Biofuels Bailout?


The U.S. biofuels industry already receives taxpayer subsidies worth more than $7 billion annually, but it still can't make a profit. So what to do? Well, everybody is looking for a bailout, so why not biofuels?

According to the Wall Street Journal, the biofuels lobbyists may now be looking for more handouts

The Renewable Fuels Association, a trade group for the U.S. ethanol industry, has spoken with staff members from Capitol Hill and President-elect Barack Obama's team and "provided them with some ideas on how to craft the language of" an economic recovery package, said Matt Hartwig, a spokesman for the RFA.

Hartwig said RFA has suggested a number of steps including setting up a $1 billion short-term credit facility so ethanol producers could finance current operations; a $50 billion federal loan guarantee program to finance investment in new renewable fuel production capacity and supporting infrastructure; and a requirement that any auto maker receiving federal aid only produce new vehicles that can run on any blend up to 85% ethanol, beginning with the 2010 model season.

Apparently, the biofuels lobbyists insist that they are just offering ideas, not actually lobbying. Well, that's certainly a relief. 

Nevertheless, food and environmental groups are worried that these "ideas" might morph into a bailout. For example, environmentalist Lester Brown, (someone with whom I rarely agree) warns:

"The ethanol industry's claim that a bailout for their industry is justified by the creation of "green jobs" is truly a case of "green wash." The net energy yield of corn-based ethanol is marginal at best."

Andrew Moylan from the National Taxpayers Union agrees:

"Since corn ethanol boosters have never known a day when they weren't benefiting from government largesse, it's sadly predictable that their response to times of economic distress is to push for more handouts rather than consider reality-based business models. Ethanol lobbyists won't call their latest loan and mandate schemes 'bailouts,' but after seeing so many other interests line up for federal cash recently, taxpayers know when they're being shaken down. Americans should be outraged that yet another industry, especially one that is already dependent on the government, has the gall to ask them for even more of their hard-earned money."


See press release featuring statements against a biofuels bailout here