Obama-GOP Tax Package: Ethanol and Clean Energy Fight for a Spot [UPDATE]

Last Updated Dec 10, 2010 12:40 PM EST

Ethanol and the clean energy industries have launched two separate, but equally aggressive, last-minute lobby campaigns in hopes of shoehorning energy incentives into the Obama-GOP deal to extend Bush-era tax cuts. With the lame-duck sessions nearing an end, expect loads of threats, protests and pleas to get each industry's incentives included in the bill.

UPDATE: The Senate added Thursday night a one-year extension of the clean energy grants (for an explanation see below.) The renewable energy industry is pleased, but they're cautious. However, as I noted earlier, it ain't over 'til it's over. Congress still has to pass the bill.

What they want

  • The ethanol industry has asked for an extension to the 45-per-gallon tax credit given to refiners that blend ethanol with gasoline; and an extension to the 54-cent-per-gallon tariff on ethanol imports. The credit, which is supported by corn-based ethanol producers and both Dems and Republicans from Midwestern states, is set to expire at the end of the year. A bipartisan group of 17 senators who oppose the measure sent a letter to congressional leaders last month that said a one-year extension of the credit would cost $6 billion and only lead to 427 additional direct domestic jobs.
  • The renewable energy industry wants a one-year extension of a lucrative federal grant program that provides a direct payment for 30 percent of the total project cost, in lieu of taking an investment tax credit. The clean energy grant program is set to expire at the end of the year. A 30 percent tax credit will continue until 2016.
  • Both industries warn that without their various extensions, U.S. jobs will be lost.
Their odds? There have been confirmations in both Bloomberg and The Hill's E2 Wire blog that ethanol and the clean energy grant program extensions have been added to the tax deal. But that means little. The White House and Republicans have shown unwillingness to budge on the deal, which means anything added will have to have a lot of bipartisan support or a serious enough threat that they'll make some concessions.

Ethanol has support, but it's also controversial. There are as many lawmakers who hate subsidies for the domestic fuel source as those who passionately support it. Clean energy has strong support from Democrats, but the tax grant program is a political pariah among the GOP because it was part of the stimulus package.

The bid to include clean energy grants may become the battle cry of the House's Democratic caucus, which includes Speaker Nancy Pelosi that is strongly opposed to the tax deal. House Democrats, the NYT's Caucus blog noted Thursday, voted to block the tax bill from getting a vote unless changes are made. One of those changes is an extension of the clean energy grant program.

Photo from Flickr user Tarter Time Photography, CC 2.0