E85 Boondoggle Of The Day: Ethanol Dominates Renewable Energy Subsidies

by Edward Niedermeyer

Published: January 8th, 2009

e85 boondoggle of the day ethanol dominates renewable energy subsidies

So we complain quite a bit about ethanol around here, but you might be thinking, what does it really cost me? Well, according to an analysis by the Environmental Working Group, US taxpayers shelled out over $3b in ethanol subsidies in 2007 alone. As if that weren’t outrageous enough, ethanol slurped up two-thirds of all government assistance to renewable energy producers that year. The so-called E10 “blender’s credit” (51 cents credit for every gallon of gas blended with ethanol) racked up $2.9b of the bill, with the Alcohol Fuel Tax Credit adding another $50m. In addition to countless state-funded subsidies for ethanol producers, distributers and refiners. If this is starting to sound like more money than it’s worth, don’t worry. It’s only going to get worse. Ethanol blending mandates were set at 4.7b gallons in 2007, climbed to 9b gallons in 2008 and will reach 12b gallons in 2011. Regardless of whether consumers want it or not. Unscientifically projecting those numbers forward, blender’s credit claims for 2008 could easily top $5b after the IRS adds it all up. Oh yeah, and the Ethanol industry is already asking for $1.5b in “emergency” loan guarantees and short-term credit facilities. And an expansion of blending mandates to E15 and beyond. How great is that?

Edward Niedermeyer

More by Edward Niedermeyer

Comments

Join the conversation

4 of 11 comments

Ronnie Schreiber on Jan 09, 2009
Because a) people actually want to buy food, as opposed to domestic automobiles A)People actually have to buy food. It's not a want, it's a need. B)The domestics' share last month was 47-48%.

Like Reply
Anonymous on Jan 09, 2009

And 6 billion for manmade global warming research. Wde are lucky to have such a wealthy government.

Like Reply
Anonymous on Jan 09, 2009
An Iowa State University study shows blending ethanol to 10% saves motorists up to 40cents per gallon by increasing the total amount of motor fuel by 10%. An unintended consequence of my almost anal attentiveness to tracking my gas mileage has lead me to discover that ethanol costs me money in the form of reduced gas mileage. When I have the opportunity to use 100% petrol (an increasingly rare event), I see an increase of approximately 10% in fuel economy. Last may when vacationing in Yellowstone Park was my last opportunity to fill-up with pure petrol. Even driving around the park, versus the highway driving at a constant 75 from Boise to Idaho Falls, I got better gas mileage from straight petrol than from the ethanol blend I filled up on in Boise. Coming back from Yellowstone I got over 10% better gas mileage on pure petrol driving the exact same route in reverse that I drove using an ethanol blend going there. People who dispute that ethanol blends significantly hurt gas mileage, fall under the category of "who do you believe, me or your lieing eyes?". I will never accept that an engine designed to run on petrol will operate as efficiently on an ethanol blend. To make efficient use of ethanol, you need to operate at much higher pressures than are used for petrol engines.

Like Reply
Anonymous on Jul 06, 2011

[...] expired before congress passed a one-year, $6b extension to the subsidy. The near-collapse of the largest “renewable energy” subsidy on the federal books came as the backlash built against the EPA’s [...]

Like Reply