Why Taxpayers Should Care About Cellulosic Ethanol

Cellulosic ethanol, a form of non-food based fuel produced from sources such as algae, wood chips, and corn stover,  is not a likely topic of dinner table discussion.  But as taxpayers, whether we were aware of it or not, we have been involved in attempts to produce it for many years.

Why?  The Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry Sen. Debbie Stabenow (D-MI) 5% is convinced it’s a central part of becoming energy independent and lowering our gas prices at the pump.

Without questioning the viability of these biofuels in the free market, Sen. Stabenow champions “tax credits to support long term investments in our energy future.”  Translation: she wants taxpayers to be forced to subsidize companies that produce these biofuels.  And this year, she got her way with the passage of the food stamp and farm bill.

She made the following remark at a hearing entitled  “Advanced Biofuels: Creating Jobs and Lower Prices at the Pump“:

We’ve heard for years that advance bio-fuels are just around the corner.  Well, we’re here.  We’re at the point where it’s actually happening.  Instead of having one more hearing where we hear ‘five years from now, we’ll have cellulosic ethanol,’ we are excited to have people here today that will be able to touch on some of the success stories that are out there.

She continued:

As we all know, the farm bill is a jobs bill and that’s why I’m so proud of the work that we all did together in developing a robust  energy title.  The energy title funds critical programs to help our farmers produce energy from non-food sources and helps companies get low interest loans for those facilities.  And of course all of that creates jobs.

The farm bill is about “creating jobs and growing rural economies while producing advanced biofuels, which ultimately help us become more energy independent and lower our gas prices at the pump,” she said toward the conclusion of her remarks.

She succeeded in putting an attractive veneer on the underlying reality of subjecting taxpayers to funding these efforts.  As the Heritage Foundation’s Nicolas Loris explains:

First, it is not the role of the government to lower financial risk. Markets take on risks all the time. Government involvement only privatizes the gains and socializes the losses. Second, good economic ideas overcome the chicken-and-egg situation all the time without government assistance. We have gas stations and gas-powered cars, cell phones and cell towers. No big government programs were necessary to make that happen.

Sen. Stabenow admitted in her remarks that companies can make progress with biofuels without taxpayer support, but immediately followed that up by advocating once again for taxpayer backing for other biofuels companies seeking such support:

Some of our airlines have undertaken their own biofuels initiatives because it makes good business sense for them to do so.  But to continue growing this industry we need policies that support it.

As Loris explains the private sector is fully capable of advancing this industry on its own, with out “policies that support it,” or taxpayer backing:

You know who else can do all those things if they make economic sense? The private sector.  If these efficiency improvement, renewable energy installation or increased biodiesel use for transportation make sense, private companies can pay for, develop and sell the production without the “assistance” of the taxpayer.

Ending subsidies for all energy sources is the only fair thing to do for taxpayers and consumers.  That way, the most desirable, viable products will be produced at the most affordable rates.  As Heritage puts it, “Subsidizing energy sources merely shifts labor and capital away from economically viable projects that would actually help to grow the economy to politically popular projects.”

To the end of protecting taxpayers and consumers, Rep. Mike Pompeo (R-KS) 82% introduced the Energy Freedom and Economic Prosperity Act (H.R. 259), which would eliminate all current energy subsidies in the tax code.  If you want these biofuels subsidies to end, tell your representative to support Rep. Pompeo’s energy bill in the form below.

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Taxpayers should not be forced to subsidize biofuels.

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