Reuters
05-18-07
Schwarzenegger attacks ethanol tariffs, subsidies
By Bernie Woodall
LOS ANGELES (Reuters) - California Gov. Arnold Schwarzenegger said on
Friday he wants markets to set policies on low carbon fuels, and called for
eliminating subsidies and tariffs related to ethanol.
"We need to take down the barriers we have created," Schwarzenegger said at a
symposium on low carbon fuels at the Lawrence Berkeley National Lab in
Berkeley, California.
The United States, he said, subsidizes domestic corn-based ethanol and
imposes a 54-cents-per-gallon tariff to limit cheap ethanol imports from Brazil.
"It makes absolutely no sense. It's crazy, and it's definitely not in the best interest
of the customers," said Schwarzenegger.
Brazil, which uses sugar-based ethanol, is the No. 2 producer of the biofuel after
the United States and its corn-based fuel.
He did not offer specific alternatives to the tariffs and subsidies, but said the
market should be allowed to come up with the best solutions after targets are set
by governments like California's.
"We set the targets. The market decides how best to get there," Schwarzenegger
said.
The booming U.S. ethanol production has increased corn costs and in turn feed
costs for chickens, hogs and cattle. The result is a $47-per-person increase since
last July in the average U.S. grocery bill, a study issued last week by Iowa State
University found.
U.S. fuel ethanol gets a 51-cents-per-gallon tax subsidy.
The low carbon fuel symposium held Friday is a method to allow the markets to
decide the best way forward on alternative fuels, the governor said. The governor
in January called for California to set a "low carbon fuel standard" meant to cut
carbon emissions in transportation fuels by 10 percent by 2020.
Schwarzenegger on Friday said the federal government's help is essential in
establishing standards that stakeholders -- from industry to scientists to
environmentalists -- can then strive to meet.
He called on the U.S. Congress "to adopt a fuel policy that works."
Transportation accounts for about 40 percent of the climate changing carbon
emissions in California, and the state now relies on petroleum-based fuels for 96
percent of its transportation fuels.
Record gasoline prices can also be helped by less reliance on oil-based fuels
and more on alternatives that cut carbon emissions, Schwarzenegger said.
Travel and motor club AAA on Friday said the U.S. average for regular gasoline
was $3.13 per gallon, and $3.46 per gallon in California.
"The low carbon fuel standard is our best weapon against rising oil prices and
gas prices," Schwarzenegger said.
"A vibrant market in alternative fuels and alternative vehicles and alternative
engines give customers a great choice, and that empowers the customers to say,
'No,' to these high fuel prices. To say, 'Hasta la vista, baby,' "