One of the candidates who wants to win the Democratic Party’s nomination for the U.S. Senate says it’s time to end federal subsidies for ethanol and biodiesel, while his two competitors say the subsidies are needed to develop alternative sources of fuel.   Candidate Tom Fiegen says the federal tax incenties for ethanol and biodiesel are “baloney.”

“We’re subsidizing our ethanol plants to the tune of 45-cents a gallon and yet they’re still failing in bankruptcy.  Vera Sun’s plants are now owned by international firms,” Fiegen says.  “As the junior senator from Iowa, one of the things I’ll say to the other senators in terms of deficit reduction: ‘I’m willing to step away from that.  I’m willing to reduce that to prove to you that I’m serious about deficit reduction.’” 

Candidate Roxanne Conlin says she doesn’t agree with Fiegen’s call for ending ethanol and biodiesel tax breaks. “One point that he made is that they need to become more efficient.  I agree and they way they become more efficient is with subsidies,” Conlin says.  “How can we be subsidizing the richest industries in the world with our tax dollars and not subsidizing efforts to make us energy independent?” 

The third candidate in the race, Bob Krause, says Vera Sun didn’t fail, as Fiegen claimed, because of inefficiencies, but because the company was caught in the Wall Street melt-down.

“Vera Sun got caught in a hedge operation where speculators were getting out of the stock market and they were moving into commodities.  They wound up nearly half a billion dollars on the wrong side of a hedge and it forced them into bankruptcy,” Krause says. “I don’t think that has a thing to do with our national policies towards ethanol.” 

The U.S. House voted earier today to renew the biodiesel tax credit which expired January 1st.  Biodiesel is a soy-based fuel.  Fiegen says it’s time to “wean” that industry off those federal tax breaks. “Biodiesel — the subsidy’s $1.50 a gallon, so if we’ve got $3 diesel fuel and you’ve got biodiesel, half that is paid by the federal government,” Fiegen says. “That is way too much money.” 

While Fiegen would phase out the tax credit for biodiesel, Fiegen is ready to end the ethanol tax break altogether. ”I was at the on-set of the ethanol industry during the Carter Administration.  I worked in it.  I know how it works,” Fiegen says. “But they have sold the American taxpayers a bill of (goods).” 

Krause says it’s about choices and he chooses the ethanol subsidy over the other alternatives. ”It’s an infant industry and there are some substantial subsidies but if we don’t push in that direction, what else are we going to have? Are going to go out and deep drill some more and give those subsidies, or subsize with troops in Iraq. Are we going to do that?” Krause asks.  “That’s a subsidy, too.”

Conlin would vote to end subsidies for “big oil” companies, and shift that money to “clean, renewable” energy” sources like ethanol and biodiesel.  “We need to be energy independent for jobs, for our environment and for our national security,” Conlin says. “We’re sending all kinds of money to people who hate us — $100 million a day to Iran.” 

In the past year the U.S. House has twice voted to extend the tax break for biodiesel, but the proposal has been hung up in the U.S. Senate.  Conlin says it’s a failure of Republican Senator Chuck Grassley, who she hopes to run against in the fall. ”I can’t understand why they went home in December and left that on the table and Senator Grassley was there,” Conlin says.  “…And so we have disrupted our own industry tremendously.  How could people plan?  How could people move forward? People have been laid off because congress is sitting on its hands and not doing what needs to be done in terms of an industry that’s pretty much a baby industry — just starting out — and  needs support.” 

Grassley tried this past week to get the Senate to pass an amendment which would renew the biodiesel tax credit, but was unsuccessful. “I’ll keep trying until this tax credit is reinstated,” Grassley said in a prepared statement.

Krause says the debate over ethanol and biodiesel subsidies has been changed by the oil spill in the Gulf of Mexico. ”It’s terrible to say for the people that are living down there, but for Iowans and Iowa farmers it’s a shot-in-the-arm.  It says, ‘Hey, we’ve got to get rid of this oil. We’ve got to look at what we can do to be self-sustaining in wind power.  We’ve got to look at what we can do to be self-sustaining in our agricultural productions,’” Krause says.  “And I think we have the window and we can drive a soy-diesel-powered truck right through that door.” 

The three candidates made their comments during taping of an hour-long Iowa Public Television program.  “Iowa Press” will air tonight at 7:30 and will be rebroadcast Saturday morning on the digital I.P.T.V. “World” channel.  A final rebroadcast is scheduled for midday Sunday.