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Stop Taxpayer Support for Ethanol

Wednesday, May 14, 2014   (0 Comments)
Posted by: Michael Geatz
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Since the creation of the domestic market for corn-based ethanol as an additive for gasoline, the federal government has nurtured and maintained the ethanol industry with a steady stream of subsidies. Originally sold as a way to achieve energy independence and reduce greenhouse gas emissions, ethanol has been a favorite issue of lawmakers.

Ethanol producers have received favorable treatment under the tax code and even a government mandate for its usage. U.S. taxpayers have spent billions of dollars subsidizing ethanol production. But as the boating industry has learned, there’s a price to be paid for ethanol usage, including damage to marine engines and fuel systems; a significant reduction in important wetlands (as land is converted for corn production); an increase in greenhouse gases; and a threat to the safety of American families while recreating on the water.

Subsidies for the corn ethanol industry litter the U.S. tax code, including tax breaks for biodiesel and blender pumps. The tax extender bill being written in the Senate Finance Committee would extend the Alternative Fuel Vehicle Refueling Property Credit, which provides a 30 percent tax break for gas stations installing E-85 blender pumps.

Thankfully, the $6 billion-per-year tax credit was retired by Congress in 2011; but the Renewable Fuel Standard (RFS) mandate still requires oil and gas companies to blend increasing amounts of ethanol with gasoline each year, and it takes special action by the U.S. Environmental Protection Agency to override the mandate. In addition, EPA approved corn biobutanol as a new, advanced biofuel. Corn ethanol has already exceeded its RFS 15-billion-gallon annual mandate, causing numerous unintended consequences, such as higher food and feed grain prices and higher greenhouse gas emissions.

Here’ s a small example of federal programs that enhance corn ethanol usage and production:

• $55 million in grants and loans to advance biofuels facilities and annual production

• $25 million in loan guarantees to advance facilities, including power facilities

• $6.9 million in reimbursement payments for biorefineries to replace fossil fuels

• $200 million to facilities dispensing ethanol fuels in the form of a 30 percent tax credit

• $13.4 billion to master limited partnerships where investors are treated for tax purposes as if they already earned income

• $14 billion as a biodiesel production tax credit of $1.00 per gallon (part of the tax-extender bill to renew)

The list goes on and on.

MRAA believes the mature corn ethanol industry should no longer receive taxpayer support, whether through infrastructure subsidies for ethanol blenders in the tax code or production subsidies through the Department of Agriculture. Contact your Congressional representatives and let them know you want to stop these taxpayer incentives today!