Ethanol Industry Finds A Subsidy It Still Likes

by Brian McGraw on January 9, 2012

in Blog

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Just a few days after our previous post outlining the ethanol industry’s brave, unprecedented, legendary, and 100% voluntary decision to give up the ethanol tax credit, we see that there are still other subsidies that they are interested in keeping:

But the head of the Renewable Fuels Association—Bob Dinneen—says the industry will work to ensure that tax credits for cellulosic ethanol will continue past the end of 2012.

“We think that the production tax credit and the depreciation that is now allowed for cellulose needs to continue,” Dinneen says.

Extension of the cellulosic tax credits will send an important signal to the marketplace and encourage investment in the next generation of ethanol technology, Dinneen says.

And to those who consider it just another federal subsidy for ethanol…

“They need only look at the tax incentive for grain-based ethanol that has just expired–that demonstrates you don’t need a tax incentive forever,” Dinneen says.

“You need to encourage investment—convince the marketplace that there is going to be consistent government support that will allow the industry to get on its feet.”

Cellulosic ethanol has not yet been produced commercially, but according to the U.S. Department of Energy web site, several commercial cellulosic plants are under construction.

Not including the federal mandate for their product or various state-level incentives, the ethanol industry has been federally subsidized in some form for over 3 decades. Just think, at this pace, after another 2-3 decades of timely, critical subsidies for the cellulosic ethanol industry they might be able to make a tiny dent in our oil consumption. What a bargain!

Harold Brown January 9, 2012 at 4:26 pm

This reminds me of the story when we were building the transcontental railroad. China of course had come in with the lowest bid on railroad spikes, yet Lincoln chose to subsidise the American production of railroad spikes. In other word he chose to create an American industry to keep the money here. Even if that meant spending 30 cents per spike over the cost of China’s. Long story short, If we can make fuel here out of solid waste such as trash, tree trimmings, and crop residue, lets do it and stop sending our money as well as our children to the middle east. America is looking for something to save our economy, how about a source of energy that can never be outsorced. Heres to biofuels and the jobs they create.

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