EU reversal on biofuels policy kicks off fresh battle

nature.com
15 Oct 2012
16:57 BST
Posted by Leigh Phillips

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Vilsack: Ending ethanol subsidy would kill jobs

Des Moines Register 1:23 PM, Apr 13, 2011 by Philip Brasher

Agriculture Secretary Tom Vilsack told a Senate committee that abruptly ending the 45-cent-per-gallon subsidy for ethanol would kill jobs in rural America. Economists have said the impact on the industry would be relatively small since refiners are mandated to use the biofuel. Vilsack did not provide an estimate of the impact himself, but he instead expressed support for shifting fundiing into infrastructure needs of the ethanol industry.

“If you create a cliff you’re going to create a significant job loss in rural America,” he told the Senate Environment and Public Works Committee, citing the precipitous drop in biodiesel production that occurred when that industry’s $1-a-gallon subsidy lapsed last year.

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Budget-cutting fever puts ethanol subsidies at risk

Minnesota Public Radio
by Mark Steil, Minnesota Public Radio
March 4, 2011

Worthington, Minn. — As lawmakers look for places to cut spending, federal support for ethanol could become a tempting target. The U.S. Government Accountability Office says ethanol subsidies cost taxpayers billions of dollars and are not necessary.

Those subsidies are important to farmers in Minneesota, which is the nation's fourth largest ethanol producer.

The ethanol subsidy known as the "blenders credit" nearly died last year. But at the last moment, Congress renewed the 45-cent-a-gallon payout as part of the tax package it approved in December.

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Variable Subsidy for Ethanol Better for Producers and Government

Hoosier Ag Today
08/24/2010
Purdue Ag Communications

A variable subsidy for ethanol producers could cost the government less and provide more security for producers than current fixed rates, according to a Purdue University study. A variable subsidy rate would insulate producers from risk because as oil and ethanol prices drop, the subsidy for producers would increase, said Wally Tyner, a Purdue agricultural economist and an author of the study. The government would save money because it would not have to pay any subsidy when oil prices are high.

"There will be times when oil prices are high and the subsidy will be low or nothing at all," Tyner said.

The current government subsidy for ethanol producers - a fixed rate of 45 cents per gallon of ethanol - will expire at the end of the year. Congress will have to decide whether to create a new fixed rate, implement a variable rate or go with no subsidy at all.

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Ethanol subsidy renewal in doubt

Des Moines Register
By PHILIP BRASHER • pbrasher@dmreg.com • July 24, 2010

Washington, D.C. — The sultry days of July in the nation's capital haven't been kind to Iowa's biofuels industry.

The ethanol industry is fracturing and under attack inside and outside the Capitol. The industry's 45-cent-a-gallon subsidy is due to end at the end of the year, but energy bills that could provide a means of extending the tax credit have been delayed, throwing the legislation's future in doubt.

"My sense all along was that it would get extended at least for a year, but I'm not so sure anymore," said David DeGennaro, a policy analyst for the Environmental Working Group, a leading critic of the subsidy.

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Editorial: It's time to end the excessive subsidies for corn ethanol

The Washington Post
Saturday, July 24, 2010

WHEN WASHINGTON starts handing out cash, it can be hard to stop. See, for example, the decades of subsidies the government has showered on the corn ethanol industry. The fuel was supposed to free America from its dependence on foreign oil and produce fewer carbon emissions in the process. It's doing some of the former and little of the latter. But corn ethanol certainly doesn't need the level of taxpayer support it's been getting. Lawmakers are considering whether to renew these expensive subsidies; they shouldn't.

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.

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Center for Agricultural and Rural Development Study Shows...

Biofuels Journal
Date Posted: July 20, 2010

... U.S. Ethanol Production and Corn Demand Will Grow With or Without Subsidy and Tariff

Ames, Iowa—America's growing interest in renewable fuels has spurred a robust discussion about the pros and cons of continuing or changing current U.S. federal government ethanol policies, specifically, (1) mandates to increase the use of renewable fuels like ethanol from approximately 13 billion gallons today to 36 billion gallons by 2022, (2) a 45-cent-per-gallon tax credit for "blenders" who add ethanol to gasoline, and (3) a 54-cent-per-gallon tariff, which increases the price of foreign imports.

A new staff report by Bruce A. Babcock, director of the Center for Agricultural and Rural Development (CARD) and a professor of economics at Iowa State University, projects that allowing the blender credit and tariff to expire would have neither the dramatic, adverse effect U.S. ethanol producers claim nor create the export bonanza foreign producers hope for.

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Ethanol industry scrambles to keep incentives

Associated Press
7/16/2010
By MARY CLARE JALONICK (AP)

WASHINGTON — The once-popular ethanol industry is scrambling to hold onto billions of dollars in government subsidies, fighting an increasing public skepticism of the corn-based fuel and wariness from lawmakers who may divert the money to other priorities.

The industry itself can't agree on how to persuade Congress to keep the subsidies, which now come in the form of tax credits worth about $6 billion annually.

One industry group, Growth Energy, made the bold move Thursday of calling for the tax credits to be phased out completely in favor of spending the money on more flex-fuel cars and gasoline pumps that support ethanol. A rival group, the Renewable Fuels Association, said it's too late in the year to make such proposals — the tax credits expire at the end of the year, and legislative days are numbered.

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Ethanol facing trouble in Congress

Des Moines Register
Blog post by Philip Brasher • pbrasher@dmreg.com • July 14, 2010

The ethanol subsidy is running into trouble in Congress.

Citing a congressional study of the cost of the 45-cent-per-gallon tax credit, the chairman of the Senate energy committee issued a statement today saying that the subsidy should not be “reflexively” extended when it expires at the end of the year.

Sen. Jeff Bingaman, D-N.M. “thinks Congress needs to take a careful look” at the cost of the subsidy “as it decides whether or not to renew it,” said spokesman Bill Wicker.

The study by the Congressional Budget Office evaluated biofuel subsidies by the energy content of the products and found that costs taxpayers $1.78 to reduce gasoline consumption by one gallon using corn ethanol. The cost rises to $3 with ethanol made from crop residue and other forms of plant cellulose, for which there is a $1.01 per gallon tax credit.

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State biofuel subsidies costly but effective, MSU research shows

EurekaAlert.com
Public release date: 26-Apr-2010
Michigan State University

EAST LANSING, Mich. —States aiming to lead the emerging biofuel industry may need to ante up substantial subsidies and tax incentives to ethanol producers just to get in the game, Michigan State University researchers say.

"State subsidies have played an important role in ethanol plant location decisions," explained Mark Skidmore, MSU professor of agricultural, food and resource economics. "The size of the incentives is important, too –– the larger the subsidy or tax credit, the more likely it is that an ethanol plant will locate in that state."

Skidmore and Chad Cotti, assistant professor of economics at the University of Wisconsin-Oshkosh, examine the influence of federal and state incentives for corn-grain ethanol production in the April 2010 issue of the Southern Economic Journal.

Experts agree that federal subsidies –– currently 51 cents per gallon for ethanol/gasoline blends ––have helped expand national ethanol production capacity. Skidmore and Cotti's paper is one of the first to analyze the effect of state incentives on the corn-grain ethanol industry. No commercial cellulosic ethanol plant, using wood and field waste instead of corn, has yet opened in the United States.

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U.S. Fossil-Fuel Subsidies Twice That of Renewables

Bloomberg.com
(Update2)
By Tina Seeley

Sept. 18 (Bloomberg) -- Fossil fuels including oil, natural gas and coal received more than twice the level of subsidies that renewable energy sources got from the U.S. government in fiscal 2002 through 2008, the Environmental Law Institute said.

Government spending and tax breaks amounted to $72.5 billion for fossil fuels and $29 billion for renewable energy, according to a report by the institute today.

“With climate change and energy legislation pending on Capitol Hill, our research suggests that more attention needs to be given to the existing perverse incentives for ‘dirty’ fuels in the U.S. tax code,” said John Pendergrass, a lawyer for the institute.

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