BIOMASS HUB

Ethanol subsidies are boiling to the surface as the key issue for 2010.  When Illinois and Missouri members of Congress opened a new effort to extend subsidies for the industry by floating a bill to extend tax credits after 2010, opposition was quick to counter.

The trouble with the ethanol subsidies is that they go to the oil industry anyway, which get 45 cents per gallon for blending corn-derived fuel with gasoline.  The oil industry already must do so anyway under the EPA’s RFS 2.0, which requires 12 billion gallons this year and 15 billion gallons in 2015.  The incentive plus the mandate has been likened to being paid to not speed (see The Biodiesel Subsidy Boondoggle).

Meanwhile, the farm lobby is a powerful force in Washington, which makes it a tough fight for any opposition to the subsidies.  But new spending rules in Congress are designed to limit government giveaways, which could skew the fight in favor of opponents to the subsidy extension.

The ethanol industry claims that without the tax break for U.S.-made ethanol, the oil industry will look to Brazil and elsewhere to meet the RFS 2.o requirement.

Read more about the battle over ethanol subsidies in the St. Louis Dispatch.