News Conference Statement of Senator Grassley

News Conference Statement of U.S. Sen. Chuck Grassley, of Iowa
Chairman, Senate Committee on Finance

Tuesday, June 3, 2003

I'm pleased to join in heralding this report underscoring the enormous benefits consumers will enjoy with the passage of the Renewable Fuel Standard, which I have cosponsored and which is currently being debated on the Senate floor. This new report, which shows the consumers will save between 6 and 7 cents per gallon by using ethanol blended fuels and a total of $3.3 billion per year, puts to rest many of the myths about ethanol usage. And the new tax provisions that I have drafted to promote ethanol use, will now protect revenues for our transportation systems.

It's time to put the brakes on our dependence on foreign oil and accelerate efforts to boost supply and demand for domestic energy. Since the energy crisis in the 1970s, the federal government has used financial incentives, regulatory requirements and other programs to expand alternative sources of homegrown energy. As a farm-state lawmaker, I understand renewable energy not only helps curb pollution and boost U.S. energy independence, it helps create jobs in Iowa. Our agricultural bounty not only feeds the world, it can help supply energy to America.

It makes sense to pursue energy production in the Midwest, far from the instability and hostility rooted in the Middle East. Volatility in the energy markets can preview an economic domino effect, including price increases on goods and services. This affects consumer confidence, purchasing power and investment decisions.

Since the 1950s, the U.S. has increased its reliance on foreign petroleum. According to the Energy Information Administration, net imports of petroleum products in 1973 made up 35 percent of U.S. consumption. By 2001, it had grown to 54 percent and is projected to increase to 64 percent by 2020.

This week and next, the Senate needs to finish work on a comprehensive energy package. We started work last year. This bill will include a Renewable Fuels Standard to phase in the use of 5 billion gallons of renewable fuel. It would triple the size of the ethanol market.

The energy bill also will include my bipartisan Energy Tax Incentives Act of 2003. This $15.5 billion measure builds on my efforts to advance development of renewable fuels and alternative energy. The package includes: an extension of the wind-energy tax credit; an extension of the biomass tax credit; an improved ethanol tax credit; an excise tax rate reduction for biodiesel fuel mixtures; a modification to allow ethanol cooperatives to benefit from the small producers credit; a production tax credit for electricity generated from livestock waste; and, a tax credit for the manufacture and use of super energy-efficient home appliances.

My tax bill also reshapes the ethanol excise tax exemption so that ethanol-blended fuels make the same contribution to the highway trust fund as regular gasoline. To keep in place the tax advantage that helps ethanol compete with and displace imported petroleum, my bill would shift the tax incentive from a tax exemption to a tax credit. Just like renewable fuels, keeping our roads and bridges safe for travel and commerce lies in the national interest. This technical change in the federal tax code would ensure renewable fuels contribute their equal share to road maintenance and new highway construction and still receive favorable tax incentives.

Policymakers need to look ahead and envision America's energy needs in the 21st century. While it is critical to encourage conservation, efficiency and production of domestic, traditional energy sources, we can't overlook the potential windfall for America that alternative, renewable energy holds. It's a matter of national, economic and energy security.