Saturday, July 2, 2011

Ethanol Sanity

Finally!  The US Senate recently voted to end ethanol subsidies and tariffs.  The Economist says that the subsidies cost the government $1.78/gallon.  This for a fuel that is less energy-dense than gasoline and barely more environmentally friendly.  The problem is that the US largely produces corn-based ethanol.  The process of converting corn to ethanol requires significant resources and releases significant amounts of carbon dioxide. The tariffs were designed to keep out Brazilian sugar-based ethanol.  But, production of sugar ethanol is much more efficient and environmentally friendly, requiring fewer resources and producing less carbon dioxide per gallon of ethanol produced.  So, for decades (since 1980), the US has been using subsides & tariffs to damage the environment.  It's like subsidizing the purchase of SUVs (!)  It sounds like the budget and debt limit crisis has finally brought at least the Senate to its senses.  I hope such sanity prevails in the House and the US can finally do away with this ridiculous waste of money and environmental harm.

As an added bonus, eliminating these subsidies/tariffs should reduce food inflation pressures in the US since farm land which was being used to produce corn ethanol will now be available to produce corn foodstuffs.

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