September 23, 2010 / 6:28 PM / 7 years ago

Ethanol backers cite need for wider U.S. support

* Awaiting EPA decision on E15

* Ethanol backers seek infrastructure investments

* Study forecasts 2020 global shortage of 5 bln gallons

By Carey Gillam

KANSAS CITY, Sept 23 (Reuters) - Ethanol industry leaders said on Thursday federal action is crucial to the industry’s future, and they urged U.S. regulators and lawmakers to move forward with proposed increased blending levels as well as greater investment in broad biofuel infrastructure improvements.

“All eyes are on Washington,” said Tom Buis, chief executive officer of Growth Energy, an industry coalition of ethanol supporters. “We have timely issues. The clock is ticking.”

Buis and Green Plains Renewable Energy (GPRE.O) CEO Todd Becker said in a press conference that while they hoped to have a favorable ruling soon from the Environmental Protection Agency (EPA) on raised blending levels for ethanol into gasoline, the industry needs continued federal support.

Currently, U.S. law provides a 45 cent per gallon tax credit to refiners who blend ethanol with gasoline, and imposes an import tariff as a deterrent to foreign competition.

But the tax credit, worth an estimated $4.7 billion last year, expires on Dec. 31. The tariff will also end at the same time.

With Congress due to recess next week and mid-term congressional races consuming lawmakers attention into November, ethanol backers have diminishing hopes that U.S. lawmakers will restore the industry subsidies.

Buis said the industry could survive without the tax credit and tariff if Congress would provide money for investments in ethanol infrastructure, such as more flex-fuel vehicles and more blender pumps at retailers, as well as higher blends.

“We don’t have a problem producing ethanol,” said Buis. “What we need more than anything is market access.”

    Supporters said they were optimistic that they will get EPA approval soon for an increased blending cap that will allow cars built in 2007 and after to burn regular gasoline blended with ethanol levels of 15 percent. The approved ethanol blend level now is 10 percent.

    The EPA is also evaluating if the higher blend, known as E15, could be used in cars as old as 2001.

    Green Plains’ Becker said research showed the E15 blend would create more than 136,000 new U.S. jobs and reduce greenhouse gas emissions by 8 million tonnes a year, while reducing reliance on foreign oil.

    “We’re fighting against big oil,” Becker said.

    The call for more federal support came as a consulting group issued a report forecasting large ethanol shortages by the next decade. Hart Energy Consulting projected demand growth of an estimated 133 percent could leave the global supply short 5 billion gallons of ethanol, and 3.4 billion gallons of biodiesel by 2020.

    “We actually see the biofuels supply deficit begin to appear around the 2015 time frame,” said Tammy Klein, Hart Energy lead on the global biofuels outlook study.

    Hart said ethanol demand will expand most notably in Brazil and the United States, followed by China and Japan, with Brazil and several Latin American countries best positioned to meet the global ethanol market demand.

    Reporting by Carey Gillam;editing by Sofina Mirza-Reid

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