Obama wins 2nd Term – what does it mean for biofuels?

November 7, 2012 |

In Washington, voters handed President Barack Obama a second term as President, and gave control of the US Senate to Democrats, while maintaining Republican control of the US House of Representatives.

What does it mean for bioenergy? The Digest will have a round-up of opinion in tomorrow’s edition, and coverage will continue throughout the month as changes in Washington flow from the election result.

Some quick positives and negatives.

US Presidency

Positives. Continuity. Obama was by far the most bullish supporter of all things biofuels in the race, so it is going to be welcome news for producers and especially early-stage companies that the former farm state Senator has won a second term.

Negatives. Hardly a sweeping mandate in the popular vote, and rural voters broke 59-32 for Romney, according to CNN exit polling – which may impact agenda-setting for the second term and in the outlook for 2016.

Defense Production Act

Positives. The program to accelerate commercialization of aviation fuel for military purposes was DOA under a Romney presidency, so this one goes back onto the table. Another positive – Virginia Senator Jim Webb, who voted against authorizing the DPA, retired in this cycle – making the Senate path to funding the program potentially much easier.

Negatives. The House remains under control of “DPA for biofuels” foes and the House Armed Services committee is unlikely to fund the DPA for biofuels. At best, biofuels will get funding through a compromise in the conference on DoD appropriations.

Farm Bill

Positives. The US Senate remains in Democratic hands – the chamber and party which passed a Farm Bill already in this Congress.

Negatives. There hasn’t been much optimism that the Farm Bill would get passed by the House, and a conference on the bill completed, before the end of the lame duck session – owing to explosive tax issues that will occupy this Congress before it adjourns.

Renewable Fuel Standard

Positive. Strong RFS supporters in the Senate all generally had good nights, on both sides of the aisle. Montana’s Jon Tester is still a question mark. And legislation to repeal the RFS altogether is DOA at the White House through January 2017, at least.

Negative. No major RFS opponents went down to defeat in this cycle. The drumbeat of opposition will continue to sound.

Tax credits

Positive. Continuity will help in terms of the tax credits – especially on biodiesel, where there is bipartisan support in the Farm Belt, and strong support from the White House.

Negatives. The bigger tax issues – the extension of Bush-era tax cuts and the automatic sequestration of funds are sure to be the overwhelming issues for the lame-duck session of Congress. Other tax credit issues may have to be adroitly steered into legislation by their supporters.

The Bottom Line

The Washington Post’s Greg Sargent writes: “[Obama] will be able to point to the fact that Republicans lost resoundingly after adopting a four-year strategy of scorched earth obstructionism to argue that it’s time the GOP sees the writing on the wall and cooperates with Democrats to move the country forward.” True, the President will argue. But will GOP moderates respond to the call?

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