Green Update–>Why Ethanol Subsidies Are Egregious and Absurd

Cellulosic Ethanol Plant in Florida

Everybody seems to hate them, but Congress just passed another round of ethanol subsidies last Friday as part of its elephantine $858-billion tax relief bill. The ethanol boondoggle has cost U.S. taxpayers over $21 billion since 2006 ($6 billion this year).

The subsidy funnels 45 cents in tax credits for every gallon of ethanol that’s blended with gasoline. And it sets a 54-cent per gallon tariff on imported ethanol to keep competition out, while you pay more at the pump. Brazil, which sensibly produces ethanol from sugarcane, not corn, is challenging the U.S. at the World Trade Organization.

Making ethanol from corn is the worst idea ever. With about 40 percent of corn production now devoted to ethanol, it’s no mystery why food prices are ballooning. Industry apologists, however, maintain the high cost of food is owing to speculators, greed and high oil prices. Mm-hmm.

At the same time it funds these subsidies, the government mandates a fuel mix to include 36 billion gallons of ethanol/biofuels (roughly one gallon in four sold) by 2022. So it’s a double whammy for the consumer and a two-handed gift to the ethanol producers.

Oil Refinery

The industry now wants to boost ethanol content from 10 to 15 percent (E15), causing a big pushback from the automakers. Their trade associations are suing the EPA, claiming violation of the Clean Air Act, plus harm to catalytic converters and engines in older cars.

Now we learn today that demand for gasoline in the U.S. is starting on a long-term decline, which can only accelerate.

By 2030, Americans will burn at least 20 percent less gasoline than today, experts say, even as millions of more cars clog the roads.

The country’s thirst for gasoline is shrinking as cars and trucks become more fuel efficient, the government mandates the use of more ethanol, and people drive less.

Well, isn’t that wonderful, and shouldn’t we applaud these government mandates?

Biofuels from cellulose may indeed be part of the answer, but there are many, many problems to solve before such an industry becomes viable and productive enough to be a factor. The subsidies haven’t worked, except to enrich Archer Daniels Midland and the campaign coffers of certain Iowa and South Dakota senators.

Should government be subsidizing the ethanol/biofuels industry another way?


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  1. More evidence from Joe Sherlock’s blog:

    Corny Idea: Congress has passed a one-year extension of the useless ethanol subsidy, amounting to a $6 billion boondoggle.

    Even paleo-Liberal Senator Diane Feinstein has noted that “the ethanol industry is the only one to ever receive the triple crown of government intervention. Ethanol use is mandated by law, its users receive federal subsidizes and domestic production is protected by tariffs. That policy is not sustainable.”

    Meanwhile, automakers are suing to stop E15 blends, pointing out that “E-15 has been shown to adversely affect engines in non-road products and later model year vehicles, cause emission failures and increase air pollution due to misfueling.”

    Ethanol also screws up chainsaws and leaf blowers. Bruce Kasting has experienced this and received an explanation from his repair guy, who pointed out that “when alcohol exceeds 10% of regular gas it dissolves plastic engine parts. Things like fuel-lines or float gaskets in the carburetor. When the mixture is too rich the engine burns hot and wears out the rings.

    He explains that the legal limit is 10% but that all the fuel distributors cheat and mix in some extra alcohol so they can make a buck. When the mix gets to 15% it’s toxic for two-cycle engines. And that is what killed my machines.

    He pulls off the gas line and shows me that it has deteriorated to the point where it has fused shut.”

  2. Absolutely not. Only government can screw up the idea. Ethanol’s promise was it would lower our dependence on foreign oil and would help clean up the environment as well. It does neither. Ethanol production is a net negative in its environmental impact, causes erosion, raises food prices, and creates more pollution. Greenies get something in their mind that they philosophically believe would make the world better and they don’t even bother thinking about the consequences. They did that same thing with climate change.

    People confuse the different environmental groups out there. On one end are the altruistic philosophers who fantasize that there is a solution to every problem. They tend toward using logic as their main tool. Conservationists on the other hand use a more business friendly, “what will work” attitude in solving problems (pragmatism). Altruists never admit their are wrong, conservationist do, and come up with other possible solutions when the first one didn’t.

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