David Shepardson/ Detroit News Washington Bureau
Washington— Major automakers said today they oppose a bill that would require nearly all vehicles to be capable of running on mostly biofuels by the 2017 model year.The letter came as the Senate beat back an effort to end tax subsidies for ethanol and to lift a tariff to keep out most Brazilian-made ethanol.
The Alliance of Automobile Manufacturers — the trade group representing Detroit's Big Three automakers, Toyota Motors Corp. and eight others, joined a coalition of groups in opposing the "Open Fuel Standard Act of 2011," which would effectively mandate that 95 percent of gasoline-powered light-duty vehicles be capable of running on gasoline, 85 percent ethanol (E85) and 85 percent methanol, or any combination of the three fuels beginning in the model year 2017.
It was also signed by the Association of Global Automakers — group representing many major foreign automakers, including Nissan Motor Co., Honda Motor Co. and Hyundai Motor Co.
Automakers noted there are currently more than 8 million flex-fuel vehicles on U.S. roads — that can run on either E85 or gasoline — yet on average they use less than a single tankful of E85 per year.
Additionally, virtually no methanol is produced for use as transportation fuel in the United States today.
But ethanol advocates support the bill.
American Coalition for Ethanol Executive Vice President Brian Jennings said the bill "provides consumers with meaningful fuel choices, including American-made ethanol."
He said that high gas prices made the bill critical.
"With gas prices hovering at four dollars a gallon, and with oil companies unapologetic about massive profits, and refusing to even consider changes to their favored tax status, it is time for us to create real competition in the fuel marketplace, and this legislation does just that," Jennings said.
But automakers and other groups questioned the bill.
"At a time when many policy makers are questioning the costs of ethanol to taxpayers, the environment and the food supply, effectively imposing a tax on consumers for a car that can run on ethanol and methanol - regardless of consumer demand and fuel availability - makes no sense," said the letter to member of Congress signed by the American International Automobile Dealers Association, American Petroleum Institute, Engine Manufacturers Association, Motor & Equipment Manufacturers Association, National Association of Manufacturers and U.S. Chamber of Commerce, among other groups.
The letter warned the mandate would cost consumers more than a billion dollars annually "to buy vehicles for which a limited supply of fuel would be available. The mandate will also lead to unintended consequences on vehicle manufacturers, the supply chain and emerging technologies."
Separately, the Senate rejected an amendment by Sen. Tom Coburn, R-Okla., that would have ended a $0.45 per gallon tax credit for ethanol blended with gasoline. It is cosponsored by Sen. Dianne Feinstein, D-Calif. The vote was 40-59. The Senate may revisit the issue next week.
The tax credit will cost taxpayers $31 billion through 2015. It is estimated to have cost taxpayers about $5.6 billion last year.
A coalition of groups — including many environmental groups, livestock groups and processed food producers — strongly oppose the tax credit.
"Continuing to subsidize oil companies to blend ethanol — which they are already required to do by the Renewable Fuels Standard - is wasteful and unnecessary. This amendment will save U.S. taxpayers several billion dollars this year and have virtually no impact on ethanol production, jobs or prices," the letter signed by Greenpeace USA, the Grocery Manufacturers Association, National Restaurant Association and Friends of the Earth.
Small producers of ethanol receive another $0.10 per gallon of ethanol they produce on their first 15 million gallons
Coburn's amendment would also end a 54-cent tariff on imported ethanol that's aimed at keeping mostly cheaper Brazilian-made ethanol out of the United States.
Ethanol advocates have lost some battles on Capitol Hill in recent months.
In a Detroit News interview earlier this month, General Motors CEO Dan Akerson criticized ethanol, saying he thought it is "going to die a slow death."
dshepardson@detnews.com
(202) 662-8735
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