism, I'm concerned about another aspect of your reauthorization proposal.  It's not a surprise by any means, but the budget proposes a new livability program funded at $4.1 billion in 2012 going up to $5.1 billion by the end of the bill (in 2017).  To put this in perspective, this is almost 10 percent of the total program and over 60 percent larger than the dedicated safety program.  This is far too much of the program to spend on things that have little or no impact on Americans' mobility. 

I can honestly say that I'm very interested to see the policies you have included in your reauthorization proposal.  The budget request reflects this to some degree, but my enthusiasm is overshadowed by the lack of a funding proposal. 

RAPID RESPONSE: EPA WILL RAISE GAS PRICES

EPA Administrator Lisa Jackson asserted today that the Energy Tax Prevention Act "would increase our oil dependence by hundreds of millions of gallons" because it would remove EPA's authority to regulate carbon dioxide from automobiles under the Clean Air Act - and thereby forgo "hundreds of millions of barrels of oil savings."  This is false.

Congress gave explicit authority to the National Highway Traffic Safety Administration (NHTSA) to establish fuel economy in automobiles, otherwise known as Corporate Average Fuel Economy (CAFE) standards. The Energy Tax Prevention Act in no way restricts or impedes NHTSA's authority over CAFE

Administrator Jackson pointed to the auto deal struck in 2009 between auto companies, EPA, and the state of California covering CO2 from autos as evidence that EPA has a major role in reducing oil consumption.  First, the Energy Tax Prevention Act keeps that deal in place.  Second, NHTSA's work overwhelms any contribution from EPA.  As EPA explained in the rule implementing the deal, "The CAFE standards address most, but not all, of the real world CO2 emissions."  In the end, EPA's rule amounts to about 4 percent of the deal's emissions reductions.

Moreover, EPA and NHTSA established a "single national program" for cars and light duty trucks.  As petitioners argued in the motion to stay EPA's GHG rules, "The [new] CAFE standards and EPA's Tailpipe Rule are virtually identical, with irrelevant differences in how the two standards address air conditioning."  Removing EPA's authority in this vein, therefore, would merely eliminate bureaucratic duplication in setting fuel economy.  As EPA explained:

[EPA and NHTSA] have harmonized many elements of program design, such as the form of the standard (the footprint-based attribute curves), and the definitions used for cars and trucks...Given the common technical issues before each agency, the similarity of the factors each agency is to consider and balance, and the authority of each agency to take into consideration the standards of the other agency, both EPA and NHTSA are establishing standards that result in a harmonized National Program

If anything, EPA's cap-and-trade agenda-designed to make fossil fuels more expensive - will result in higher gas prices.  How?  By restricting supply. 

Take the example of Lion Oil.  Vice President Steve Cousins recently testified before the House Energy and Commerce Committee that his company began a major $2 million expansion of its El Dorado refinery in 2007, with 2,000 construction jobs, but its completion has since been stalled.  As Cousins explained, "The uncertainty and potentially prohibitive costs associated with possible cap-and-trade legislation and EPA's greenhouse gas regulations were a critical factor leading us to delay the completion of the expansion."

Cousins also testified in 2009 that cap-and-trade legislation would have forced his company out of business.  He sees the same threat looming at EPA:

It is our fear that left unchecked, EPA will use the Clean Air Act to drive to exactly the same goals as the defeated cap-and-trade legislation that Congress so wisely chose not to pass. And in that pursuit, EPA will inflict the same damage on our company and our nation's economy.

In today's press conference, President Obama said that we "need to continue to boost domestic production of oil and gas" to make sure that Americans are not overwhelmed by rising gas prices.  Mr. President, take an important first step: support the Energy Tax Prevention Act.

In the News...Boxer-Inhofe To Hold Hearing on Ethanol in April

NYT/Greenwire

Industry feels squeeze as Congress tightens belt

(03/07/2011)

Elana Schor, E&E reporter

Link to Article

It's been a rough season for corn ethanol on Capitol Hill.

A winter that began with a tougher-than-expected battle to win congressional approval for a one-year extension of the ethanol blenders' tax credit is delivering more harsh doses of reality to an industry that benefits from notable government support. With a House Republican majority newly emboldened to trim ethanol mandates and a bipartisan Senate majority eyeing subsidy reform, the political obstacles facing conventional biofuels appear steeper than ever.

Even corn ethanol's strongest allies acknowledge that the 45-cent-per-gallon tax credit, the 54-cent tariff on imported biofuels and a federal renewable fuel standard (RFS) that calls for 36 million gallons of production by 2022 merit scrutiny -- particularly in the current political moment, when fiscal austerity is a watchword.

"If the government has a mandate, it has to be a mandate that can be reached," said Sen. Chuck Grassley (R-Iowa), perhaps the Capitol's biggest ethanol stalwart, in a recent interview. Of the long-term RFS target set by lawmakers in the 2007 energy bill, he added: "The extent to which it is realistic, I think, is legitimate to look at."

But despite the rising voices of critics who see the industry's benefits as too generous for taxpayers to afford, ethanol has a substantial political advantage: Subsidies for all energy producers are under the microscope. By emphasizing the "R" in its RFS, then, corn ethanol can position itself as aligned with solar or wind rather than Big Oil.

"Everyone in the industry, or at least those who are realistic about it, understands that the tax incentive as we currently know it will be reformed," said Matt Hartwig, spokesman for the ethanol trade group Renewable Fuels Association, in an interview. "The question is, what does that reform look like? And does such reform come with similar reform efforts for other fuel subsidies?"

Major oil companies, Hartwig added, "make $50 billion a quarter in profits, yet still get billions of dollars of permanent subsidies in the tax code each and every year. Is that a wise use of taxpayer dollars?"

House Democrats raised similar questions during debate over their chamber's seven-month government funding bill, forcing a vote on an alternative plan that would cut back oil industry tax breaks. That effort fell short, however, while two amendments to the funding bill limiting federal ethanol support passed easily -- including one, from Rep. John Sullivan (R-Okla.), with a potentially veto-proof majority.

Sullivan's amendment blocking U.S. EPA from allowing the sale of fuel blended with 15 percent ethanol (E15) for newer vehicles, passed the House on a 285-136 vote, with 79 Democrats lining up in favor. That 67 percent majority should serve as a "wake-up call" to the Obama administration, Sullivan said through a spokesman.

Still, the next stage for the drama over ethanol's future will likely be the Senate Environment and Public Works Committee, which anticipates holding a hearing in April that takes a broad look at multiple facets of U.S. renewable fuels policy. The panel's chairwoman, Barbara Boxer (D-Calif.), was one of 17 upper-chamber members who signed a bipartisan letter in November calling for the phaseout of ethanol tariffs and blending subsidies.

And ethanol is one of a few issues that find Boxer aligned with her committee's ranking Republican, Sen. James Inhofe of Oklahoma, a longtime ethanol foe who is relishing his ability -- despite a reputation as a vocal climate change skeptic -- to build a partnership with environmentalists who want Congress to reduce support for the corn-based fuel.

"What we're trying to do is reach across the aisle" on ethanol, Inhofe spokesman Matt Dempsey said in an interview. "When you have Inhofe and Barbara Boxer and Friends of the Earth (FoE) on the same page, it's pretty understandable what's coming."

By the time of the April hearing, Inhofe aims to reintroduce his previously proposed bill that would allow states to opt out of the corn-ethanol portions of the RFS. His aides have even taken to Twitter to nurture what one green advocate dubbed an "unholy alliance" between her camp and the oil-patch Oklahoman.

Open season on subsidies?

Sen. Bob Corker (R-Tenn.), who joined Boxer on the November letter calling for the phaseout of ethanol tariffs and subsidies, described his stance as a simple matter of opposition to "artificially distorting the market."

"If ethanol, which is a very mature industry, wants to compete, that's fine with me," Corker said in a recent interview. "My guess is, in their heart of hearts, many folks who represent areas where ethanol [is made] think it's a bad policy. I certainly think it's a bad policy."

The Government Accountability Office lent some weight to that perspective last week in a report on extraneous programs that Congress could consolidate to reduce wasteful spending. "The ethanol tax credit and the renewable fuel standard can be duplicative in stimulating domestic production and use of ethanol, and can result in substantial loss of revenue to the Treasury," the office's independent auditors wrote (Greenwire, March 1).

"If we lose ethanol overnight, it would cause significant problems for us," said Sen. Ben Cardin (D-Md.), a senior EPW Committee member, in an interview. "The question is, how much energy do we net on ethanol, and how disruptive is it to the food chain?"

Some senators who did not join the 17-member letter, spearheaded by Dianne Feinstein (D-Calif.) and Jon Kyl (R-Ariz.), said they would welcome a debate on the effectiveness of government supports for ethanol during a political moment rife with deficit consciousness.

"We've got to reduce the cost to the American people, financially as well as environmentally, so I'd like to see a more serious look at what the consequences of our tariffs on ethanol are," said Sen. Frank Lautenberg (D-N.J.), another senior EPW Committee member, in a recent interview. "The taxpayer pays the price, and I don't think that's appropriate."

Nonetheless, Midwestern lawmakers can be expected to join ethanol producers in fighting hard against attempts to reduce federal support for the fuel without transitioning it to other types of benefits. Given that, the road map to a long-term shift in corn ethanol policy could rest on a gradual shift from tax credits to more spending on infrastructure, such as a long-term plan offered by biofuels trade group Growth Energy in 2009 that is gradually winning more favorable notice from its colleagues in the industry (Greenwire, Oct. 22, 2010).

Growth Energy's concept is also catching on with some of the Hill's strongest ethanol backers. A move from subsidies to investment in blender pumps, storage tanks and other projects "has to be our direction" in the long term, Sen. Mike Johanns (R-Neb.) said in a recent interview.

Describing the coming EPW Committee hearing as "an opportunity to make the case that this is the right course of action for our nation," Johanns put his support for ethanol in context.

The fuel is not worth backing "because it's going to solve all of our oil issues, but it is a piece of the puzzle," he said: "It's domestic, it's here, we don't have to worry about whether" Middle East unrest could jeopardize global supplies.

Ethanol industry representatives are now hammering out a proposal for how to reshape their businesses' federal benefits. That work recognizes the importance of presenting a "unified plan ... that moves forward in a fiscally responsible manner" to Congress and the administration, said Hartwig, of the RFA industry group.

"When you have even a perception of discontinuity in the industry and competing priorities, that's a problem," Hartwig said. If ethanol players of various stripes cannot present a united front, he added, "imagine how confused members of Congress [would] get who are managing a multitude of issues."

In another strategic shift from the industry, RFA created an Advanced Ethanol Council last month aimed at giving a stronger voice to companies involved in cellulosic ethanol and other emerging ethanol technologies. Whether that new emphasis can win over ethanol's critics, however, remains to be seen given the lower-than-expected performance of cellulosic (ClimateWire, Feb. 16).

"In the past, a lot of environmentalists were very high on cellulosic ethanol," said Frank O'Donnell, president of the green group Clean Air Watch, in an interview. "It's looking more and more like that's a mirage."

E15 and climate

Despite the lopsided vote count in favor of his anti-E15 amendment, Sullivan said after the House funding bill's passage that the administration had yet to reach out to him to discuss the level of resistance to blending more ethanol in order to meet the RFS.

"My amendment is not an attack on ethanol -- it's about making sure the EPA is not sacrificing consumer safety for the sake of pushing E15 to meet the RFS mandate," Sullivan said through a spokesman, pointing to former President Clinton's recent warning that an uptick in corn ethanol production could cause global unrest and higher food prices (E&ENews PM, Feb. 24).

O'Donnell of Clean Air Watch, a dogged opponent of the House funding bill's attempts to hamstring EPA, said that the level of support for Sullivan's plan deserved notice.

"On the merits of the issue, I think the vote reflects the fact that there's a very broad and real coalition that has concerns about this," said O'Donnell, whose concerns about blending more ethanol into fuel stem from the resulting potential for increased emissions.

Meanwhile, ethanol's growing primacy on the congressional agenda comes as the once-marquee fight to pass a comprehensive climate change bill becomes a defensive play by Democrats to preserve EPA authority to limit greenhouse gas emissions.

The demise of cap-and-trade legislation could yet create space for a bipartisan consensus on scaling back ethanol subsidies, but it also holds the promise of pushing the parties further apart during months of heated combat over emissions regulations.

One GOP aide working on the issue predicted that Democrats and green advocates would have "to figure out how much they want to be involved in this coalition" to closely examine ethanol but contended that having "cap and trade off the table" puts biofuels dealmakers at an advantage.