Stop Taxpayer Support for Ethanol
Wednesday, May 14, 2014
Posted by: Michael Geatz
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
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
• $14 billion as a biodiesel
production tax credit of $1.00 per gallon (part of the tax-extender bill to
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!