Senate Drops Cap and Trade Push for Now

Senate Majority Leader Harry Reid announced that the Senate would not include an emissions cap or related climate change provisions in the energy bill currently being crafted. The Senate is attempting to craft a bill that is focused on responses to the Gulf oil spill and energy efficiency measures.

Reid also indicated that there will not be a renewable electricity standard in the package.

Their intent is to pass an energy package before they adjourn for the August recess next week, however given the evolving contents of the package, lack of consensus, and the limited time remaining, it is uncertain if legislation will get passed.

If not, the Senate would likely resume consideration of an energy bill in September. Growth Energy hopes that if energy efficiency measures do get included in the bill, that it will be the avenue for its idea to phase-out ethanol tax credits and redirect those funds to pay for infrastructure development including blender pumps and flex fuel vehicles. continued division among those who want the phase out of the tax credits and those who don't.

With less than 20 legislative days left on the calendar, POET CEO Jeff Broin said Growth Energy and ethanol producers wanted to make sure they positioned themselves to move the industry to compete on a leveling playing field with oil if climate legislation moves yet this fall.

"We could get nothing and want to be at the table if something moves," he added. "We feel without question the time is right," Broin said of transitioning funds towards building market access.

In a hearing last week, Iowa Sen. Chuck Grassley asked Gen. Wesley Clark if Growth Energy would support the existing blenders' tax credit in the absence of Senate action on infrastructure investments in energy legislation.

In response, Clark, the retired four-star U.S. Army general who co-chairs Growth Energy, testified his organization "fully support(s) the extension of current tax policies and the extension of the secondary tariff on foreign ethanol" as part of U.S. comprehensive energy policy.

But, he testified, Growth Energy's "preference would be to extend and redirect some of this assistance into the building out of the infrastructure, because ethanol is so competitive right now that really it's a matter of working the demand side so that consumers can buy it – as much as working the demand side.

"If we can't get these issues addressed in the energy legislation," Clark said, "we certainly support the straight extension (of the blenders' tax credit) for five years at the current rate."

The U.S. House Ways and Means Committee is reportedly considering a one-year extension of and a 20% reduction in the 45-cent-per-gallon ethanol-blender tax credit that is due to expire at year's end.

House Agriculture Committee Chairman Collin Peterson warned that the five-year extension doesn't look likely, and even a shorter-term extension may not get passed before the current law expires.