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Public Statements

Ethanol

Floor Speech

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Date:
Location: Washington DC

Mr. COONS. Mr. President, I rise today to speak to the proceedings that just occurred in this body with regard to ethanol and to talk about how I see them from the perspective of my home State of Delaware.

Today, the Senate agreed on a path forward to end Federal subsidies for corn-based ethanol. As Senators, we are often asked to make tough choices, and the bipartisan votes on today's amendments were largely a reflection of where we are from.

For Delaware, agriculture is the single largest part of our economy. We grow a lot of corn, we grow a lot of soybeans, we have companies investing in advanced biofuels, and we have a major poultry industry. Today, I voted for Delaware's poultry growers and for our consumers. Lots of folks across this country in the last few years have lost their jobs, lost their homes, and lost their livelihoods. It is very important to me that the people of Delaware know, on the record, that the vote I cast today to end Federal subsidies for ethanol was about making sure we are supporting our home State poultry industry.

My main concerns are that one of the most important economic engines--not just in Delaware but in the whole Delmarva Peninsula--is the poultry industry. That industry has its back against the wall and is struggling to survive. At a time when many other agricultural industries are seeing record prices--and that is a positive, a boon for them--for the poultry industry, the rising cost of feed is forcing decades-old companies to rethink their business models or, sadly, as in one case just last week for one of the most important and vital poultry companies in Delaware, to shut their doors and go into bankruptcy.

We need to move away from corn-based ethanol and toward homegrown advanced biofuels if we are going to accomplish three goals at the same time. One is to reduce our deficit, to end unwise and unnecessary Federal spending; second is to support and advance and defend our poultry industry, whether in Delmarva or throughout the rest of the country; and third is to continue to make progress toward the future of clean, promising biofuels that are not from grain.

The amendment I just voted for closes the door on corn-based ethanol, but that should not prevent us from finding a path forward to advanced biofuels, those not from grain, whether cellulosic ethanol or drop-in biofuels from algae or otherwise.

Today, I also filed an amendment with Senator Carper, the senior Senator from Delaware, that makes it clear that as we close the door on corn-based ethanol, we need to do two other things going forward: first, use those billions of dollars in savings to reduce the deficit and, second, redirect funds, formerly committed to VEETC, to support an important but just beginning, a nascent advanced biofuels industry.

Ultimately, the policies we pursue should lead to American consumers, producers, and farmers using less petroleum and, more importantly, using less oil from overseas sources. If we are going to reduce our dependence on fossil fuels and especially on those we import from overseas, we are going to need to continue to pursue a range of cleaner and more secure sources of energy. Advanced biofuels are central to this effort. Now that we have taken the important first step by adopting the Feinstein-Coburn amendment and signaling the intent of this body to end Federal subsidies to corn-based ethanol, I hope we will also responsibly pay down our Federal deficit and continue a strong path forward toward the advanced biofuels that Delawareans are making a significant contribution toward making a reality.

As my colleague from California has noted, corn-based ethanol has historically been supported by three policies: the volumetric ethanol excise tax credit, known as VEETC, which provides a 45 cent per gallon tax credit to gasoline suppliers who blend ethanol with gasoline; a tariff of 54 cents per gallon on imported ethanol, which is largely targeted at sugarcane ethanol from Brazil; and a requirement that mandates the use of ethanol in gasoline by set amounts every year, increasing to 36 billion gallons by 2022.

VEETC and the import tariff may have been needed in the past to stand up the nascent corn-based ethanol industry, but experts agree that the industry has matured, and these two supports are no longer needed.

At a time when our federal government is facing a massive deficit and spiraling debt, we need to take a hard look at how we spend our taxpayer dollars. These subsidies are expensive, and studies have shown them to have dramatic impacts on our federal budget as well as on the cost of corn feed used by chicken farmers, including those in Delaware. This year alone, VEETC will cost taxpayers $6 billion. We just can't afford to maintain this duplicative and wasteful subsidy.

Delaware's chicken farmers can't afford it either. Most economists and market analysts agree that the steady growth in ethanol demand has had a dramatic effect on the price of corn. This cost has trickled down to related agricultural markets, including food, feed, fuel, and land. The average annual price of corn has jumped 225 percent just in the past 5 years. Last week, corn futures reached nearly $8 a bushel, which is 140 percent over last year.

The No. 1 cost for chicken farmers is feed, and farmers in Delaware are feeling the pinch. One major poultry company declared bankruptcy last week, and it cited the high cost of corn feed as a major factor. Couple this with rising energy costs, trade barriers, and low chicken prices, and you can see why many poultry companies are nearing a breaking point.

Something must be done. The VEETC credit and the tariff are no longer worth the investment. It is past time that we repeal these subsidies, and I was proud to vote for the Feinstein-Coburn amendment to do so.

At the same time, let me be clear: the Feinstein-Coburn approach is only part of a larger effort. In addition to ending VEETC and the tariff, we must also do much more to promote investment in the research, development, and deployment of advanced biofuels, including cellulosic and drop-in biofuels. These will help us reduce our dependence on petroleum and encourage further innovation. We need to provide greater certainty to help launch a next-generation biofuels industry through the extension of tax credits and other federal programs for certain targeted advanced biofuels.

Many concerns are raised because corn ethanol dominates the U.S. biofuels market. But what is our ultimate goal? Shouldn't it be about greater fuel efficiency and product diversity in our domestic transportation sector? First, that can be achieved through increased fuel economy standards. Second, it can also come from technological alternatives like electrification, natural gas and hydrogen fueled vehicles. Third--and most important for what we are debating here today--it will come from developing commercially viable, advanced biofuels.

There are legitimate concerns about corn ethanol's economic and environmental impacts, but we should also not be cutting off our nose to spite our face. For this reason, I have filed an amendment that makes it clear that we should be redirecting the repeal of the VEETC to deficit reduction and the extension of advanced biofuels for 5 years to provide a long-term signal to this small but emerging industry.

I want to be part of a solution that provides a strong, long-term future for our Nation's alternative fuels industry. I want to see domestically produced, next-generation feedstocks grow. This would be from cellulosic, biodiesel, and drop-in fuels like methanol and butanol. They could come from different feedstocks, such as recycled grease, wood, corn stover, switch grass, municipal waste, algae, and livestock manure. Right now there is little to no commercial production, but we need to support those efforts with new incentives for these fuels and bio-refineries. Most importantly, we need to work on bringing down the costs and expanding their markets.

In Delaware, inventive companies are already hard at work researching cutting-edge biofuel systems, including ones that produce energy from soybeans and algae. One such company is Elcriton in Newark, which is producing drop-in fuels from duckweed, an aquatic plant that can be used to produce fuel. Another company headquartered in Delaware--DuPont--working with partners around the country on both cellulosic and biobutanol technologies. None of these fuels compete with the price of livestock feed. I am proud of the biofuel innovation taking place in my State, and I want to replicate this model across the country.

In addition, this growth of advanced biofuel innovation has the potential to lead to new economic opportunities not only for energy companies and consumers but also for Delaware chicken farmers. Today, of great concern to them is the price of corn on the input end of farm operations, but--hopefully, not too far down the road--a significant factor on their balance-books may soon be earnings from waste that can be sold for biofuels.

Ultimately, the policies we pursue should lead to American consumers, producers, and farmers using less petroleum. If we are going to reduce our dependence on fossil fuels, particularly those imported from overseas, we are going to need to pursue a range of cleaner and more secure sources of energy. Advanced biofuels are central to this effort, and, now that we have taken the first step by adopting the Feinstein-Coburn amendment, I hope the Senate will take the next step as well.


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