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CBO Report: Ethanol Industry Reaping Benefits from Biofuel Subsidies

Friday, July 16, 2010

(American Meat Institute)

The Congressional Budget Office (CBO) has released a study assessing the subsidies provided for producing different types of biofuels.  The study also estimated the cost to U.S. taxpayers and analyzed the interaction of the tax credits and mandates to produce biofuels.  The study was requested by the Chairman of the Subcommittee on Energy, Natural Resources and Infrastructure of the Senate Committee on Finance.

According to the report, after adjustments for the different energy contents of the various biofuels and the petroleum fuel used to produce them, producers of ethanol made from corn or other similar feedstocks receive 73 cents to provide an amount of biofuel with the energy equivalent to that in one gallon of gasoline. Using ethanol to reduce gasoline consumption by one gallon cost taxpayers $1.78.

The report also determined that to the extent mandates determine levels of production in the future, the biofuel tax credits would no longer be increasing production.

The tax credit for corn-based ethanol is set to expire December 31, 2010.

The report, “Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals,” can be accessed at http://www.meatinstitute.org/ht/a/GetDocumentAction/i/61065.

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