Analysis: Ethanol sector braces for looming subsidy cuts

Reuters
By Carey Gillam and Charles Abbott
KANSAS CITY/WASHINGTON Fri Dec 3, 2010 2:40pm EST

KANSAS CITY/WASHINGTON (Reuters) - Mark Marquis had planned to double the size of his Illinois ethanol plant in 2011, and was considering expanding a Wisconsin facility his family-run firm bought into last July.

But those plans are now on hold, as Marquis and other ethanol producers brace for the possible end of $6 billion a year in U.S. subsidies for the alternative energy source.

"In certain scenarios, it could be very devastating," said Marquis, whose Marquis Energy operates a 110 million gallon ethanol plant in Hennepin, Illinois. "It is difficult to know what will happen."

The 45-cent a gallon tax credit for fuel blenders and 54-cent a gallon tariff on imports that subsidize the U.S. ethanol industry are due to expire on December 31. With Washington focused on deficit reduction, many in the industry call renewal an uphill battle.

Read more