USDA's Vilsack criticizes Senate panel biofuels vote
* Senate measures were part of defense spending bill
* Provisions still need approval from full Senate
* Vilsack: "beyond me" why senators don't support biofuels
By Emily Stephenson
May 31 (Reuters) - An Obama administration official on Thursday criticized a U.S. Senate panel for voting to block the Pentagon from buying more costly alternative fuels, saying a military biofuels program announced last year could help revitalize rural America.
The Senate Armed Services Committee voted last week to block the Pentagon from using 2013 funding to buy alternative fuels that are more expensive than conventional fuels. Another amendment, also approved as part of a $631.4 billion defense bill, would prevent the Defense Department from building a biofuels refining facility unless required by law.
The provisions still need approval from the full Senate and the defense bill would have to be reconciled with the version approved by the House of Representatives.
U.S. Agriculture Secretary Tom Vilsack said senators on the panel "may not fully understand" a partnership between the Agriculture Department, the Energy Department and the U.S. Navy aimed at encouraging the development of biofuels.
The Navy wants to use next-generation fuels made from wood chips, inedible parts of plants and other sources to reduce its use of fossil fuels imported from other countries.
"It's beyond me why we wouldn't help this industry that will create higher farm income, more jobs in rural America, reduce the costs for consumers, satisfy commercial airlines ... and make our military less reliant on a foreign supply of energy," Vilsack said during a conference call with reporters.
"It is just astounding that people don't understand that."
Vilsack made the comments during a conference call with Adam Monroe, president of biotechnology company Novozymes North America, to urge Congress to extend several tax credits for clean-energy companies.
Boosting renewable fuels and creating "green jobs" has been a priority for President Barack Obama, a Democrat, and is a talking point for his campaign for re-election in November.
Monroe said Novozymes took advantage of government support to open a new plant in Nebraska that will create 100 new jobs.
Critics have argued that the next generation of biofuels is not yet commercially feasible, that using corn to make ethanol drives up corn prices, and that the government is unfairly picking winners and losers in energy markets. Republicans have made this criticism part of their election-year attacks on Obama.
Vilsack told reporters the partnership with the Navy is crucial to ramp up production of alternative fuels and bring the cost down to a level more attractive to other consumers.
The $510 million program calls for companies to be invited to bid on biofuel projects for which the government would match the investment. The USDA and Energy Department would oversee parts of the development, and the Navy would buy the fuels to power fighter planes and other military craft.
"Government has a role to work in partnership with the private sector to provide incentives, to provide the right tax policy, to provide assistance to get these industries up and going," Vilsack said.
The Senate Armed Forces Committee voted on the biofuels provisions of the defense bill in a closed-door session.
"The Senate has taken a significant step to rein in the radical green agenda that President Obama is attempting to impose on our military," Senator James Inhofe, a Republican, said in a statement released after the vote.
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