Annual biofuel subsidies will hit $60 billion in 2022 — Earth Track

by Marlo Lewis on May 12, 2009 · 1 comment

in Agriculture, Global Warming

Doug Koplow of Earth Track, assisted by researchers with Friends of the Earth, has produced a new study, A Boon to Bad Biofuels, on the taxpayer cost of federal biofuel tax credits and mandates. The numbers are staggering.

In 2008, federal support for ethanol and biodiesel totalled more than $9.5 billion. The subsidy system has two main components:

  1. The Renewable Fuels Standard (RFS), which mandates increased blending of biofuels into the national motor fuel supply, ramping up from 9 billion gallons in 2008 to 36 billion in 2022.
  2. Tax credits including the Volumetric Ethanol Excise Tax Credit (VEETC), which pays out $0.45 for each gallon of corn ethanol; a parallel program for biodiesel worth $1.00 per gallon; and a production tax credit that pays $1.01 for each gallon of cellulosic ethanol produced.

“In their current form, these tax credits scale linearly with production, without limit,” notes Koplow. This means that the $9.5 billion in subsidies in 2008 increases six-fold to $60 billion in 2022, “due both to more production and to a shift to more heavily subsidized cellulosic fuels.” The cumulative cost from 2008 to 2022: $420 billion, nearly 40% of which will go to the corn industry.

But wait, there may be more. As a candidate, Obama proposed to up the RFS to 60 billion gallons by 2030. If this proposal is adopted, “subsidies would top $120 billion per year by the end of the period, for a cumulative subsidy during the 2008-2030 period of more than $1 trillion.”

Kudos to Koplow and his colleagues at Friends of the Earth for this important contribution.

Tagged as: Biofuel, Earth Track, ethanol, Friends of the Earth, Renewable Fuel Standard, subsidy

{ 1 comment }

Avitar May 12, 2009 at 8:47 am

I think that this is an understatement. The costs of biofuels are going to accelerate as the shortage of food increases. The banned chemicals and bad economic policy will increase the costs and reduce the supplies, which will drive up the prices. Incorporating inflation already built into the economy, I am thinking 200 billion by 2022, at least.

I think that the KKK will be the largest third party having split off from the Democrats by then too.

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