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By Nathanael Greene on Jul 19, 2010 with 2 responses

CBO Report Shows The Folly of Corn Ethanol Tax Credit

A new report released by the Congressional Budget Office yesterday afternoon reaches some eye popping conclusions about what our lavish support for old corn ethanol is costing us. For mature and mainstream corn ethanol, we the tax payers are shelling out $1.78 per gallon before we even pay for it at the pump. As I’ve written a lot about before, this comes on top of a federal mandate, which this year requires 12 billion gallons. That adds up to a total cost of over $21 billion just this year!

The industry is already is heavy spin mode, but even it has to acknowledge the sticker shock. RFA’s early response amounts to “sure it’s expensive, but what else are you going to spend your money on?”  But how about vehicle efficiency or electrification or getting advanced biofuels commercialized? Imagine what we could do with a fraction of $21 billion on those fronts. Or heck, even just reducing the drinking water pollution, gulf dead zone, soil erosion, and wildlife impacts of corn ethanol production.

Unfortunately, bills like the one introduced by Klobuchar, which I wrote about yesterday, would take us in the wrong direction pulling the rug out from under advanced biofuels and extending the corn ethanol tax credit.

Look soon for a more comprehensive assessment of the CBO report from my colleague Sash Lyuste.

  1. By Walt on July 19, 2010 at 7:54 pm

    Nathanael Greene said:

    RFA’s early response amounts to “sure it’s expensive, but what else are you going to spend your money on?”

     


     

    How about methanol?  Ok, don’t throw stones, I was just asking a question! :)   $0.25-0.50 cents per gallon production cost for methanol without subsidies and at reasonable scales.

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  2. By Kit P on July 19, 2010 at 11:19 pm

    Great news!

     

    “This CBO study assesses
    the credits’ contributions to achieving energy and environmental
    goals in the light of those forgone revenues; it does not consider
    any impact on farm incomes or the agricultural sector more broadly.”

     

    A successful government
    programs. The NRDC hates anything that works and we must make up
    complaints in favor of: NG writes,

     

    “But how about vehicle
    efficiency or electrification or getting advanced biofuels
    commercialized?”

     

    Well what about it? Last I
    checked we are still working on those.

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