subsidies

Senate deal would ax $6 billion ethanol tax credit

Three senators reached a deal on Thursday to repeal the $6 billion-per-year ethanol tax credit by the end of July, an agreement that must still be passed by Congress.

The loss of the subsidy could add extra costs for ethanol blenders such as Valero Energy and Marathon Oil, but it is unlikely to reduce demand for corn.

"This agreement is the best chance to repeal the ethanol subsidy, and it's the best chance to achieve real deficit reduction," said Sen. Dianne Feinstein from California, who made the deal with Sens. John Thune from South Dakota and Amy Klobuchar from Minnesota.

Government mandates require increasing amounts of the corn-based fuel until 2015. The ethanol industry uses some 40 percent of the U.S. corn crop to make the alternative motor fuel.

The deal would reduce the federal deficit this year by $1.33 billion and direct $668 million to extend tax breaks for technologies to help alternative motor fuels including biofuels get to market, Feinstein said.

Model for other tax credit cuts? The call on Capitol Hill to reduce tax breaks for ethanol and other industries has increased as President Barack Obama and Republicans in Congress search for ways to break the budget deadlock.

Feinstein won a symbolic vote in the Senate, 73-27, on June 16 to end the payments on July 1.

The path for the deal to become law is still uncertain. It could be attached to a standalone tax bill or become part of a wider measure to raise the federal debt limit. … Read more

Senate vote marks start of end for ethanol subsidies

The Senate voted overwhelmingly today to eliminate billions of dollars in support for the U.S. ethanol industry, sending a strong message that the era of big taxpayer support for biofuels is ending.

The 73-27 vote may ultimately be symbolic since the White House has vowed not to repeal ethanol subsidies fully and the bill the repeal language is attached to is not expected to make it into law. But it underscores the growing desperation to find savings in a budget crisis that is forcing both sides of the aisle to consider sacrificing once-sacred government programs.

"Ending this wasteful handout would ensure taxpayers no longer subsidize the already profitable corn ethanol industry," Democratic Sen. Frank Lautenberg said.

The increasingly hostile attitude toward federal ethanol support has added fuel to a steep fall this week in the price of corn, from which most U.S. ethanol is made.

The Senate vote shows the odds are diminishing that the 45-cent-a-gallon subsidy the government gives refiners and the 54-cent-per-gallon tariff on imported ethanol--both targeted in today's vote--will be extended at current rates beyond their scheduled expiration at the end of this year. … Read more

Agencies: Scrap biofuel support to curb food costs

Governments should scrap policies to support biofuels because they are forcing up global food prices, according to a report by 10 international agencies including the World Bank and World Trade Organization.

The report adds to growing opposition to biofuels targets and subsidies such as those in Europe, Canada, India, and the United States.

"If oil prices are high and a crop's value in the energy market exceeds that in the food market, crops will be diverted to the production of biofuels, which will increase the price of food," said the report.

"Changes in the price of oil can be abrupt and may cause increased food price volatility," said the report.

Prepared at the request of the Group of 20 major economies, the report addressed price volatility in food and agriculture, and its authors also included experts from the World Food Programme, International Monetary Fund, the UN's Food and Agriculture Organization, and the Organization for Economic Cooperation and Development. … Read more

U.S. wind growing again, but business still choppy

The U.S. wind industry is growing again after taking a big step backward last year.

Yet turbine makers and wind farm developers are finding few reasons to celebrate as the clean energy source struggles to secure long-term government support while facing stiff competition from cheap natural gas.

Once the world's top wind market, the United States ceded that mantle to China last year as a weak economy halted its growth and cut new installations to half of the 10,000 megawatts of capacity built in 2009.

Since then, business has picked up, but not for the reasons the industry would like. Energy demand is still tepid due to a gurgling economic recovery, and the low cost of natural gas is keeping power prices low.

Pricing in long-term power sales contracts signed by wind developers has fallen 30 percent in the last two years and will fall further this year, according to IHS Emerging Energy Research.

Currently, the market is being shepherded by developers who are scrambling to put turbines in the ground ahead of a 2013 expiration of lucrative federal tax credits for wind. Beyond that date, the industry's fortunes are hazy. … Read more

Obama 2012 budget provides $8 billion for clean energy

President Barack Obama today proposed boosting funds for clean-energy research and deployment in his 2012 budget by slashing subsidies for fossil fuels such as oil, gas, and coal.

The budget would provide the Department of Energy with $29.5 billion for fiscal year 2012, up 4.2 percent from the proposed 2011 budget, and up 12 percent from the enacted 2010 budget. Some $8 billion would support research in clean energy like wind, solar, and advanced batteries.

"Whomever leads in the global, clean-energy economy will also take the lead in creating high-paying, highly skilled jobs for its people," … Read more

Come on, Google, subsidize me

$529. That's the price of Google's new Nexus One and admittedly a small price to pay for the eternal bliss promised by its backers.

For $179, you can get the same device through T-Mobile, because the wireless carrier expects to charge you $79.99 per month for at least two years. (For those who think AT&T's wireless service couldn't get worse, you're wrong. Try T-Mobile.)

If T-Mobile is willing to subsidize the cost of the Nexus One in return for a services contract, why isn't Google subsidizing the device, given that it'… Read more

Report details AT&T wait to break even on iPhones

With its large subsidies to Apple, AT&T doesn't break even on iPhone accounts with high data-usage until the 17th month of a 24-month contract, according to a new report from Yankee Group.

The report, titled "The Golden Subsidy Egg's Goose is Cooked: Welcome to the Brave New Subsidy-Free World," looks at the downside of subsidies paid to manufacturers by cell phone carriers. The report cites AT&T's iPhone contract with Apple as a prime example.

Subsidies have typically helped mobile carriers offer customers free or low-cost devices in order to lure them … Read more

iPhone upgrade update: I did it, with the help of my wife

A few weeks ago, I was at wit's end. I couldn't upgrade to an iPhone 3GS, and apparently neither could many other people who bought their 2008 3G in the window that AT&T had promised would net "most customers" a 2009 3GS subsidy.

AT&T was never really forthcoming about what, exactly, would trigger being qualified for an update versus not. I gave up, and then had an idea: my wife was eligible for an upgrade to her 2G iPhone, but didn't want to pay $15 more for a 3G data service. In an incredibly generous move, she allowed me to use her upgrade eligibility for an experiment.

We went to the Apple Store at Fifth Avenue in Manhattan, bought an iPhone 3GS, and then headed home. I swapped my SIM out of my 3G and into the 3GS, and synced with my home MacBook. In seconds, it seemed like a fluid swap had occurred.

Then I took my wife's new 3GS SIM and put it in her old iPhone. The iPhone 2G displayed a "plug into iTunes" screen and emergency call display when I restarted, but plugging back into her Vaio brought up an iTunes page that required reauthorization before an AT&T activation. After entering her social digits and billing zip, a funny thing happened: iTunes itself recommended to me that I downgrade my wife's newly-minted 3G data plan back to 2G, to match the phone detected. I agreed, and moments later, her first-gen iPhone was up and running once again. … Read more

Wind power outlook weak in Europe, report says

Rising materials costs, engineering challenges, and installation snags threaten European goals to dramatically expand wind power, according to a report by Cambridge Energy Research Associates.

The European Union aims to get 20 percent of its energy from renewables by 2020. But wind power won't meet a significant portion of that unless more government subsidies help companies offset increased costs, the firm warned Wednesday.

The world market for wind power will grow by 155 percent by 2012, according to a March report by the Global Wind Energy Council.

But a global backlog of turbines has sent wind park builders scrambling … Read more