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Home Local Maryland Government Announcement Originally published March 31, 2011

IT’S TIME TO ELIMINATE THE SUBSIDY FOR ETHANOL by U.S. Senator Ben Cardin



As Congress struggles to find ways to reduce our budget deficit, I have one suggestion that can save American taxpayers as much as $6 billion annually: eliminate the federal subsidy for corn ethanol. Today, we provide what is basically corporate welfare to the oil industry for a tax break that the Government Accountability Office says is “largely unneeded.”

In introducing the bipartisan the Volumetric Ethanol Excise Tax Credit (VEETC) Repeal Act, S. 520, with U.S. Senator Tom Coburn (R-OK), I want to draw attention to a costly and unnecessary expense that is driving up our deficit. The VEETC, often referred to as the “blenders tax credit,” provides a 45-cent per gallon tax credit to oil refiners for blending corn-based ethanol into gasoline that is sold to consumers at the pump. In addition to increasing our deficit, corn-based ethanol fuels don’t make much sense from an energy or environmental standpoint when you consider that ethanol is expensive to produce and burns with one-third less efficiency than gasoline.

A tax break for ethanol is a gift to big oil companies and grain producers -- a gift that actually harms American consumers. Corn is a staple food commodity that is found in millions of American products from food additives to livestock feed. More than one-third of our nation’s corn is now going into the production of ethanol. This increased demand for corn is raising the price of everything from eggs to milk to chicken to breakfast cereals, and it’s the American consumer who is hit the hardest with higher food bills.

Using corn to make ethanol also harms our environment. Corn is a “resource intensive” commodity to produce, requiring large amounts of water and fertilizer to cultivate. One season of corn production can so deplete the nutrients from soil that it is expensive and difficult to successfully replant that field from season to season. Once corn is harvested, it is a costly and energy-intensive process to turn it into an ethanol fuel fit for commercial sale.

We need to develop sustainable, renewable biofuels -- those that are not derived from food-based commodities such as corn and sugar -- to make our nation less dependent on foreign energy sources. While I support developing the next generation of algae and biofuels, I am opposed to giving away billions of taxpayer dollars for a fuel product that is driving up the cost of food, harming our environment and doing little to reduce our consumption of foreign oil.

It’s time we stop subsidizing big oil companies to produce a fuel product that they will produce with or without an additional $6 billion annual taxpayer subsidy. The elimination of this subsidy will not adversely affect domestic energy supply. We need to put American families and our environment first and that means developing an energy policy that makes sense and doesn’t rely on costly subsidies for an industry that is already making trillions of dollars in profits.