Corn Ethanol Subsidy Extended: Not a Victory for the Environment

During this past lame-duck session, most political pundits focused on the flurry of legislative victories for President Obama. The pieces of legislation passed were generally regarded as bipartisan efforts and were seen as necessary to move the country forward. As such, legislation such as repealing DADT (Don't Ask Don't Tell) or ratifying the START treaty were seen as fairly significant and good accomplishments for the President and the country as a whole. Yet one piece of legislation that did not get as much coverage or attention was "The Senate on Wednesday voted in favor of a one-year extension of the ethanol tax credit and the ethanol import tariff at existing rates, despite complaints the subsidies were wasteful."

The extension of the ethanol subsidy is wasteful because it is effectively propping up and helping an inefficient process, namely the production of corn ethanol since it uses fossil fuels in the overall production and manufacturing process. The problem with the tax credit extension lawmakers approved for corn ethanol, in particular, is that it "drives up the cost of livestock feed (which) results in more runoff of fertilizer and pesticides from farmland." Therefore, the extension the Senate approved in essence is one where food prices could go up in the coming year because of corn being diverted to the ethanol process.

As such, the argument with corn ethanol in addition to the question of fertilizer and pesticide runoff that may result during the process is the common argument of food versus fool. From both an environmental and efficiency and to some extent economic standpoint, it is clear that corn ethanol is wasteful, inefficient, and detrimental to some degree for consumers in terms of hurting their pocketbook everytime they decide to purchase food at the supermarket. On the other side of the fence, however, is the proponents who are likely to argue that corn ethanol industry creates jobs.

However, based on the totality of evidence, the fact that it is a relatively inefficient process whereby there are more inputs into the system relative to the energy output, coupled with some of the detrimental environmental impacts such as fertilizer and pesticide runoff, it is clear that the cons outweigh the pros of extending the corn ethanol tax credit for one year. Yet, the Senate decided to do so in the lame duck session probably because of the current economic conditions and many lawmakers may have been persuaded by the industry touting the number of jobs created in the biofuels industry. Clearly, therefore, lawmakers need to find a way to balance both environmental and employment/economic concerns.  A better balance can be found, however, they should have explored other biofuels other than corn ethanol.

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