[Congressional Record Volume 143, Number 64 (Thursday, May 15, 1997)]
[Senate]
[Pages S4579-S4580]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 ETHANOL TAX POLICY; PRESENT AND FUTURE

  Mr. DASCHLE. Mr. President, I want to take this opportunity to 
clarify a statement I made last week with respect to the upcoming 
battle to protect and extend the ethanol tax incentives.
  I want to make clear that I do not think there is any room to 
compromise on the existing tax incentives prior to the year 2000. Many 
ethanol plants have made investments based on the expectation that 
those incentives will be available in their current form until 2000. 
Congress should not change those incentives or jeopardize in any way 
those existing plant investments.
  Having said that, I appreciate that some will argue that the ethanol 
incentives should be allowed to expire in 2000. My response to them is 
that the Nation will continue to benefit in some very significant ways 
in the 21st century from new entrants into the industry and expanded 
use of clean burning ethanol and its ether. By encouraging billions of 
dollars of investment in commercial scale plants, the tax credits have 
promoted major technology advances and many more improvements are on 
the brink of commercialization. These benefits justify some level of 
continuing support. On the other hand, to my fellow industry 
supporters, I suggest that we need to recognize that the tax incentives 
are nearly 20 years old and should be reviewed for possible 
constructive changes.
  In extending the incentives beyond 2000, we should be willing to take 
a critical look at the incentives to determine if they should be 
modified to better achieve the objectives of the ethanol industry and 
the country. During this debate, my first priority will be to ensure 
the continued growth and development of small ethanol plants that have 
been responsible for diversification of the ethanol industry and rural 
economic development. Those plants represent the future for economic 
growth in rural America and will help keep the benefits of value-added 
agricultural processing in the rural communities from which those 
products originate.
  Ethanol and its ether, ETBE, have never played as large a role as I 
believe they can and should play in cleaning up America's air or 
reducing its dependence on foreign energy through the reformulated 
gasoline program. We

[[Page S4580]]

need to explore how the tax incentives can be restructured to make ETBE 
more price-competitive with MTBE, so that ethanol can play a greater 
role in the reformulated gasoline market.
  Finally, Congress should be willing to provide sufficient 
encouragement to the rest of the ethanol industry to allow it to 
continue converting corn and other grains into high grade liquid fuel 
and proteins, generating much needed rural employment and investment, 
and improving air quality. This can be done while still limiting our 
tax expenditures and contributing to a balanced Federal budget.
  Since its inception in the late 1970's, the domestic ethanol industry 
has helped reduce our dependence on foreign oil, create rural jobs and 
greater farm income, and provide consumers with a choice of oxygenated 
fuels. That is a track record that makes sense for America, and that 
should neither be discounted nor abandoned. It is my hope that in the 
near future a constructive dialog can begin in Congress on how to 
extend the tax incentives in a fiscally prudent and economically 
effective manner beyond the year 2000. I am committed to that goal.

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