Ethanol supporters prevailed Tuesday in a heated Senate contest on whether to ax billions of dollars in annual tax incentives for the corn-based fuel.

The Senate voted 59-40 against advancing a proposal that immediately would repeal a 45-cent-per-gallon excise tax credit for ethanol blenders. The 40 supporters needed 20 more votes to end debate and move the measure along.

The proposal by Sen. Tom Coburn, R-Okla., also would have eliminated a 54-cent-per-gallon tariff on imported ethanol.

Refiners blend ethanol into gasoline under federal mandates to reduce use of fossil fuels.

Supporters of Coburn's plan said the final vote reflected Democrats' anger with the way the proposal was forced onto the floor rather than its substance.

The vote pitted senators from corn-growing regions against those from other states who have targeted the tax incentives as wasteful. It also united some unlikely allies, putting Coburn on the same page as Sen. Dianne Feinstein, D-Calif., another ethanol critic.

Feinstein said government historically gives an advantage to emerging products by subsidizing them, insulating them from competition or requiring their use. But "corn ethanol is the only product receiving all three forms of support from the U.S. government at this time," Feinstein said.

Coburn insisted that he supports corn farmers and ethanol, including existing U.S. policy that requires the blending of renewable fuels into gasoline.

"But," he added, "we have a way to get the same amount of ethanol produced and put into our cars without spending $3 billion between now and the end of the year" on these subsidies. The annual average cost of the tax incentives is $5.8 billion.

Coburn's gambit faced resistance on several fronts.

Many Senate Republicans previously have committed to a "Taxpayer Protection Pledge" advanced by Americans for Tax Reform, which says that Congress should create new tax cuts to replace any eliminated tax incentives. Under Coburn's measure, the money saved by eliminating the tax incentives would be used to pay down the federal deficit — not to offset any other tax credit.

Tactic draws objections

Democratic leaders objected to the procedural tactic Coburn used to force a vote on his proposal - which blindsided top Senate officers - and encouraged their colleagues to vote against the proposal.

Feinstein acknowledged those concerns.

"If it weren't for the process, we would have 60 votes," added Feinstein, who ultimately voted no.

A coalition of environmental groups and tax-cutting advocates who want to end ethanol tax incentives dismissed the vote as "being about process rather than substance" and said in a statement they remained "confident of eventual success."

'Destructive policy'

But the Renewable Fuels Association said in a statement that the vote "demonstrates the lack of appetite for this kind of destructive policy and political gamesmanship."

Ahead of the vote, some senators were whittling away at support for Coburn's proposal by talking up an alternative plan to replace the 45-cent tax credit with new spending on infrastructure to support the fuel.

Sen. John Thune, R-S.D., said that alternative plan would "phase out the ... tax credit but do it in a way that does not impact and disrupt" current investments in ethanol.

Texas' two Republican senators, John Cornyn and Kay Bailey Hutchison, voted for Coburn's proposal.

Lawmakers from the corn-growing Midwest have argued that the targeted tax credit is essential to helping the developing ethanol industry.

Sen. Chuck Grassley, R-Iowa, noted that tax incentives targeted to oil and natural gas producers are still on the books nearly a century after some were first created.

He call it "ridiculous to claim that the 30-year-old ethanol industry is mature and, thus, no longer needs the support of the taxpayers, while the century-old oil industry still receives $35 billion in taxpayer support."

'Changes are on the way'

Despite Tuesday's vote, the fight over ethanol subsidies isn't over.

House Speaker John Boehner, R-Ohio, predicted that "changes are on the way" when it comes to tax support for the alternative fuel.

The issue could come up in negotiations over how to cut the federal deficit and raise the nation's debt limit. It also is sure to emerge during a broader rewrite of the tax code Congress is expected to embark on soon.

jennifer.dlouhy@chron.com