Reuters Summit - US Seen Importing Ethanol, But Tariff Uncertain US: April 7, 2008 WASHINGTON - The United States will need to import more sugarcane-based ethanol to meet renewable energy mandates, a top US official said, but he stopped short of recommending that a controversial ethanol tariff be lifted. "If our goal is to reduce hydrocarbon usage and to increase ethanol usage, that is going to happen through cane-based production," Tom Shannon, the top US official for Latin America, said in the Reuters Latin America Investment Summit on Friday. "Even with all the production happening in the United States, we won't be able to fill our demands, so it's going to require the importation of biofuels," he said. But Shannon, the assistant secretary of state for Western Hemisphere affairs, stopped short of saying the tariff -- 54 cents on every gallon of imported ethanol -- should be abandoned when it expires at the end of the year. The tariff has become a charged issue as the United States seeks to wean itself from foreign oil, in large part with biofuels like ethanol, and the debate intensifies about the wisdom of using corn -- now by far the most common source for biofuels in the United States -- to make ethanol. At least a quarter of the US corn crop is expected to go to making ethanol in 2008 as the country moves toward a renewable-fuels-use mandate of 36 billion gallons by 2022. Detractors, including Shannon, note that corn-based ethanol is far less efficient than sugar-based ethanol and could even undermine the health of the environment. That's not to mention the outcry from some quarters, such as the livestock industry and consumer groups, about the record prices for corn and other crops -- and the higher food prices -- that the ethanol boom has helped unleash. That has made the prospect of increasing imports of sugar-based ethanol, which Brazil has been producing for decades, an attractive alternative for some. The US ethanol industry, however, isn't ready to see the tariff go. "We firmly believe the tariff should remain in place to prevent the American taxpayer from subsidizing foreign ethanol production, as the tariff simply exists to offset the tax incentive for which all ethanol -- foreign and domestic -- is eligible," said Matthew Hartwig, a spokesman for the Renewable Fuels Association. The United States is also investing in new ethanol crops that would be suitable for its climate, including cellulosic sources such as switchgrass, but Shannon acknowledged those technologies are a ways from being commercially viable. (Additional reporting by Tom Doggett; Editing by Gary Hill) Story by Missy Ryan REUTERS NEWS SERVICE