Time to Repeal the Ethanol Mandate by Ben Lieberman and Nick Loris
The Bear on May 22 2008 at 8:28 am | Filed under: Energy Policy
Though intended to help consumers and reduce greenhouse gas emissions, the ethanol mandate has done just the opposite, contributing to high food and gas prices with little environmental benefit. Representative Jeff Flake (R–AZ) has introduced H.R. 5911, the Remove Incentives for Producing Ethanol Act of 2008, which would eliminate the mandate and other benefits for ethanol, and other measures may soon be introduced.
A return to a free market for ethanol would be a welcome step. Congress should eliminate the ethanol mandate, ethanol-related tax breaks, and protectionist tariffs that keep out potentially cheaper foreign supplies.
A Growing Mandate
Renewable fuels, and particularly corn-ethanol, have long enjoyed preferential treatment from the federal government. This includes a tax credit worth $0.51 per gallon. In addition, tariffs discourage imports of ethanol, including potentially cheaper sugar cane–based ethanol from Brazil.
Yet the ethanol industry still wanted more, and Congress, concerned about high gas prices, global warming, and domestic energy production, enacted a mandate. The 2005 energy bill contained the first-ever requirement that renewable fuels be mixed into the gasoline supply. The 2007 energy bill increased the mandate substantially. The U.S is now committed to using 9 billion gallons in 2008, rising to 36 billion by 2022.
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