Biofuels industry liable to lose their federal funding
posted at 2:01 pm on July 11, 2012 by Erika Johnsen
House Republicans are looking to eliminate government funding for the biofuels industry through the farm bill — and it feels so good. I am always pleased when any federally subsidized product, service, or industry is finally forced to face the music and compete in the free market based on its meritorious profitability rather than its political profitability. …Granted, that doesn’t seem to happen often, due the ever-expanding size of our federal bureaucracy and the ensuing tendency to nurture bad policies, but it looks like the biofuels industry may at last find itself released back into the wild of unsubsidized competition.
Biomass and biofuels groups warn that the loss of $800 million in guaranteed federal support would stall progress in developing the fuel source and cause job losses in rural communities that can least afford it.
The industry claims interest groups such as fossil fuel producers and livestock owners have hijacked the process as the House Agriculture Committee begins a markup of the bill this week. …
House Republicans say the plans to choke off funding for biofuels and biomass projects reflect the basic fiscal reality that cuts have to come from somewhere. …
The funding goes toward a variety of loans and grants for bio-refineries and renewable-energy programs, as well as subsidies for dedicated energy crops.
Hmmm. If the loss of federal funding would stall biofuels’ progress, can we be sure that it’s a viable fuel source currently worth the costs? If, without government subsidies, the biofuels industry would bleed jobs, are those really productive jobs that add to economic growth, or are they unproductive jobs that detract from economic growth at taxpayer expense?
While the biofuels industry is of course going to play up the angle that they’re the victims of well-monied interests like big oil, they can really quit acting as if they don’t have powerful political influences of their own. Farming-heavy states and agribusinesses have demonstrated a remarkable penchant for endorsing both liberal and ‘conservative’ politicians who manage to find ample justification for supporting agriculture-related handouts. Even Grist had a post yesterday acknowledging that ethanol is “beloved by farmers,” but obviously, farmers don’t love ethanol itself — they love ethanol subsidies.
What’s most interesting about the debate over the RFS and, specifically, the increase from E10 to E15 is the light it shines on the political process. Midwestern corn-producing states (and their elected officials) are happy about the mandate. Including more ethanol means buying more of the corn from which ethanol is made. Oil producers (and their elected officials) don’t like the increase. More ethanol means less gasoline; less gasoline means less money.
The Grist article also points out that a lot of greenie groups don’t like ethanol, either — the analyses of the environmental benefits versus the costs are highly dubious at best. So, remind me, why are we providing the biofuels industry with all of this “free money,” again? I say it’s time to cut ‘em loose.
Breaking on Hot Air