In comments last week, Secretary of Agriculture Tom Vilsack said that USDA plans to do what it can to make ethanol a national industry by investing in infrastructure and technology. The agency, he said, “is set to release…a roadmap on how to build on the success of corn-based ethanol and to meet the goals of the federal Renewable Fuels Standard.”
Today, multiple federal policies encourage the production and consumption of ethanol but as this NRDC co-sponsored ad clearly states, today’s policies are not about creating new or cleaner ethanol. As currently structured, the Volumetric Ethanol Excise Tax Credit (VEETC) almost exclusively supports ethanol from corn, which creates more global warming pollution than the oil it is supposed to replace, increases water pollution, erodes our valuable soils, and raises the cost of corn sold for food and feed.
In terms of state participation, the ethanol industry today looks like a far cry from the national industry Tom Vilsack envisions. A recent analysis of which states benefit from the VEETC commissioned by NRDC shows just how concentrated conventional corn ethanol production is:
While the burden of paying for corn ethanol subsidies falls on every American taxpayer, benefits accrue primarily to just a handful of states: Iowa, Nebraska, Illinois, Minnesota and South Dakota. Corn ethanol produced in Iowa alone accounted for 25% of the $4.8 billion in VEETC value in 2009, the equivalent of over $400 per person in the state. In fact, the top five ethanol-production states all benefitted handsomely:
By 2022, the RFS mandates the use of 36 billion gallons of ethanol and other biofuels, including new and cleaner biofuels, such as those made from dedicated “energy crops” like willow and switchgrass. But by indiscriminately subsidizing the best and worst gallons of ethanol, we’ll never get where we need to go. Today most states do not even participate in the biofuels market. But a reformed, greener biofuels tax credit that rewards the cleanest gallons would spur innovation and help create the national ethanol market that Vilsack envisions. We’ve been working on some analysis to show just what that national market would look like. Stay tuned for more on that in the coming days.