All You Need To Know About U.S. Ethanol Subsidies

Joanna Schroeder

Ever wonder what would happen if the ethanol subsidy disappeared? Well, today UNICA answers that question in their new video, “All I Need to Know About U.S. Ethanol Subsidies,” that explains to taxpayers how Congress could save them $6 billion per year and help lower prices at the pump. For consumers to reap these savings, all lawmakers have to do is let 30 years of ethanol tax credits and trade protection expire on December 31.

According to UNICA, current U.S. ethanol policies include an interlocking system of subsidies and tariffs that cost taxpayers $6 billion per year for a total of $45 billion since 1980. These subsidies contribute to fluctuating gas prices and make sugarcane ethanol practically unavailable in the U.S., although sugarcane ethanol is favored in some areas such as California because it has a lower carbon intensity than other current forms of ethanol.

The video explains these policies as well as discusses the environmental, economic and energy security benefits of opening up the market to foreign sources of ethanol.

“Americans are increasingly writing and calling Congress to urge that it’s time to allow clean, renewable energy sources like sugarcane ethanol into the U.S.,” said Joel Velasco, UNICA’s Chief Representative in North America. “Their letters and phone calls all echo one thing: they are tired of having their tax dollars used to keep these options out of reach and to support a thriving industry that’s already the world’s largest.”

The majority of sugarcane ethanol is produced in Brazil (who is also one of the largest producers of sugarcane), but sugarcane is also grown in more than 100 countries. The Brazilian ethanol industry has been working with various countries to help them develop their own biofuels programs using local feedstocks.

In fact, Brazil Mines and Energy Minister Marcio Zimmerman, just announced on Monday that Brazil is expected to double its ethanol production within the next 10 years. The country produces 26 litres today and will reach 64 billion litres in 2019, and Zimmerman says they will have a surplus to export.

Earlier this year, Brazil eliminated its tariff on imported ethanol through the end of 2011, in hopes that other countries, specifically the U.S., would follow suit. The country says it will make the move permanent if the U.S. drops its ethanol subsidy and argues that by opening up the marketplace, it allows consumers to save money at the pump.

“We are 100 days away from cleaner and more abundant energy choices at less volatile prices if Congress lets the ethanol subsidy and tariff expire on December 31,” concluded Velasco. “We hope American drivers take a few minutes to watch this video and see how their fill-ups could be improved.”

corn, Ethanol, Legislation, UNICA, Video