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Published: Wednesday, 4/14/2010

Ethanol industry steps up lobbying as clout wanes

ASSOCIATED PRESS

WASHINGTON - Is corn-based ethanol fuel the wave of the future, creating domestic jobs and vital to the nation's energy supply? Or is it a taxpayer boondoggle responsible for higher food prices?

For some in Washington, the answers to those questions have changed.

For years, ethanol fuel derived from corn was almost politically untouchable, thanks to powerful advocates on Capitol Hill. The ethanol industry has consequently exploded over the last decade, thanks to government subsidies and incentives.

But skepticism about ethanol is rising, prompted by fluctuating food prices and an organized campaign by anti-ethanol advocates to discredit the industry.

"The old saying is that if you aren't at the table, you're on the menu," said Tom Buis, lobbyist and chief executive officer of Growth Energy, a new ethanol industry group formed in 2008 as some ethanol companies grew worried that their political clout was waning. The organization's largest member is Poet LLC, one of the country's top two ethanol producers.

Poet has facilities in northwest Ohio, and The Andersons Inc., a Maumee agribusiness, owns a few ethanol-fuel plants in Ohio and Michigan.

At stake for ethanol companies are billions of dollars in tax credits that expire at the end of the year and a pending action at the Environmental Protection Agency that could raise the amount of ethanol in every driver's fuel tank.

Mr. Buis said the industry now has to work harder to convince an increasingly skeptical public and Congress that ethanol continues to deserve government money. A series of television ads launched this week are part of the group's efforts.

Ethanol, which makes up 85 percent of the fuel at the pump at left in St. Ansgar, Iowa, was touted as a solution to high petroleum prices. The industry exploded
over the last decade, thanks to government subsidies and incentives. But questions about ethanol are on the increase, prompted by fluctuating food prices and efforts by anti-ethanol groups. Ethanol, which makes up 85 percent of the fuel at the pump at left in St. Ansgar, Iowa, was touted as a solution to high petroleum prices. The industry exploded over the last decade, thanks to government subsidies and incentives. But questions about ethanol are on the increase, prompted by fluctuating food prices and efforts by anti-ethanol groups.
CHARLIE NEIBERGALL / AP Enlarge

There's evidence that Congress is weary of giving money to an industry that critics say should be able to stand on its own after getting its start in the early 1980s with powerful congressional advocates such as Sens. Bob Dole of Kansas and Tom Daschle of South Dakota.

"It is our view that after 30 years we should declare success," said Scott Faber, a lobbyist for the Grocery Manufacturers Association, which represents food companies that say their prices have risen because of the high use of corn for ethanol.

The organization is part of a growing patchwork of food companies, livestock producers, environmental groups, and oil companies that have spent millions of dollars in the last few years framing ethanol's success as "food vs. fuel." They argue that the increase in production of corn and its diversion for ethanol is making animal feed more expensive, raising prices at the grocery store, and harming the land.

The diversion of corn has been particularly tough on the meat industry, which uses corn for animal feed. But the ethanol industry disputes that the fuel has a substantial effect on food prices, saying corn prices affect only a small portion of each dollar overall spent at the grocery store.

Ethanol's opponents gal-

vanized in 2008 as food prices skyrocketed and lawmakers debated if ethanol was to blame. It's unclear whether the increased efforts will pay off. After Growth Energy filed its petition last year to increase the amount of ethanol in gasoline to 15 percent from 10, the EPA said in December it needed more tests to determine if car engines could handle it.

With a decision on that issue and congressional debate over the tax credits approaching, Growth Energy is now positioning the ethanol industry as the underdog.



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