January 14, 2016

Setting the Record Straight


Washington – Former United States Senator and Americans for Energy Security and Innovation (AESI) Chairman Jim Talent sent the following memo to the moderators of tonight’s presidential debate and Republican presidential campaigns setting the record straight on ethanol:

TO: Maria Bartiromo and Neil Cavuto, Fox Business Network
FROM: Former Senator Jim Talent (R-MO); Chairman, Americans for Energy Security and Innovation (AESI)
CC: Ed Brookover – Carson Campaign; Danny Diaz – Bush Campaign; Beth Hansen – Kasich Campaign; Corey Lewandowski – Trump Campaign; Ken McKay – Christie Campaign; Jeff Roe – Cruz Campaign; Terry Sullivan – Rubio Campaign
DATE: January 14, 2016
SUBJECT: Setting the Record Straight on Ethanol

In recent days, the debate over domestic biofuels has taken center stage in the fight for the Republican presidential nomination. Given the increased attention to this issue, it is highly likely that this topic will be one of the issues discussed at Fox Business Network’s upcoming presidential debate.

Most Republican candidates have indicated their strong support for ethanol and the impact that this clean-burning, homegrown, renewable source of energy has had in reducing our dependence on foreign sources of oil. Even Senator Ted Cruz, who has in the past been critical of policies that help support ethanol, has committed to continuing the successful Renewable Fuel Standard through 2022 and called for leveling the playing field by ensuring market access for biofuels.

Over the course of this discussion, significant misinformation has been spread about domestic biofuels. One of the most commonly peddled false attacks is that ethanol is a heavily subsidized source of energy that relies on taxpayer dollars to survive. Nothing could be further from the truth, and the moderators and candidates participating in this week’s debate have a responsibility to stick to the facts when discussing this issue.

Unfortunately, many in the media have mistakenly incorporated these falsehoods in their coverage the presidential campaign. Several examples include:

The fact is that the federal government has not provided any subsidies for ethanol since 2011. The direct ethanol subsidy, VEETC, provided a tax break to oil companies to blend ethanol in their gasoline. Therefore, it is incorrect for members of the media or any presidential candidates to refer to the RFS as a “subsidy” given this reality.

It is, however, true that fossil fuels are heavily subsidized, with oil and gas receiving at least $4 billion in subsidies a year. Oil and gas have received almost 60 percent ($490 billion) of federal spending to support energy since 1950, according to an analysis by Management Information Services for the Nuclear Energy Institute.

Ten years ago, the Renewable Fuel Standard (RFS) was signed into law, requiring that a certain percentage of biofuels became part of the fuel supply. I was one of the prime movers behind its passage when I served in the United States Senate, and I still believe that biofuels are the most feasible replacement for oil as automobile fuel. The RFS encourages private investors to develop the biofuels industry by giving them adequate assurance that their potential market cannot be destroyed by the manipulations of the foreign oil cartel.

The policy has been a success — 10 percent of the nation’s fuel supply now comes from biofuels, which are cost competitive. Additionally, the biofuels industry has created or supported over 850,000 well-paying jobs in small town America and across the country. The policy enjoys broad bipartisan support and has been endorsed by the vast majority of the Republican presidential candidates on the debate stage.

There is no free market when it comes to energy. OPEC, the international oil cartel, can – and does – inhibit a fully competitive marketplace. Right now, for example, the Saudis are using their market power to hold down the price of oil to reduce U.S. production capacity by driving our oil producers from the market. Domestically produced energy – both oil and ethanol – reduce our dependence on foreign oil and create a stronger marketplace both in the U.S. and globally.

Ethanol does not receive subsidies, and the assistance it receives as a result of the Renewable Fuel Standard simply ensures market access. It is incorrect to imply that the ethanol industry is subsidized and it is the responsibility of the moderators on stage at the next debate to properly discuss this important issue.