Kick Out The Corn – The End of Ethanol Subsidies?

  • Published on December 1st, 2010

Ethanol has been a disaster. Once pushed as an alternative fuel that could help the planet, corn-based ethanol was done all wrong – and ends up costing more in greenhouse gas emissions than regular gas.


By Jeremy Bloom

It never made economic sense without taxpayer handouts – but it made political sense thanks to the clout of farm-state Senators, and thanks to the clout of the Iowa caucuses in the process of selecting a President. But all that could finally change this year, as free-market purists team up with deficit hawks and realists who never supported this boondoggle in the first place.

Greg Sargent of the Washington Post has gotten a hold of a letter being circulated on Capitol Hill. Authored by Senators Diane Fienstein (D-CA) and John Kyl (R-AZ), the letter draws a bi-partisan line in the sand: “Let the subsidies expire.”

We are writing to make you aware that we do not support an extension of either the 54 cent-per-gallon tariff on ethanol imports or the 45 cent-per-gallon subsidy for blending ethanol into gasoline. These provisions are fiscally irresponsible and environmentally unwise, and their extension would make our country more dependent on foreign oil.

Subsidizing blending ethanol into gasoline is fiscally indefensible. If the current subsidy is extended for five years, the Federal Treasury would pay oil companies at least $31 billion to use 69 billion gallons of corn ethanol that the Federal Renewable Fuels Standard already requires them to use. We cannot afford to pay industry for following the law….

Eliminating or reducing ethanol subsidies and trade barriers are important steps we can take to reduce the budget deficit, improve the environment, and lessen our reliance on foreign oil. We look forward to working with you on responsible energy tax policy.

Sargent says Republican Senators Jim DeMint and Tom Coburn, who hold a lot of sway among the new Teapartiers swarming into Congress, have told him they are calling on their colleagues to end the subsidies as well. It’s a perfect bi-partisan allignment of left and right.

Marcos Moulitsas, writing at the DailyKos, notes this will cause interesting complications.

But even beyond the primaries, The midwest is a key electoral battleground, and ethanol is huge in Iowa, Illinois, Minnesota, Nebraska, Ohio, South Dakota, and Wisconsin… That’s quite a few senators who will fight to protect free government money to their agricultural sector.

…These aren’t normal times, with the teabaggers demanding that Republicans pay more than lip service to deficit reduction. And there’s no doubt that these subsidies aren’t just wasteful, but they’re unsound on any possible policy grounds. Subsidizing Big Oil and Big Agribusiness for environmentally unsound ethanol subsidies is madness, and has only persisted as long as it has because of Iowa’s presidential clout.

It’s nice to have the conservatives on the side of the environmentally-sound policy for a change. Hopefully there will be other areas in which this works out.

More on ethanol vs food:

(Cornfield image AttributionShare Alike Some rights reserved by Randy Wick)

About the Author

Jeremy Bloom is the Editor of RedGreenAndBlue. He lives in New York, where he combines his passion for the environment with his passion for film, and is working on making the world a better place.