Business

May 6, 2008

Senators want ethanol pullback

24 GOP legislators, including John McCain, urge EPA to cut biofuel mandate to ease food crunch.

MATTHEW PERRONE AP Business Writer

WASHINGTON — Senate Republicans have asked environmental regulators to use their power to halt the country’s plans to expand ethanol production amid rising food prices.

Twenty-four Republican senators, including presidential candidate Sen. John McCain of Arizona, sent a letter Friday to the Environmental Protection Agency suggesting it waive, or restructure, rules that require a fivefold increase in ethanol production over the next 15 years.

Congress passed a law last year mandating a ramp-up to 15 billion gallons of corn ethanol by 2015 and 36 billion by 2022. But McCain and other Republicans said those rules should be suspended to put more corn back into the food supply for animal feed, and to encourage farmers to plant other crops.

“This subsidized (ethanol) program — paid for by taxpayer dollars — has contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world,” said McCain, in a statement.

A spokesman for the Environmental Protection Agency said regulators will consider economic impact of renewable-fuel requirements when deciding whether to suspend the rules.

The agency has the power to waive or restructure federal requirements if they cause harm.

Spokesman Jonathan Shradar said the Bush administration remains committed to ethanol as an alternative fuel because of its potential to “get our nation off its addiction to foreign oil.”

But lawmakers are questioning the unintended consequences of using corn for fuel amid a global food crisis that has led to riots abroad and higher grocery bills at home.

Analysts say lawmakers are unlikely to roll back popular ethanol subsidies during an election year.

Congress will not “turn on the corn belt” because of the significant number of votes held by ethanol-producing states, Friedman, Billings, Ramsey & Co. analyst Kevin Book argued in a recent note to clients. Ethanol subsidies could face greater risks, however, in 2009 and going forward, according to Book.

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