Craig Lassig for The New York Times

Any other year, the ethanol industry would have declared a defeat, not a victory.

As I mention in Friday’s Times, three senators — one an ethanol opponent and the other two supporters — came up with a grand compromise on Thursday that would end the $6 billion in annual tax credits that go to blenders of ethanol in gasoline and a tariff designed to keep Brazilian ethanol out of the United States.

The deal would direct $1.33 billion of that unspent money toward lowering the federal budget deficit and $668 million to various subsidies to help develop advanced biofuels and promote the installation of pumps at gas stations that would offer drivers higher concentrations of ethanol.

Ethanol executives and lobbyists praised the deal, which was brokered by Senators Amy Klobuchar, Democrat of Minnesota, and John Thune, Republican of South Dakota, who are ethanol supporters, and Dianne Feinstein, Democrat of California, an ethanol foe. That’s because the industry saw the writing on the wall last month, when the Senate passed an amendment to cut corn ethanol subsidies in a 73-27 vote.

In Washington’s highly polarized environment, that kind of lopsided tally usually involves honoring Abraham Lincoln or celebrating Mother’s Day. But these days, the budget deficit trumps helping ethanol, even with presidential candidates already competing in Iowa.



The agreement is not guaranteed to make it through Congress or to be adopted by administration and Congressional negotiators working on a budget deficit and debt deal. But there was no doubt that the ethanol industry favors it. “We don’t care what train it’s on,” said Tom Buis, the chief executive of Growth Energy, an ethanol lobbying group, although he conceded it was “not perfect reform.”

A consensus has arisen in Washington — one accepted by the ethanol industry — that as long as there is a renewable fuels standard that mandates the use of increasing amounts of biofuels, ethanol can prosper. Ethanol is cheaper than gasoline in most markets, making it attractive to blenders even without the tax goodies.

And Brazil does not have much extra sugar ethanol to export at the moment; in fact, it is importing corn ethanol from the United States to meet its needs. Perhaps corn ethanol is finally a victim of its own success.