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Coalition of 90 groups urges Congress to end corn ethanol subsidies

Sasha Stashwick

Posted March 1, 2011

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Today, a whopping coalition of 90 organizations, from Freedomworks to, the Grocery Manufacturers Association to Oxfam, and dozens of environmental, agricultural, religious, taxpayer interest and business groups all sent a letter to Congressional leadership calling on Congress to end wasteful corn ethanol subsidies and resist industry pressure to spend more taxpayer dollars supporting this dirty fuel.

In these politically partisan times, it’s rare to see this diverse an array of organizations come together with one voice. Their message is clear:

“At a time of spiraling deficits, we do not believe Congress should continue subsidizing gasoline refiners for something that they are already required to do by the Renewable Fuels Standard.

This is not the first time that business associations and advocacy groups, lawmakers and major newspaper editorial boards from the left, right and center have all come together to reject more giveaways to old, dirty corn ethanol by allowing the Volumetric Ethanol Excise Tax Credit or “VEETC” to expire at year-end.

Today’s letter shows that the coalition continues to grow and its message cannot be ignored.  In these difficult times, we have to be smarter than ever about how we use our tax dollars.  A $6 billion dollar per year subsidy to gasoline refiners for blending corn ethanol they are already required to blend by law is unacceptable.

As I discussed here, it used to be conventional wisdom that the corn ethanol industry was too strong to take on. Industry lobbyists used every trick in their playbook to keep their billions a year in subsidies, including making grossly inflated jobs claims, issuing dire warnings about their (in)ability to compete without continued government subsidies, and repeatedly attacking the science on the lifecycle environmental impacts of corn ethanol

But as the coalition letter points out, the facts are crystal clear: analysis after analysis has shown the redundancy and wastefulness of the VEETC and concluded that ending it would have little impact on domestic corn ethanol production or jobs. 

Congress should heed this call to stop wasting scarce taxpayer dollars supporting a mature corn ethanol industry that pollutes our air and water at the expense of supporting the cleaner, advanced biofuels we need. It’s time to end the VEETC, once and for all.

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BiobloggerMar 1 2011 12:25 PM

I respectfully recommend that before ending the only clean source of oxygenates (corn ethanol) in this country and the only commercial scale biorefinery network we have to provide alternatives to oil (talk about dirty and expensive), that the advanced biofuels alternatives for cellulosic ethanol actually be produced at scale, first. That will not happen this or even next year.

We need a smooth transition from where we are now (oil dependence) to where we want to go (cellulosic and algal biofuels alternatives) for many reasons. We need to continue infrastructure and flex-fuel car availability to proceed apace and corn ethanol is enabling us to do that.

But at least as important is preserving investor confidence. We currently have one year left of subsidies and it is generally accepted that that is all that forecasts can be based on Jerk that out now and investors will recognize that there is no reliable forecast on new biorefinery projects that can be predicted in the U.S. because policies are unreliable. That kills the involvement of private industry and even risk-taking venture capitalists in domestic biofuels projects of any kind.

Biodiesel subsidies were suspended and it severely hurt that industry. Let's show a little patience otherwise we are in danger of further compromising our energy security and economic future.

Roger EricksonMar 1 2011 03:06 PM

When you get rid of the oil company subsidies that are in the many billions of dollars then you can talk about ethanol. Until then we need to realize that corn ethanol is a stepping stone to advanced biofuels and we should stop demonizing ethanol and playing into the hands of the grocery manufacturers who are pumping our kids full of empty calories in the form of cheap sweeteners. There is an inversely proportional link between biofuels policy and epidemic obesity in this country. Thus the reason for the grocery people to attack ethanol. Wake up America. If ethanol incentives go away who probably wins?--big oil and big soft drink and livestock companies.

Clay OggMar 3 2011 01:00 PM

I wonder how many grocery shoppers would support the comment suggesting the burning of food, and the resulting higher food prices, offers a good policy for addressing obesity. I suspect it would be close to one percent, which is the portion of the U.S. population that produces America's crops. The largest 15% of farmers account for over three fourths of farm sales, so the benefits from biofuel subsidies and mandates go to a very wealthy group of folks.

The real losers, of course, are the billions of poor people in developing countries who spend most of their income on food. In Mideast countries, like Egypt, about half of the population lives on less than $2 per day. But we all are victims of political unrest and inflation that the higher crop prices are causing.

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