The Hill News

If the bipartisanship that manifested itself in the recent lame-duck session is prologue, 2011 can be the year when folks who have grown hoarse shouting at each other can finally reason together about barrier-breaking approaches to America’s future. American biofuels provide one such issue.

>By extending the incentives for producing and using ethanol for one year, Congress has set the stage for a wide-ranging debate about public policies to encourage American biofuels.

Now that we need not worry about our short-term survival, the American biofuels industry can take the long view and craft a comprehensive proposal that reflects fiscal realties as well as our nation’s energy needs. We hope our critics will respond in a similar spirit.

The discussion of biofuels’ future should be founded upon an appreciation for three fundamental facts:

First, the federal government has spurred private investment in energy sources of all kinds. Oil, natural gas, coal, nuclear, wind, solar, geothermal, and hydroelectric â€" all have benefited from tax or other incentives.

Many of these subsidies have lasted much longer than those for ethanol. All pale in comparison to the estimated $280 billion-a-year in federal subsidies for the highly lucrative petroleum industry that resulted in oil’s virtual monopoly over the U.S. transportation fuel market.

Nor is energy the only sector that benefits from public as well as private investment. Promising technologies, from railroads to the Internet, have been spurred by government support, particularly during their early years. With all these subsidies, the question is whether the nation is reaping returns commensurate with the magnitude of the investment.

Second, public investment in ethanol is reaping returns, now and for the future: 10.75 billion gallons of the biofuel produced in 2009 alone; nearly 400,000 non-exportable, direct and indirect high-paying green jobs; $53.3 billion added to the Gross Domestic Product and $15.9 billion in federal, state and local tax revenues; a 20 to 60 percent reduction in greenhouse gas emissions, compared to gasoline; and the replacement of more than 360 million barrels of imported oil, much of it from unfriendly or unstable governments.

With efficiency improvements in today’s industry and technological advances in new processes and feedstocks, American biofuels are the only viable replacement for declining oil resources.

But ethanol producers and public policymakers need to face up to the third fact: When it comes to incentives, the status quo is no longer sustainable, whether in terms of the nation’s fiscal realities or biofuels’ future.>

With the current condition and growing concern about the federal deficit, the biofuels industry recognizes that we are not exempt from belt-tightening. We need to develop a 21st century tax policy for a 21st century industry.

Yes, the members of the Renewable Fuels Association were committed to extending the current tax incentive structure during 2010. We understood that some underlying market certainty was required to set the stage for responsible reforms that allow the industry to continue to innovate, grow, and mature.

Now, let’s consider not only how we can sustain existing biofuel technologies, but also how we can support the development of new and emerging biofuel technologies. Let’s provide the incentives that the private sector needs to install the essential infrastructure to provide consumers with options at the pump. And let’s produce the vehicles that are needed to use these options.

In short, we need a comprehensive energy policy that recognizes the differences between energy sources that are depleting and those that are developing and between aging technologies and advanced technologies. We must not allow foreign competitors to seize growing markets at America’s expense.

As the debate resumes, there is no shortage of ideas about new policies on tax incentives and other issues. Some are more fully thought-out. Others lack essential details. But none should be rejected out-of-hand.

Those who have been critical of ethanol should take a fresh and objective look at the industry today. Those within the industry should be willing to work with our critics. Just as maintaining the status quo should not be an option, neither should simply allowing the ethanol industry to wither on the vine, leaving a 10 percent void in the market that can only be filled by increased and significantly more costly oil imports. That course is neither fiscally responsible nor environmentally sustainable.

In extending ethanol incentives, Congress did the right thing. It’s time for the ethanol industry and our critics to do the right thing, too, and define the future, instead of dwelling on the past.

Bob Dinneen is president and CEO of the Renewable Fuels Association, the national trade association for the U.S. ethanol industry.