Biofuels Bill: Federal Subsidies Will Top $400 Billion, Enviros Say

Posted on May 8, 2009. Filed under: Advanced Biofuel, Field-to-Pump | Tags: , , , , |

Biofuels Bill: Federal Subsidies Will Top $400 Billion, Enviros Say

By Keith Johnson

The Wall Street Journal

May 7, 2009

 

 

Replacing oil with home-grown biofuels is already proving to be an environmental headache for Washington. Fixing that could turn out to be an expensive headache, as well.

Environmental groups Earth Track and Friends of the Earth just put out a study quantifying biofuels subsidies through 2022, as the U.S. plans to massively increase production of biofuels. The upshot? The cost to taxpayers would be about $420 billion over that period, or an average of about $28 billion a year.

That’s largely because so-called cellulosic ethanol, made from non-edible stuff like grass, gets bigger subsidies than corn ethanol. And government targets mandate that cellulosic ethanol make up the biggest share of the pie, because it seems to be better for the environment—cellulosic ethanol is seen as the big winner in the administration’s new biofuels roadmap.

For example, biofuels subsidies in 2008—all corn—totaled $9.5 billion, Friends of the Earth says. That would grow to $60.7 billion in 2022, with more than $40 billion going just to cellulosic ethanol.

The study assumes that biofuels subsidies will stay the same through 2022, since there’s nothing on the books to automatically rein them in. While it’s true, as the study notes, that “no federal tax subsidy that has been granted to the biofuels industry over the past 30 years has ever been eliminated,” subsidies do occasionally get scaled back. Like the blenders credit, which was reduced from 51 cents a gallon to 46 cents a gallon this year.

The study also assumes that cellulosic ethanol makers will hit their stride and produce the billions of gallons per year mandated by federal law; so far, there are no commercial-scale cellulosic ethanol plants operating in the U.S. Less production would also mean fewer subsidy payouts by Washington.

Still, the total biofuels bill could get even bigger, Friends of the Earth argues: If President Obama makes good on campaign promises to increase U.S. ethanol production even more between 2022 and 2030—from 36 billion to 60 billion gallons–the total price tag could come to $1.2 trillion.

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About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On  April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  On January 20, 2009, Florida Energy & Climate Commission amended RET Grant Agreement S0386 to increase Renergie’s funding from $1,500,483 to $2,500,000. By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is renewable, more economical, cleaner, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

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    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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