Download: Political Footprint of the Corn Ethanol Lobby
The federal government has in one form or another provided lucrative subsidies to the corn ethanol industry for more than 30 years, wasting tens of billions of taxpayer dollars in the process. Corn ethanol lobbyists have secured favorable treatment under the tax code, tariff protection from foreign competition, and even a government mandate for its use. From the ethanol tax credit (VEETC) to subsidies for ethanol blender pumps in the Rural Energy for America Program (REAP), corn ethanol continues to feed at the federal trough. Originally sold as a way to achieve energy independence and reduce greenhouse gas emissions, corn ethanol has failed to deliver on all fronts and instead has caused numerous unintended consequences for motorists, taxpayers, the environment, and consumers.
One federal policy from which corn ethanol benefits heartily and is vigorously trying to protect is the federal Renewable Fuel Standard (RFS), which mandates 15 billion gallons of corn ethanol be used in U.S. motor fuel every year from 2015 to 2022, in addition to 21 billion gallons of biofuels produced from non-food sources such as agricultural residues and perennial grasses. Corn ethanol backers are trying to increase their market share by eating away at mandates for other types of biofuels such as ethanol or biodiesel produced from non-food feedstocks such as switchgrass, corn stalks, wood residues, municipal waste, etc. (known as “advanced biofuels”). Currently, corn ethanol is the only biofuel produced in commercial quantities since production of cellulosic ethanol derived from perennial grasses and agricultural residues has yet to move beyond the pilot or demonstration phase. If ethanol backers successfully eat away at mandates for other biofuels, the RFS will simply be a federal mandate for the production and use of corn ethanol while production of other biofuels continues to lag behind government projections.
Thankfully some policymakers heeded our call to end wasteful subsidies for ethanol and successfully defeated attempts to extend the ethanol tax credit and protective tariff allowing it to expire at the end of 2011. This occurred despite a well-funded campaign by corn ethanol lobbyists to either retain their $6 billion-per-year federal tax credit or expand subsidies for ethanol infrastructure projects like dedicated ethanol pipelines and ethanol blender pumps. But the fight does not end there. Lobbyists for the corn ethanol industry are continuing to seek more subsidies for these types of projects with the potential reauthorization of a new farm bill this year.
Several biofuels programs already exist that funnel taxpayer dollars to the mature corn ethanol industry through the farm bill’s energy title. For instance, in 2011, corn ethanol lobbyists convinced the U.S. Department of Agriculture (USDA) to allow gasoline stations to qualify for REAP subsidies that underwrite the cost of purchasing new ethanol blender pumps which dispense higher blends of corn ethanol. Other proposals have suggested that taxpayers should be on the hook to build dedicated ethanol pipelines or back federal loans for new biofuels facilities.
Organizations and companies lobbying for such special treatment of corn ethanol include well-known names such as Archer Daniels Midland, Cargill, POET LLC, and the American Farm Bureau. These groups use their connections, revolving door lobbyists, and huge lobbying expenditures and political contributions to increase the market share of corn ethanol through expanded subsidies and favorable policies in the federal tax code and energy and farm bills. Understanding this complicated nexus is the first step in helping ensure policymaker decisions are based on merit, not muscle.
Read the full fact sheet: Political Footprint of the Corn Ethanol Lobby
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