U.S. Agriculture Secretary Ed Schafer said the country should maintain incentives to promote its renewable-fuels policy until the industry is "mature."
The Energy and Security Act of 2007, which President George W. Bush signed into law in December, requires the United States to use 9 billion gallons of renewable fuels such as ethanol this year. The mandate climbs to 15 billion gallons by 2015. Republicans last week released a platform that said they would end the requirement.
"I believe those incentives ought to stay there until the industry is mature," Schafer said today at a Society of American Business Editors and Writers event in Kansas City, Mo.
Bush in 2007 proposed cutting U.S. gasoline dependence 20 percent in 10 years by raising car fuel-efficiency and using more alternative fuels. Renewable fuels account for about 6 percent of U.S. gasoline supplies.
U.S. ethanol production swelled 40 percent to 585,000 barrels a day, from 418,000 a year earlier, according to the latest Energy Department data.
"The ethanol industry has incorporated the last year of subsidies into their operational models. That's a mistake," Schafer said. "We'll have to see a step-down in reduction of subsidies because it's built into the operational models."
There are 168 ethanol distilleries in the United States with the capacity to produce 10 billion gallons of ethanol annually, according to the Renewable Fuels Association in Washington.
VeraSun Energy Corp., based in Brookings, S.D., is the largest ethanol maker. Closely held Poet LLC, based in Sioux Falls, S.D., is the second-biggest producer.
