As Republicans Move to Nix Ethanol Subsidies, USDA Pushes ‘Flex Fuel Pumps’

By Susan Jones | June 13, 2011 | 9:50 AM EDT

Judith Canales, USDA Rural Business-Cooperative Administrator, is pictured with Glen Badenhop, co-owner of American Freedom Energy, which is considering federal assistance in installing flexible fuel pumps at gas stations the company is developing. (USDA photo)

( – Senate Republicans are moving to repeal all subsidies, mandates and tariffs on ethanol, the corn-based fuel additive.

A vote is expected Tuesday afternoon on Sen. Tom Coburn’s (R-Okla.) amendment repealing the ethanol subsidy.

In addition, Sen. Jim DeMint (R-S.C.) announced that he will introduce an amendment to repeal the renewable fuels standard that requires ethanol to be blended with gasoline.

The Obama administration, meanwhile, is urging gas station owners to apply for federal grants to purchase and install pumps that deliver fuel with a high ethanol content.

‘Bad policies’

“Washington's ethanol policies are a case study in why government attempting to pick winners and losers is a bad deal for taxpayers,” DeMint said. Americans are being forced to subsidize corn ethanol, which "drives up the cost of gas, lowers gas mileage, harms automobile engines, releases carcinogens into the air, and drives up food prices which harms the poor," he added.

"Unfortunately, Washington's bad ethanol policies don't end with just subsidies and tariffs; we must also repeal the mandate, which my amendment would do.”

Sen. Coburn says his amendment repealing the ethanol tax credit and tariff would save $3 billion for the remainder of this year and $6 billion annually.

“The days of placing spending programs in the tax code and giving them holy status are over,” Coburn said in a news release. “Eliminating the ethanol tax earmark and tariff would be a big step toward restoring fiscal sanity in Washington. Ethanol is bad economic policy, bad energy policy and bad environmental policy.”

A taxpayer advocacy group said the DeMint amendment “fills in the gaps” left by the Coburn amendment.

Americans for Tax Reform opposed the Coburn amendment on its own, because it eliminates a tax credit, which ATR views as increasing the net tax burden on Americans. But because the DeMint amendment also would permanently eliminate the death tax, ATR said it can now go along with Coburn’s amendment – but only in combination with DeMint’s.

“Our goal has been to repeal the ethanol tax credit, tariffs and the mandate totally --without raising taxes,” ATR said. “The Coburn amendment, combined with the DeMint Amendment, accomplishes this longstanding goal.”

Flex-fuel pumps

Banking on a future that includes ethanol, the U.S. Agriculture Department has set the goal of deploying 10,000 flexible fuel pumps at gas stations around the nation by 2015.

USDA is now offering grants to help eligible applicants purchase and install biofuel pumps that “offer Americans more renewable energy options.”

According to the Energy Department, most gasoline sold in this country is 10 percent ethanol, but flexible fuel vehicles can take a blend that’s 85 percent ethanol and 15 percent gasoline.

The funding for flex-fuel pumps and other energy-producing and energy-saving projects is available through USDA’s Rural Energy for America Program (REAP).