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Published May 05, 2011, 08:28 AM

Klobuchar, Franken back end to ethanol subsidies

MINNEAPOLIS (AP) — Minnesota Democrats Amy Klobuchar and Al Franken are among a bipartisan group of U.S. senators backing a bill to eventually end tax subsidies for ethanol producers.

MINNEAPOLIS (AP) — Minnesota Democrats Amy Klobuchar and Al Franken are among a bipartisan group of U.S. senators backing a bill to eventually end tax subsidies for ethanol producers.

The senators introduced a bill Wednesday that weans ethanol producers off tax subsidies by 2016. The Domestic Energy Promotion Act of 2011 is co-sponsored by Iowa Republican Sen. Charles Grassley and North Dakota Democratic Sen. Kent Conrad.

One of the subsidies that would be phased out provides oil companies an incentive to blend ethanol with gasoline and ensure market access. Other ethanol tax breaks slated for reduction include the alternative fuel refueling property credit, the cellulosic producers' tax credit and the special depreciation allowance for cellulosic biofuel plant property.

Savings from reducing and ending the subsidies would be applied to the budget deficit for now. Klobuchar wants to eventually use the savings for the next generation of biofuels and has introduced a bill to that effect.

"The whole idea is that we know the country faces severe budget problems now," Klobuchar said. "But, I don't want to pull the rug out from under biofuels."

Another supporter of the bill, Democrat Tom Harkin of Iowa, has also introduced a separate bill that calls for reinvesting the ethanol subsidies in other forms of renewable energy.

Franken supports federal incentives for installing ethanol blender pumps at gas stations and for production of vehicles with flex-fuel engines.

"What's most critical for the ethanol industry to keep growing is increased market access," Franken said. "Minnesota farmers and ethanol producers agree that ramping down the ethanol tax credit and directing some of these funds toward ... infrastructure is the way to expand market access for ethanol."

The Star Tribune says (http://bit.ly/jNL6fD ) says the bill has the backing of a coalition of ethanol industry groups.

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