In 2007, 75% of Renewable Tax Benefits Went To Corn-Based Ethanol Industry
Generally, the two biggest criticisms of corn-based ethanol have been that it is actually bad for the environment and increases pressure on the world’s food supplies. However, in spite of these facts, U.S. renewable energy policy has been skewed greatly in-favor of ethanol.
Highlighting this fact, Environmental Working Group (EWG) recently released an analysis of U.S. ethanol policy that finds the following incredible conclusions (among others):
- Corn-based ethanol has accounted for fully three-quarters of the tax benefits and two-thirds of all federal subsidies allotted for renewable energy sources in 2007.
- Corn-based ethanol industry received $3 billion in tax credits in 2007, more than four times the $690 million in credits available to companies trying to expand all other forms of renewable energy, including solar, wind and geothermal power.
- By 2010, ethanol will cost taxpayers more than $5 billion a year — more than is spent on all U.S. Department of Agriculture conservation programs to protect soil, water and wildlife habitat.
In spite of this dramatically skewed federal policy, EWG notes, “the ethanol industry wants even more. In recent weeks, the corn ethanol lobby has pushed for billions in new federal subsidies as part of the economic stimulus package.”
EWG argues that the solution is to “Phase out tax credits for corn ethanol and subsidize other biofuels only if they show clear promise to meet strict climate and environmental protection standards,” and to “Rebalance the U.S. renewable energy and energy conservation portfolio to favor options that do the most to reduce fossil fuel use, safeguard the environment, spur more widely-shared economic development and increase energy security.”
However, it seems to us that it was centralized decision making that led to our misguided federal renewable energy policy in the first place. While phasing out the ethanol tax credits and subsidies is a good idea, maybe the alternative should be a system that penalizes polluting industries, rather than picking winners? (Like a carbon tax or cap-and-trade system.)
Otherwise, the subsidies may just go to the next industry that is best organized and able to afford the most lobbying efforts.
Hat-tip: Treehugger
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- US ethanol policy must be based on science, not lobbying
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