Taxpayer Supports for Corn Ethanol in Federal Legislation April 2013

Since its creation of the domestic market for corn ethanol after the energy crisis of the 1970s, the federal government has nurtured and maintained the ethanol industry with a steady stream of subsidies. Originally sold as a way to achieve energy independence and reduce greenhouse gas emissions, ethanol has been a favorite of many lawmakers: ethanol producers have received favorable treatment under the tax code, tariff protection from foreign competition, and even a government mandate for its use. As a result, taxpayers have spent billions of dollars over the last 30 years subsidizing the production of corn ethanol, while at the same time creating unintended costs for consumers and the environment.

Members of the House and Senate Agriculture Committees have said they would like to see Congress pass a farm bill this year that "by and large" contains similar language to bills passed in the full Senate and House Agriculture Committee last year (but which never became law). If this occurs, corn ethanol would continue to receive handouts through the energy  title. The mature corn ethanol industry should no longer receive taxpayer support, whether through infrastructure  subsidies for ethanol blender pumps in the tax code or production subsidies in the farm bill's energy title. Given the nation's current fiscal health, these subsidies are more egregious than ever.