A Boon to Bad Biofuels: Federal Tax Credits and Mandates Underwrite Environmental Damage at Taxpayer Expense

Federal Renewable Fuel Standards (RFS) were nearly quintupled in the 2007 Energy Independence and Security Act, mandating use of 36 billion gallons of biofuels per year by 2022.  Because key federal subsidies scale linearly with production without limit, biofuels will receive more than $400 billion in cumulative subsidies between 2008 and 2022; nearly 40% of this will flow to corn ethanol.  Should proposals advanced by the Obama campaign to boost the mandate to 60 billion gallons per year by 2030 be implemented by the Obama administration, cumulative subsidies would surpass $1 trillion by 2030, with annual subsidies of more than $60 billion.  

Restrictions on accessing this pool of support for environmentally-damaging biofuel production chains has been limited under the mandates, and non-existent for the lucrative excise and production tax credits.  A variety of simple reforms to more effectively restrict what fuels and production systems receive support; and to implement a platform- and fuel-neutral policy approach for options to displace oil would provide large and rapid fiscal, environmental, and competitive gains.  Earth Track and Friends of the Earth.  (May 2009).