We need to level the playing field and eliminate mandates, subsidies, tariffs and price supports that focus exclusively on corn-based ethanol and prevent the development of market-based solutions which would provide us with better options for our fuel needs.
—John McCain

Ever since I posted an article on ethanol, I was put on a pro-ethanol mailing list (Renewable Fuels Association). Recently, I received this press release:

Ethanol and renewable fuels have received attention in this year’s presidential debates and in the campaign. Specifically, the assertion has been made that one way to balance the federal budget and help solve the economic crisis is to eliminate the tax incentives that have helped to build America’s domestic renewable fuels industry. Such an assertion fails to account for ethanol’s role in reducing our dependence on imported oil, lowering gas prices at the pump, stimulating investment in rural America, creating millions of green jobs, and lowering federal farm program costs. The claim that cutting these programs will save taxpayer dollars is wrong. Federal incentives for ethanol generate revenue for federal and state governments and are saving American consumers money.

Below are just some of the economic benefits realized by an increasingly robust American ethanol industry:

• In 2007, the ethanol industry added nearly $48 billion to the nation’s GDP and generated $4.6 billion in federal tax revenues and nearly $3.6 billion in tax revenues for state and local governments.
• According to the U.S. Department of Agriculture, the increased demand for grain used in ethanol production reduced federal farm program costs by more than $6 billion.
• With clean burning ethanol blended into 70% of the nation’s gasoline, domestic ethanol production has reduced America’s dependence on foreign oil by over 400,000 barrels a day. Several independent analyses have recently concluded the use of ethanol in the U.S. is saving consumers between $0.25 and $0.50 a gallon.
• The production and use of 6.5 billion gallons of domestic ethanol in 2007 reduced oil imports by 228 million barrels, saving $16 billion of taxpayer dollars.

These increases in tax revenues and savings in federal program payments and oil imports totals more than $30 billion. That compares to the $3.4 billion that oil companies received for blending ethanol in 2007.

By a factor of nearly 10, the investment in America’s ethanol industry is producing economic and energy security benefits that are unmatched by any other renewable fuel technology today.

Some critics, on the other hand, don’t have a problem with ethanol getting some subsidies, but believe they have been over-subsidized:

Corn ethanol subsidies totaled $7.0 billion in 2006 for 4.9 billion gallons of ethanol. That’s $1.45 per gallon of ethanol (and $2.21 per gal of gas replaced).

Even with high gas prices in 2006, producing a gallon of ethanol cost 38¢ more than making gasoline with the same energy, so ethanol did need part of that subsidy. But what about the other $1.12. Not needed! So all of that became, $5.4 billion windfall of profits paid to real farmers, corporate farmers, and ethanol makers like multinational ADM.

Still others think ethanol should be dumped completely because it’s not the eco-friendly solution it purports to be:

Scientists now believe that the production of ethanol actually creates more harmful emissions than it prevents. Indeed, Princeton University professor Timothy Searchinger and other researchers have concluded that “corn-based ethanol, instead of producing a 20 percent savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years.” (Their findings were published earlier this year in Science magazine.) The reason is that converting undeveloped land to cropland—in order to grow more corn and facilitate biofuel production—releases a massive amount of carbon dioxide. Only if biofuels are made from waste products or grown on abandoned agricultural lands does the production process actually reduce GHG emissions.

It’s enough to make a midwesterner’s head spin. Good, bad, neutral — who knows for sure?