Minnesota's two U.S. senators, along with lawmakers from other corn-growing states, have introduced a bill that would gradually end tax subsidies for ethanol producers.
Under the proposal, the tax credit for the corn-based fuel would drop from 45 cents a gallon today to 15 cents a gallon by 2013. After that, the size of the credit would be linked to the price of oil.
The bill would maintain support for cellulosic ethanol to promote a transition to those fuels, which don't use corn as a feedstock.
Sens. Amy Klobuchar and Al Franken, both Democrats from Minnesota, support the bill.
"Over the next five years, we think it's very reasonable to make that transition and ramp down the blender credit on corn ethanol," said Franken.
The bill comes as deficit hawks have zeroed in on tax breaks for ethanol as a sign of special interest influence over the federal tax code.
Minnesota produced about 1.1 billion gallons of ethanol least year, about 8 percent of all production in the U.S.
"What's most critical for the ethanol industry to keep growing is increased market access," Franken said, adding that the money saved by reducing the tax credit should be directed toward increasing the number of gas pumps that can dispense ethanol-blended fuel, and producing more "flex-fuel" vehicles that can run on ethanol blended gasoline.
The Domestic Energy Promotion Act of 2011 is co-sponsored by Sen. Charles Grassley, R-Iowa, and Sen. Kent Conrad, D-N.D.
(The Associated Press contributed to this report)