4 editorials and two confessions highlight wasteful ethanol tax credit

In the last week, 4 major newpapers have editorialized against the corn ethanol tax credit. First, The Chicago Tribune wrote under the headline: Enough Ethanol. Then The Washington Post wrote: It's time to end the excessive subsidies for corn ethanol. This past Monday, The Wall Street Journal wrote: Survival of the Fattest. This was interesting not just because it slammed the ethanol tax credit, but because it specifically took issue with ethanol as a way to reduce global warming. As the editorial pointed out, corn ethanol is either an outrageously expensive way to get carbon reductions or (as EPA found) actually making global warming worse. Finally today, The New York Times got it just right with: Energy Subsidies — Good and Bad. The ethanol subsidies are bad and the cash grants for wind and solar are good. Since Congress is hopefully thinking hard about how to spend our tax dollars, this is a perfect example of the opportunity cost that the corn ethanol tax credit imposes on us. We simply can't afford to be wasting $5.4 billion this year and over $30 billion over the next 5 years if we extend the tax credits.

And even major players in the ethanol industry have started to admit that the industry doesn't need the tax credit. As my colleague Sasha wrote earlier this week, Valero--an oil company that is one of the largest recipients of corn ethanol tax credits--told its investors that there would be no change in the profitability of corn ethanol if Congress let the tax credit expire. And yesterday, while arguing for shifting government support to things like ethanol infrastructure, the CEO of the 4th largest ethanol producer told the Omaha World Herald that even without the tax credit, ethanol is still competitive with gasoline.

NRDC has highlighted the wastefulness of spending billions to support a mature and mainstream industry like corn ethanol, the redundancy of paying oil companies to purchase corn ethanol when the Renewable Fuel Standard already requires them to do so, and the opportunity cost of spending billions in taxpayer dollars supporting an old, polluting technology instead of the new, cleaner and more competitive advanced biofuels we need.

It's time for Congress to let the tax credit expire.