With federal subsidies for ethanol, wind energy and other alternative energies targeted for possible cuts, many in Kansas’ Congressional delegation say they won’t defend them.
Most want to reduce the subsidies, while at least one wants to eliminate them altogether.
Observers say this marks a change for a state whose members of Congress have long worked to support farmers and industry through government subsidies.
These subsidies directly benefit thousands of the state’s farmers either through higher crop prices or through the possibility that a wind farm will be built on their land.
State government considers alternative energy a key growth industry for the future. Gov. Sam Brownback, a conservative Republican, supports ethanol and wind power as a way to boost the state’s economy – largely the same stances as the previous Democratic administrations.
Congress might also be turning away from earlier efforts to reduce dependence on foreign oil.
“The issue of alternative energy is not in a vacuum,” said Bob Beatty, a professor at Washburn University. “It’s tied to foreign policy and can we cut our need for foreign oil through new technologies.”
But since the 2010 election, security and job programs have taken a backseat to budget cutting on many agendas.
“Winds have shifted; they’re looking for places to cut,” said Ken McCauley, a farmer in Doniphan and Brown counties who sits on the Kansas Corn Growers Association board.
He noted that most of the Kansas delegation, like a lot of politicians from other farm states, are interested in figuring out a way to keep something. And, he said, so are farmers.
“We feel we are able to cut some things in agriculture, but we’re really only one season away from needing some support again,” he said.
And, he added, the pain should be shared.
“There is a lot of oil subsidies and oil money, so we don’t think they should just cut one side of this.”
Sen. Pat Roberts voted twice this year against bills to block ethanol subsidies.
Roberts said the ethanol industry and Congress understand that the tax credits won’t be extended after they expire in December. He backs the industry’s proposal to give up its main tax subsidy: the 45-cent-per-gallon of ethanol credit called the Volumetric Ethanol Excise Tax Credit. The industry wants to use some of that money for deficit reduction and some to encourage retailers to install pumps that use higher levels of ethanol.
Giving the ethanol industry direct access to consumers independent of the oil companies is key to their survival, Roberts said.
On wind, he said he opposes a measure called the Renewable Energy Standard that requires utilities all over the country to use a certain percentage of wind-generated electricity, although he has supported other wind tax credits.
Renewing the production tax credit for wind farms in 2012 will be difficult, he said.
“We’ll see,” he said in an e-mail.
Roberts said he is generally not in favor of cutting tax incentives for traditional oil and gas drilling. He said that, just as with ethanol and wind, he thinks it makes sense to use the tax code to boost the energy supply.
Sen. Jerry Moran echoed Roberts’ position that the subsidy should be changed but not eliminated – he, too, twice voted against bills to block ethanol subsidies.
He has co-sponsored a bill that echoes the industry’s proposal: tax credits and grants to encourage retailers to install pumps that use higher levels of ethanol. The industry says that, given the choice, drivers will opt to pump more ethanol into their cars because, they say, it is cheaper than gasoline.
He was a littler more vague about wind energy, saying that Congress must phase out the production tax credit responsibly, without shocking the existing industry.
Moran said he is open to looking at certain oil and gas tax provisions but only as part of an overall tax reform that cuts other subsidies and lowers rates.
Rep. Mike Pompeo, the representative for the Fourth District, which includes the Wichita area, takes a clear anti-subsidy position for alternative energy. He sits on the House Energy and Commerce Committee and is part of a coalition of Republican representatives called the House Energy Action Team.
He said the market should make all decisions about energy. He said he has nothing against ethanol or wind or other sources, but he’s not willing to use the tax code to subsidize them. Instead, he said he wants to remove federal barriers, such as the Environmental Protection Agency’s cap on ethanol in automobile fuel.
“I’m happy to approve E100 (100 percent ethanol) or E85 or whatever consumers want to put in their cars by having the federal government take away all those barriers from wholesale and retail opportunities,” he said.
He largely rejected cutting existing tax breaks for traditional oil and gas drilling. He contends those tax breaks are essentially the same tax breaks all businesses enjoy, just applied to oil and gas production.
“If you are talking about the provisions in the Internal Revenue code that applied to many industries,” Pompeo said, “I wouldn’t classify that as a subsidy. ”
Rep. Tim Huelskamp, who represents the First District – western and much of central Kansas – has a reputation as a staunch conservative, but he also has an enormous farm constituency.
He said in an e-mailed response that the government shouldn’t be in the business of picking winners and losers, distorting the market for energy.
He said energy subsidies likely will go away, but eventually rather than immediately.
“We need to make sure such phase-outs are strategic and as seamless as possible,” he said.
Rep. Lynn Jenkins, who represents the Second District, which includes most of eastern Kansas from Manhattan to Pittsburg, also is a member of the House Energy Action Team, which was created this spring to push Republican energy policies.
In an e-mail, she said a responsible long-term energy policy must consider sustainability, national security and jobs.
Rep. Kevin Yoder, who represents the Third District – suburban Kansas City and part of Lawrence – said in an e-mail that he backs a market-based approach to energy that creates jobs, ends dependence on foreign oil and keeps America competitive, and that Kansas is uniquely situated to play a leading role in this.
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