From all corners: Congress shouldn't waste dollars on ethanol or cut support for clean energy

Progressive and conservative Senators, clean energy advocates, livestock farmers, fiscal conservatives, and today a new wave of editorial boards all agree: Congress and President Obama shouldn't waste tax dollars on corn ethanol that pollutes the air we breathe nor fail to support wind, solar and efficiency, which create clean, renewable electricity and put Americans back to work. This means letting the wasteful corn ethanol tax credit and tariff expire and extending the grants and tax credits for renewable power and energy efficiency.

The New York Times get's it exactly right:

Congress should keep the subsidies for renewable energy while jettisoning the subsidies for corn ethanol. That makes sense for the environment, the economy, and for American taxpayers.

The current package being negotiated in the House and Senate would end support for wind, solar, clean tech manufacturing and energy efficiency. Specifically, the proposal would not extend the “Treasury Grant Program” (Sec. 1603 of the American Recovery and Reinvestment Act), the Advanced Energy Manufacturing tax credit (section 48C of the tax code) and the building energy efficiency incentives (sections 45L, 25C, and 45M of the tax code). These are programs that have created clean energy and construction and manufacturing jobs in nearly every state. (Here's a factsheet on these tax credits.)

The Washington Post and the Chicago Tribune focus on the wasteful corn ethanol tax credit, which would cost $6 billion next year and more than $31 billion over the next 5 years and essentially bribes the corn ethanol and oil industries to obey the Renewable Fuels Standard law, which already guarantees the ethanol market:

If you're wondering which of America's leaders are serious about cutting wasteful government spending, you might start by examining who's behind the effort to extend tax breaks to America's corn ethanol industry, which expire at the end of the year. - the Washington Post.

It's not every day that California Democrat Barbara Boxer, one of the most liberal members of the U.S. Senate, joins forces with Arizona Republican Jon Kyl, one of the most conservative. But they and 15 other senators signed a letter calling the existing 45-cent-per-gallon federal subsidy to ethanol fuel and the 54-cent-per-gallon tariff on imported ethanol "fiscally irresponsible and environmentally unwise." They oppose renewal of the two programs, which are scheduled to expire at the end of this year.

Yet there's talk that an extension of the subsidy, and even a boost in the tariff, could be included in the tax deal reached by President Barack Obama and Republican leaders. That would be a terrible mistake.

The fiscal tab of the federal tax credit comes to about $6 billion a year, which is more than the entire savings from President Obama's two-year freeze on federal civilian pay. The more dire our fiscal predicament grows, the harder it is to justify this special-interest expense. - the Chicago Tribune.

As most of the major environmental groups said in a letter to the House, Senate and President Obama yesterday:

Continuing the massive subsidy for corn ethanol while eliminating needed support for innovative clean energy technologies would take U.S. energy policy in precisely the wrong direction. Such a bill would provide handouts to an established enterprise that markets a product that drives environmental degradation and that already gets more than enough assistance from government mandates, while eliminating critically important support for newer, cleaner, and more struggling efforts.

The Congress should not, as one of its final acts take a giant step backward on U.S. energy policy, disadvantaging the very industries and technologies the U.S. needs to progress economically and environmentally.

About the Authors

Nathanael Greene

Director, Renewable Energy Policy, Energy & Transportation program

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