SUNUNU ISSUES REMARKS ON ETHANOL AMENDMENT TO THE ENERGY BILL

WASHINGTON, DC – United States Senator John Sununu (R-NH) gave the following remarks on the floor of the United States Senate on May 9, 2003, regarding a proposed ethanol-related amendment to the Energy Bill:

“Mr. President, this week we began debate on the energy bill, a vast and complex piece of legislation, arguably an important piece of legislation, that deals with an issue that touches every American in some way, shape, or form. Access to stable, reliable sources of energy is central to the strength of our economy.

“I have real concern, as we take up this bill, that it not simply be a piece of legislation where we look to include every element, every fragment, every idea ever considered that might, in fact, alter energy markets around the country or around the world. I am concerned that in our effort to craft an energy policy, we simply look for ways to aid or to assist particular businesses, industries, or areas of research.

“This bill currently includes very substantial loan guarantees to successful private corporations around the country; it includes research subsidies for investment in fossil fuel research, oil and gas development; and it includes a very complex and sizable tax package, some of which I think is questionable as to whether it will achieve the kind of fairness, equity, and efficiency in the energy markets we would like to see.

“This morning, however, I wish to speak about one particular provision that is before us in the form of an amendment, an amendment that has been offered to dramatically increase the size and the scope of the Federal ethanol program. It not only expands the size of the ethanol program in America, but it effectively makes it mandatory, taking us from a 2-billion-gallon-a-year ethanol program to some 5 billion gallons a year over the next 8 years.

“I can understand there are a lot of supporters of the ethanol program in this Chamber. A lot of the Members of the Senate have farm economies back home and see income or productivity that comes from this Federal program. But I do not think it is right to provide a subsidy at the taxpayer’s expense for a program that cannot stand on its own feet.

“Among the concerns I have with the current program, first and foremost, is the supposed environmental benefits of ethanol. It is true, as an oxygenate, ethanol reduces the volatile compounds that are emitted into the atmosphere from fuel, from gasoline, but it does not do anything substantively to reduce the level of NOx in the atmosphere that contributes to the ozone problem, to the smog problems. I think as this debate goes forward, we will hear a lot of discussions from some of those Senators who represent urban parts of the country that have tough, real problems with ozone and smog. They have grave concerns about this program that provides a huge taxpayer subsidy without dealing with those important environmental issues.

“From an energy perspective, we will hear a lot of discussion about the amount of energy that will be produced from this renewable resource because it is corn based, but from most proponents we will not hear a lot of discussion about the energy it takes to produce this ethanol in the first place. It takes nearly a gallon of fuel to produce a gallon of fuel. So at the end of the day, you may have ethanol that you can blend in gasoline and put in your car, but you have used quite a bit of energy to get there in the process.

“From an energy perspective, energy efficiency, energy independence, even then, in the best case, the benefits are marginal, if they exist at all.

“Finally, of real concern is the subsidy itself. There is an enormous taxpayer subsidy that is used to provide viability to this industry. As everyone goes to the pump, they pay 18.3 cents in tax for every gallon of gas they put in their car. If that gallon is blended with 10-percent ethanol, it is exempt from 5.3 cents of that gas tax. That represents a 53-cent-a-gallon subsidy for the ethanol itself – 53 cents. At the end of the day, that means a billion dollars less going into our highway trust fund.

“We are going to deal with the highway reauthorization bill later this year, and there are a lot of supporters of highways who are pushing for more money. I think we need to take a long, hard look at what the right amount to spend on infrastructure is in this country. But we certainly do not need to be subsidizing a questionable effort such as this ethanol program in a way that takes money out of our highway trust fund, a billion dollars a year today, and with this expansion that will go to $2 billion a year by 2012. That means $2 billion a year lost from the highway trust fund.

“Now, for years the argument that was made by House Members, Senators or legislators all across the country to support this subsidy, was that we need the subsidy in order to encourage people to use the ethanol fuel. That is why we have the subsidy. We need it if we are going to get people to use this fuel.

“That subsidy has not been very successful in getting people to use that much of the fuel. So now they are going to go to a mandate.

“Well, I can understand why one would want to force a mandate on the American people if they are determined to force them to purchase the fuel. But if it is going to be mandated, why is the subsidy still needed?

“That is one of the central issues we are going to have to deal with in this debate, and we need to at least put people on the record as to why they think we still need to subsidize this industry, in many ways a very concentrated industry.

“There are about half a dozen very large, successful businesses that are responsible for about 70 percent of the ethanol produced in this country. Why do we ask taxpayers to continue to subsidize this industry when we have a mandate in place that forces them to buy the product? That makes no sense. I do not think it is fair in the first place to force them to buy the product, but I certainly do not think it is fair to force them to subsidize the product at the same time. It has got to be one or the other. If a subsidy is to be provided because it is the only way to get people to purchase the product, at least that is a rational argument – not one I support but it is a rational argument. If the only way to get them to buy the product is to mandate it, to force them to buy it, that is also a rational argument, although not one that I support. But it cannot be both ways. A subsidy cannot be forced on the American people, the money cannot be diverted from the trust fund and have the mandate at the same time.

“If the mandate is going to be that 5 billion gallons of this fuel has to be purchased every year, the least we can do is then treat it the same way we treat any other fuel in this country with an appropriate, fair, and well-thought-out excise tax. The American people deserve consistency and fairness in this matter.

“I think it is a shame that we have a program such as this ethanol program that really has not proven its worth, that unfortunately channels huge taxpayer subsidy to a small number of very successful, profitable companies around the country. I would rather see a bill that did not have this taxpayer subsidy in it in the first place, but if we are going to take up this issue, let us at least be fair and equitable in the way we deal with it.

“We need a good, thoughtful energy policy in the United States. This kind of subsidy ought not to be part of that program and that policy.

“I have a number of other concerns with the legislation before us, but I hope when the time comes we can work to craft an amendment that would right this wrong, that would ensure that ethanol is treated the same as any other fuel that we have in the country, and that would improve the quality of this legislation before it passes the Senate, if it is able to do so.”

# # #