ETHANOL:

Rival trade groups campaigning to woo senators, clobber each other

This story was updated at 4:51 p.m. EDT.

Two rival trade groups seeking congressional help for the ethanol industry launched advertising yesterday to promote themselves and bash one another.

Growth Energy Inc., which represents corn and other domestic ethanol producers, seeks to maintain supremacy at home, while the Brazilian Sugarcane Industry Association, or UNICA, wants to tear down corn ethanol's benefits in order to grab a larger share of the U.S. market.

The campaigns' same-day launch was coincidental, the groups said. The lobbying efforts likely are eyeing the same legislative target, one analyst said.

"Senator Kerry is now saying that they're going to have an energy bill in the next three weeks," said Ken Green, resident scholar at the American Enterprise Institute think tank, referring to the climate bill that Kerry is crafting along with Sen. Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.). Ethanol groups, Green said, "want to turn up the heat on what's in this new energy bill and how it treats ethanol."

The two groups are working on opposing tracks. Growth Energy wants an extension of tax credits as well as to maintain an import tariff against ethanol produced in other countries and to promote the construction of ethanol pipelines and blender pumps. UNICA seeks elimination of the import tariff and of domestic subsidies for biofuels.

Domestic ethanol producers are facing the expiration at the end of this year of the Volumetric Ethanol Excise Tax Credit, also known as VEETC and the blender's tax credit. The federal benefit that started in 2005 gives a tax credit of 51 cents for every gallon of pure ethanol blended into gasoline. Reps. Earl Pomeroy (D-N.D.) and John Shimkus (R-Ill.) have introduced legislation with a five-year extension of the benefit.

The tax credit could be worth plenty in the future. The 2007 energy bill created a requirement that the United States use 36 billion gallons a year of biofuels by 2022. That created a demand for ethanol, Green said, because it is the most readily available biofuel. Cellulosic biofuel crops including switch grass, wood chips and the nonfood parts of corn have obstacles including higher production costs, he said.

Ethanol can displace up to 10 percent of gasoline but faces questions about how much it helps combat climate change.

Kerry, Graham and Lieberman have not tipped their positions on biofuels or if it even will be a factor in their bill. And at least one of the ad campaigns appears to be looking further out as well as at what could happen now.

The $2.5 million campaign from corn ethanol features six spots that will run for six months on the news networks of Fox, MSNBC, CNN and HLN. Half of the ads will run in prime time, and the rest will appear on shows including "Larry King Live," "Morning Joe," and "Fox and Friends," picked because they "attract influential viewers, including political officeholders and the press," according to a statement from Growth Energy.

"Ethanol is America's fuel: It's made here in the U.S., it creates U.S. jobs, and it contributes to America's national and economic security," said retired Gen. Wesley Clark, Growth Energy's co-chairman. "This ad campaign is designed to reach beyond the Beltway to communicate those facts about ethanol to the broader American public -- people who until now have only heard one side of the story."

The sugar-cane ads will appear in inside-the-Beltway newspapers like Roll Call, National Journal, CQ and Politico periodically throughout April. Nothing is set beyond that right now. In addition, there are sponsorships on public radio and a new Web site: sweeteralternative.com, which pushes the energy security, economic and environmental benefits of sugar-cane ethanol.

UNICA's campaign costs "less than one-tenth" of Growth Energy's effort, said James Hill, a UNICA spokesman. He described that trade group as "throwing millions of dollars behind a rival advertising campaign." The largest component of UNICA's push is the Web site, Hill said.

The price of gasoline could be cut by more than $1 per fill-up with sugar-cane ethanol, the group said. It pointed to the 54-cents-per-gallon tariff than ethanol importers must pay. Additionally, it said, the average price of fuel with sugar-cane ethanol runs 50 cents less per gallon than that using corn ethanol.

"We hope the Sweeter Alternative campaign will help Americans understand how sugar-cane ethanol is a clean and affordable renewable fuel that could help them save money at the pump, cut U.S. dependence on Middle East oil and improve the environment," said Joel Velasco, UNICA's chief representative in North America, in a statement.

Trading barbs

Some of the ethanol trade groups' ads target each other indirectly, with the sugar-cane ads arguing, "Americans cannot benefit from this clean, less expensive alternative if Congress continues to maintain trade barriers against imported ethanol." One fuel ad offers "ethanol has not shipped a single job overseas."

Other spots in the Growth Energy's "America's Fuel" campaign appear to address oil, saying that "ethanol has contributed $0 to the governments of Iran, Saudi Arabia and Venezuela," and "no beaches have been closed due to ethanol spills." The ads are "designed to present ethanol as the alternative to foreign oil," Growth Energy spokesman Chris Thorne said.

In its press release announcing the ads, the sugar-cane lobby criticized benefits given to corn ethanol.

"Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs," Velasco said in the UNICA statement. "The same principle holds true for the renewable fuels market where competition will create a race to the future and generate better alternatives for consumers."

On its sweeteralternative.com Web site, UNICA offers a more specific comparison. Sugar-cane ethanol is less expensive than corn ethanol, the Web site says, because "it simply takes less energy to manufacture ethanol directly from sugar cane (a one-step process) than from starch in corn (a two-step process). Starch first must be broken down into simple sugars, before it can be used to produce ethanol. Sugar cane already contains the necessary sugars."

Growth Energy said the two ethanol sources are not equivalent.

"The U.S. operates with much higher labor and environmental standards than does Brazil," Growth Energy's Thorne said. Brazil's ethanol market has enjoyed subsidies in the field, at the sugar mill, at the fuel pump and has been helped by subsidies given to consumers for flex-fuel cars, he said.

If the import tariff were removed, Thorne said, sugar-cane ethanol could get the blender's tax credit, giving it subsidies in both Brazil and the United States.

"Finally, if we are already addicted to foreign oil, what sense does it make to become addicted to foreign ethanol," Thorne said. "Increasing our dependence on Brazilian ethanol would not create any U.S. jobs and would allow yet another overseas country to have control over our economy in the shape of price spikes. They'll control production, and therefore they'll control price, just like OPEC."

Some sugar cane is grown domestically, but the larger portion comes from tropical regions. Corn ethanol has the edge in the battle from a lobbying perspective, Green said.

"The sugar people face an uphill row to hoe," Green said. "The corn ethanol lobby is very strong. I don't think anything can really challenge it for supremacy."

Greenhouse gases at issue

Some argue that ethanol should not gain policy help because the fuel source fails to really cut the carbon emissions blamed for climate change.

"The return for taxpayers and the environmental benefits don't seem to be that good," said Don Carr, spokesman for the Environmental Working Group.

The 2007 energy bill said that biofuels have to cut greenhouse gas emissions 20 percent compared to gasoline. Advanced biofuels like cellulosic and sugar cane must achieve a 50 percent reduction, Carr said in an Environmental Working Group blog post. But the bill also grandfathered in the existing corn ethanol industry "whether it reduces GHG emissions or not," he said in the posting, "in essence exempting ethanol from the renewable fuel standard."

Green agreed, saying that when greenhouse gases from crop production are added in, corn ethanol is not any better for the environment than using gasoline.

Sugar-cane ethanol is easier to grow and make, Green said, but in some cases it is grown after trees that eat carbon are cut down. In addition, Green said, when you add in shipping the product from tropical areas, it too might not have a greenhouse gas emissions benefit versus gasoline.

UNICA said sugar-cane ethanol produces 60 percent less greenhouse gases than gasoline, "better than any other biofuel widely produced today." U.S. EPA confirmed sugar-cane ethanol's superior environmental performance earlier this year by designating it an 'advanced renewable fuel.'"

Growth Energy cited a 2008 study published in Yale's Journal of Industrial Ecology that said "recent improvements in crop production, biorefinery operation, and coproduct utilization in U.S. corn-ethanol systems result in greater GHG emissions reduction, energy efficiency, and ethanol-to-petroleum output/input ratios compared to previous studies." That study said that compared to gasoline, ethanol offers a 48 to 59 percent reduction in greenhouse gas emissions.

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