BIOMASS HUB

When it comes to picking winners in the economy, the U.S. government — for the most part — tries to stay out of the ring.  But in the world of biofuels, heavy subsidization is the norm…at least according to Obama’s 2011 budget.

Obama’s 2011 budget makes a deliberate shift away from fossil fuel subsidization in favor of renewables.  Dave Levitan writing for Solve Climate reports:

The 2011 budget also proposes extending a number of other tax laws, including a $1 per gallon credit for the production of biodiesel and a $0.45 per gallon credit for ethanol. The former was allowed to expire at the end of 2009, while the ethanol credit is set to expire at the end of this year.

There is little question that the ethanol credit is a clear example of the government “picking a winner” in the biofuels realm, and many environmentalists have since come out against the credit amid evidence of rising food prices and little greenhouse gas reduction.

Jeffrey Sachs, director of the Earth Institute at Columbia University, told the committee that while alternative fuels should be pursued, the first generation biofuels, largely corn-based ethanol, were “a disaster” because of the shifting of farmland from food to fuel.

So far, the biofuel tax credits have followed different trajectories.  The message: not all biofuels are created equal; it depends on the feedstock, conversion processes, end product, etc.

With key tax credits expiring at the end of 2010, many biofuel industry organizations and interests are clamoring to get their hands on some green (see Survival of the Fittest: Making Sense of the Biofuel Subsidy Battle).

More on Obama’s budget picking winners in renewable energy.