Today, a diverse coalition of more than 30 organizations again underscored their opposition to wasteful corn ethanol subsidies with a clear message to Congress: it’s time to end the Volumetric Ethanol Excise Tax Credit, the main corn ethanol tax credit known as the “VEETC”. The group sent a letter urging Senate leadership to support a bipartisan amendment offered by Senators Tom Coburn and Dianne Feinstein to sunset the VEETC on July 1st of this year—and with it, 30 years of tax subsidies for the corn ethanol industry. In addition, the amendment would end the import tariff on foreign ethanol.
There are few issues that can garner this type of support from a coalition of otherwise strange bedfellows, including business associations, hunger and development organizations, agricultural groups, environmental advocates and budget hawks. But this effort speaks to the strong bipartisan consensus on ending subsidies to old, polluting corn ethanol, which would save taxpayers billions and finally force the mature corn ethanol industry to compete in the marketplace after three decades of government support.
As the letter states, “continuing to subsidize oil companies to blend ethanol – which they are already required to do by the Renewable Fuel Standard – is wasteful and unnecessary”. RFS mandates already require oil companies to blend increasing amounts of ethanol into our fuel supply. The VEETC is therefore nothing more than a bribe to oil companies to get them to obey the law. Because of its duplicative nature, eliminating it will save scarce taxpayer resources with little impact on domestic ethanol production, prices or jobs in the industry.
Today’s corn ethanol creates more global warming pollution than the oil it is meant to replace. And because the VEETC isn’t tied to environmental performance, it does nothing to encourage cleaner, better performing biofuels. Instead, it simply pumps billions into conventional biofuels made from first-generation feedstocks like corn, which have unacceptable impacts on food prices around the world and comes at the expense of investing in the advanced biofuels we need to reduce our dependence on oil, create jobs and address climate change.
In these difficult times, we have to be smarter than ever about how we use our tax dollars. Billions in subsidies to gasoline refiners for blending dirty corn ethanol they are already required to blend by law is unacceptable. Congress should heed this call to stop subsidizing a mature corn ethanol industry that pollutes our environment at the expense of supporting the cleaner, advanced biofuels we need. It’s time to end the VEETC, once and for all.