Against Ethanol Subsidies


The Washington Post editorial board makes the case:

The feds give companies that combine corn ethanol with gasoline a 45-cent tax subsidy for every gallon of corn ethanol added to gasoline. That's on top of a tariff on imported sugar cane ethanol from Brazil and federal mandates requiring that steadily increasing amounts of these biofuels be produced. The Congressional Budget Office this month estimated that, all told, the costs to taxpayers of replacing a gallon of gasoline with one of corn ethanol add up to $1.78. The tax incentives alone cost the Treasury $6 billion in 2009.

How about the environmental benefits? The CBO calculates that it costs a huge $750 to reduce annual carbon dioxide emissions by one ton using corn ethanol. And that figure relies on assumptions extremely favorable to the industry.

This is one of those policies that I always think ought to have more crossover appeal. It's expensive to taxpayers. It's bad for the environment. It's a counterproductive corporate handout. Folks left, right, and center have acknowledged all of this for years. The only reason to continue to support ethanol subsidies is constituent favoritism. But on the evidence, that seems to be reason enough for Congress.

Yesterday, Ron Bailey took a closer look at the CBO's estimate of the cost of the biofuels mandate. I looked at biofuel scams worldwide here.