NCPA - National Center for Policy Analysis


July 28, 2010

Congress is finally starting to recognize the high cost of filling up gas tanks with ethanol, the motor fuel made from corn.  Billions of dollars in federal subsidies are on the chopping block.  It's about time.  With the national debt soaring, the government needs to wean the biofuel industry from its dependence on federal subsidies, says the Columbus Dispatch. 

  • Taxpayers have bankrolled biofuel research and a boom in ethanol production.
  • Aggressive mandates have hiked the amounts of ethanol blended into the gasoline supply, and the industry is pushing for even-higher levels of the corn-based fuel in each gallon.
  • At the same time, trade barriers have kept out cheaper ethanol produced from sugar in Brazil and other countries. 

When ethanol factories were popping up all over the heartland four or five years ago, livestock producers and food processors warned that using grain to make fuel would raise grocery prices.  Not to worry, the biofuel industry responded, since corn would be phased out and inedible cellulose would be used instead.   Last week, the Congressional Budget Office calculated how much taxpayers provide in biofuel subsidies to reduce gasoline consumption.  The bottom line: 

  • $1.78 for every gallon when the biofuel is made from corn.
  • Ethanol from cellulose costs a beyond-belief $3 a gallon in subsidies. 

It's time to eliminate the tax credit.  And before Congress even considers mixing more biofuel into the gasoline supply beyond the current 10 percent in each gallon, it needs to lift the protectionist barriers so ethanol brewed from foreign sugar can compete, says the Dispatch. 

Source: Claire Brunel, "Other viewpoints," Columbus Dispatch, July 27, 2010. 

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