One of President Obama’s signature achievements, passage of $812 billion in stimulus funds at the height of the recession, was labeled a failure by the chairman of the US House Transportation Committee, which had jurisdiction over about eight percent of the projects funded. In a hearing yesterday, Representative John Mica (R-Florida) explained that the money did not end up going to needed infrastructure projects.

“This will go down in history as one of the greatest failures of a government program to stimulate the economy that mankind has ever created,” Mica said. “This is a trillion-dollar lesson.”

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Editor’s Note: The text of the “Transportation Opportunity Act” with section-by-section analysis can be downloaded in PDF format here [courtesy: bna.com]

The White House last week began circulating its legislative proposal for transportation reauthorization that included provisions to add toll booths to existing freeways and impose a tax for every mile driven. The “Transportation Opportunities Act” for the first time gave the Obama administration’s full approval to the concept of an added charge on drivers for the use of roads throughout the country, including on existing, untolled freeways in major metropolitan areas.

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President Obama’s goal of putting one million plug-in vehicles on the road by 2015 has faced serious challenges from day one, with several studies pointing out that the goal probably isn’t achievable without more government action.But up till now, President Obama has forwarded only one actual policy change aimed at achieving his goal, namely turning an existing $7,500 federal plug-in tax credit into a rebate, redeemable at the point of purchase (an idea first forwarded by Michigan Democrat Debbie Stabenow). This plan should help drive a Cash-for-Clunker-style EV buying frenzy, as the rebate would not be dependent on the buyer’s tax burden. But Automotive News [sub] reports that Senate Finance Committee Chairman Max Baucus (D-MT)

is very concerned [about the credit-to-rebate scheme] from an effectiveness standpoint.

Baucus doesn’t make a regular habit of opposing the President, but apparently his concerns about the Obama/Stabenow credit-to-rebate plan are serious enough for him to put politics aside.

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After several abortive attempts over the last several congresses, the “Right To Repair” Coalition for Auto Repair Equality  has had a new bill introduced in the 112th Congress with the goal of

requiring that car companies provide full access at a reasonable cost to all service information, tools, computer codes and safety-related bulletins needed to repair motor vehicles.

The auto industry has long opposed such bills, which have been passed on the state level but have never been passed into federal law. Back in 2009, then-head of the Alliance of Automobile Manufacturers lobby group, Charles Territo, argued against Right To Repair legislation in a TTAC editorial, calling it “a solution in search of a problem.” More recently, the AAM opposed a Massachusets Right To Repair bill on the grounds that it would increase Chinese piracy of auto parts. Needless to say, now that CARE has finagled HR 1449 into Congress with bipartisan sponsorship (from Todd Platts (R-PA) and Edolphus Towns (D-NY)), the debate is about to get fired up all over again.

How things change in a few years! Just a few short orbits of the sun ago, automakers like GM were some of the biggest boosters of ethanol subsidies. Now, the Detroit News reports

The Alliance of Automobile Manufacturers – the trade association representing General Motors Co., Ford Motor Co., Chrysler Group LLC, Toyota Motor Corp. and eight others – opposes a bill sponsored by Sen. Tom Harkin, D-Iowa, that would require 90 percent of all vehicles to run on E85 – a blend of 85 percent ethanol – by the 2016 model year.

Shane Karr, vice president for government affairs, said the mandate “would cost consumers more than $2 billion per year” for flex fuel vehicles if automakers passed on the full cost “even though consumers will have little or no access to alternative fuels. Therefore, such a mandate is essentially a tax with little consumer benefit.”

In the face of this new opposition, the Renewable Fuels Association has even taken to employing the rhetoric of market economics to justify market-manipulating ethanol subsidies. And it doesn’t seem to be convincing anyone. If anything, Harkin’s bill may just hasten the death of existing subsidies, which are under pressure as both Democrats and Republicans seek to trim the federal budget.

At the end of last year, the Volumetric Ethanol Excise Tax Credit (aka “Blender’s Credit) very nearly expired before congress passed a one-year, $6b extension to the subsidy. The near-collapse of the largest “renewable energy” subsidy on the federal books came as the backlash built against the EPA’s approval of E15 (15% ethanol) blends for certain vehicles, with a huge coalition of industries, environmentalists and budget hawks coalescing around the idea of ending government support for corn-based ethanol. That coalition lost some momentum as the VEETC was extended in order to drum up support for the controversial tax bill that was passed during December’s lame duck session. But now, SolveClimate [via Reuters] reports that the brewing deficit battles have put the Blender’s Credit back on the chopping block, as a new bill seeks to cut the wasteful, inefficient and unpopular (outside of farm states) subsidy.

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House Republicans took the first steps towards banning the EPA’s regulation of greenhouse gases, as the Energy and Power Subcommittee of the House Energy and Commerce Committee approved HR 910, the Energy Tax Prevention Act of 2011. In their statements today, Republican committee leaders cited rising gas prices and negative impacts on American businesses as the main reasons for attempting to strip the EPA of its ability to regulate emissions of

Water vapor, Carbon dioxide, Methane, Nitrous oxide, Sulfur hexafluoride, Hydrofluorocarbons, Perfluorocarbon and any other substance subject to, or proposed to be subject to, regulation, action, or consideration under this Act to address climate change.

Intriguingly, subcomittee Chairman Ed Whitfield’s statement [PDF] names a number of industry groups who support HR910, including the National Association of Manufacturers, U.S. Chamber of Commerce, American Farm Bureau Federation, National Mining Association, National Cattlemen’s Beef Association, National Petrochemical and Refiners Association, and the National Association of Realtors… but no auto industry group was named as a supporter of the bill (current regulation of GHGs only cover power stations and large-scale emitters). HR910 has been fast-tracked to the full Energy and Commerce Committee, which will begin hearings on Monday. According to Bloomberg, Senate Democrats are vowing to block the bill, arguing that Republicans attempts to link the bill to gas prices are misleading and that if passed, it would increase harmful pollution.

The EPA’s decision to allow E15 ethanol in public pumps has been something of a lesson in the way politics can trump common sense. The decision was motivated by intense pressure brought to bear by the ethanol industry, which is facing a serious problem in the form of a “blend wall.” The industry first tried to get the EPA to approve the 15-percent ethanol blend before research was complete, and the agency’s approvals came first for 2007 model-year and later vehicles, and was expanded shortly thereafter to 2001 and later models. In the meantime, a number of industries have come out against E15, suing the EPA to stop the approval and calling for congressional hearings. Now, with few reasons left to support E15 outside of propping up the staggering farm-state ethanol industry and huge portions of the economy coming out against it, the House has voted “overwhelmingly” to ban E15 from America’s gas pumps.

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Senator Debbie Stabenow has introduced S. 3715, known as the Charging America Forward Act, which would extend tax credits for plug-in vehicles until 2014 and “front load” the credits, to create a dealership-level discount, among other provisions. Though inspired by President Obama’s call to put a million plug-in vehicles on the road by 2015, Stabenow’s website plays up a single, all-important angle to the bill

Michigan is already a leader in emerging hi-tech battery and electric car production. Other countries are acting to develop their own advanced vehicle markets because they realize the tremendous economic potential this new technology represents.  These initiatives will allow Michigan innovators to continue to out-compete the world and create new jobs here

Though the full text of the bill hasn’t hit Govtrack yet, the DetN reports that it’s chock full of plug-in subsidies, so it seems that Stabenow’s proposa is considerably more dramatic than the recent plug-in credit extension introduced by Rep Sander Levin. And that’s not necessarily a good thing…

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Rep Sander Levin (D-MI) has introduced legislation which would increase the cap on consumer tax credits for plug-in electric vehicles.The current subsidy allows consumers to take a $7,500 taz credit, but caps the number of qualifying credits at 200k per manufacturer, but Levin’s bill would raise that to 500k units. Said Levin in a statement

Green vehicles represent the vanguard of automotive innovation, but they have to be economical for consumers and profitable for manufacturers. Raising the cap on this credit will help carmakers reach the demand and production scale necessary for long-term viability.

To which, his brother Senator Carl Levin, adds

The U.S. auto industry is poised for a technological explosion that promises to fundamentally change transportation here and around the world. But if we fail to support this revolution, workers in China, India, South Korea and our other competitors will build these vehicles instead of American workers.

The call to raise the cap for EV consumer tax credits was first publicly raised by GM’s Tom Stephens, who argued that 200k units was inufficient government support to keep the Volt viable until the second generation comes out. At the time, Rep Debbie Stabenow argued that credits should be “front-loaded” and deducted from the price of the vehicle at the dealership, but that proposal seems to have fallen b the wayside.

The Department of Energy’s $25b Advanced Technology Vehicle Manufacturing Loan program was very nearly used as a slush fund to keep GM and Chrysler afloat during the dangerous days leading up to the federal auto bailout. Though President Bush’s decision to use TARP to rescue America’s failing automakers took away the need to tap the so-called “retooling loan” program to fund America’s auto bailout, that decision also contributed to a long delay in the allocation of the ATVM loans. Because the loans require applicants prove “financial viability,” GM and Chrysler’s requests (which account for $17.4b out of the remaining pool of $16.7b in non-allocated loans) have been on hold, and with them, every other automaker still seeking approval for its requests. And now, with no word from the DOE on the loan program since last April, congress is agitating for the DOE to make with the loans already. Senator Diane Feinstein captures the frustration in a letter published by the Detroit News

“On multiple occasions, the department has missed internal deadlines for initial decisions, term negotiations, final decisions and loan closure,” she wrote, saying the department failed to give applicants “a clear timeline.”

But did the DOE miss deadlines and string automakers along out of negligence, or because it had to wait in order to fulfill the loan program’s mission, namely supporting the bailed-out automakers?

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The lame duck congress has adjourned for the year, and with it goes the effort to pass a suite of new auto safety regulations drafted as a reaction to the Toyota recall scandal of early 2010. Different versions of the Motor Vehicle Safety Act passed House and Senate committees earlier this year, but were attacked by industry groups and Republican lawmakers. When Republicans came out ahead in November’s midterm election, it was widely speculated that the MVSA might be one of the legislative casualties. Sure enough, the Detroit News reports that

Both the Senate and the House have passed a one-year extension of the Volumetric Ethanol Excise Tax Credit (aka “blender’s credit”), the Small Ethanol Producer Credit and the ethanol import tariff and the Alternative Vehicle Refueling Property Tax Credit, as part of a tax bill that now needs only the President’s signature to become law. The full suite of ethanol subsidies were extended at their current levels, despite an attempt to lower the blender’s credit to 36 cents per gallon instead of 45 cents per gallon. These subsidies will cost in the neighborhood of $6b next year, keeps cheaper Brazilian ethanol out of the US market, and may inspire a WTO complaint with Brazil. And, as Senator Diane Feinstein (D-CA) puts it:

The ethanol industry is the only one to ever receive the triple crown of government intervention. Ethanol use is mandated by law, its users receive federal subsidizes and domestic production is protected by tariffs. That policy is not sustainable.

And she’s not kidding: even with these subsidies in place, ethanol plants are still losing money on each gallon they produce… and analysts are predicting record-high grain prices after the extension is signed. What’s not to love?

Senate Democrats confirm that an extension of the full 45 cents/gal tax credit and 54 cents/gal import duty has been included in the Senate version of a Bush Tax Credit extension, prompting an angry response from the Brazilian sugar cane ethanol lobby. With Brazilian subsidies set to drop by nine cents per gallon, the Brazilian Sugarcane Industry Association (UNICA) claims that the American subsidy is no longer an “offset” but a full-fledged barrier to trade. UNICA’s President Marcos Jank tells brighterenergy.com

It is clear that the United States is not committed to open and fair trade in clean energy, particularly ethanol. We will have exhausted all options to resolve our differences through informal dialogue and the U.S. legislative process. It will then be time for the WTO to resolve this matter in accordance with applicable international rights and obligations.

Previously it was reported that the ethanol Blender’s Credit would be extended at a lower rate of 36 cents/gal, but with the tax credit extension debate snowballing into a lame duck slugfest, it seems that the subsidy extension was included to bring farm-state legislators on board. In addition to pissing off the Brazilians and possibly sparking a WTO battle, a full five-year extension of ethanol subsidies and tariffs at the current rate will cost the government no less than $31b. But don’t start planting corn yet… House Democrats seem set on scuppering the Senate’s tax credit extension deal (even though they support the ethanol extension). If they keep anything from passing during the lame duck session, the subsidies will expire completely, forcing the industry to champion new legislation. The battle rages on…

It seems that yesterday’s optimism about a possible end to the ethanol “Blender’s Credit” may have been somewhat premature, as Senate Budget Committee chair Max Baucus has now proposed extending the 45 cents per gallon tax credit at the lower rate of 36 cents per gallon. The ethanol industry has expressed disappointment, but says it will accept the proposal. Which, given the fact that the Blender’s Credit is opposed by groups as diverse as Friends Of The Earth and FreedomWorks, seems like the reasonable step. And because the 36 cent per gallon extension is only good for a year, even if it is approved, this battle will rage on.