The federal government has subsidized the U.S. biofuels industry—primarily corn ethanol and soy biodiesel—for decades. Over the last 50 years, tens of billions of taxpayer dollars have been wasted on these mature industries, including through federal grants and tax credits for biofuels infrastructure.

Biofuel is an energy source derived from biological raw materials. Most U.S. biofuels are made from corn starch (ethanol) or soybean oil (biodiesel and renewable diesel). These fuels are primarily used as transportation fuels blended with gasoline and diesel. The most common blend of ethanol is E10—10% ethanol, 90% gasoline. Approximately 96% of the vehicles on the road today can use blends up to E15 (15% ethanol), while only about 8% can use blends up to E85 (51% to 83% ethanol). Ethanol is more corrosive than gasoline and often requires specialized equipment to transport, store, and dispense. In 2009, the EPA estimated that installing E85 refueling equipment would cost about $122,000 per facility. There are currently 4,722 E85 fueling stations in the United States.

While biofuels infrastructure subsidies were once sold as a bridge to next-generation, advanced biofuels derived from non-food feedstocks—such as perennial grasses and agricultural residues—taxpayer subsidies have instead been primarily used to prop up distribution and sales of first-generation, food-based biofuels derived from corn and soybean crops. This has led to increased market distortions, higher fuel and food costs, and other long-term liabilities for both consumers and taxpayers.

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