"The major U.S. ethanol incentive would be cut by 20 percent but given one more year of life in a Senate tax bill that also would revive a biodiesel tax credit that died a year ago.

The bill was 'very unlikely to pass' but would be a starting point for negotiations this month on many issues including estate tax and income tax rates, said consultants Washington Research Group on Friday.

The analysts said a final tax package was not likely until late this month. Senators were expected to debate the tax package on Saturday.

With ethanol supporters under fire by livestock producers, foodmakers and environmental groups, ethanol leaders say the best chance to extend biofuel supports is to attach them to a must-pass tax bill. Ethanol supports cost $6 billion a year."

Charles Abbott reports for Reuters December 6, 2010. [2]