Key Ethanol Subsidies Expire

Two long-running federal subsidy programs intended to aid U.S. producers of ethanol ended in 2011: a 54-cent-per-gal tariff on imported ethanol and a 45-cent-per-gal tax credit to U.S. oil companies that purchase and blend ethanol with gasoline. The subsidies, which Congress chose not to extend, stretch back 30 years and have helped spur U.S. production of corn-kernel-based ethanol. Nearly all U.S. gasoline now contains 10% ethanol, and U.S. farmers produce more than half of the world’s ethanol. However, a subsidy program specifically for ethanol made from cellulosic materials—corn stover, wood chips, switchgrass, and other nonfood material—remains in place. Over these years, U.S. production of corn-kernel-based ethanol has grown to 14 billion gal per year, but cellulosic ethanol production has stayed flat at less than 10 million gal annually.