Klobuchar announces end of ethanol tax credit

A group of Senate ethanol supporters have reached a deal with Senators opposed to further subsidies for the corn-based fuel.

Currently, the industry gets more than $5 billion a year in tax credits — in addition to other programs such as a requirement that ethanol be mixed with gasoline.

Under the deal announced Thursday by DFL Sen. Amy Klobuchar, that tax credit will be closed at the end of this month. Following that, $1.3 billion of the savings will go toward reducing the federal deficit.

The remaining funds will help gas stations that install ethanol blender pumps and producers making ethanol from new sources, such as agricultural waste and algae.

Klobuchar hailed the deal as a savings for taxpayers.

"What this does is allows us to use existing funds, existing money, not use any new money going forward," she said.

The House and Senate need to vote on the agreement. Klobuchar said it's possible the ethanol deal could be rolled into a larger deficit reduction package being negotiated.