The Growing Political Presence of Ethanol

The resurgence of ethanol in the biofuels industry in the past few years has caused controversy and intense competition in national and international markets. Ethanol has made a comeback (it was the original source of fuel for Henry Ford’s cars in the late 19th century), largely due to U.S. government subsidies.

In June 2011, the U.S. Senate voted by a margin of 3-1 to eliminate $6 billion in annual ethanol subsidies. However, the proposal did not pass in the House of Representatives, and is not supported by the White House. These subsidies, granted to gasoline distributors for blending ethanol with regular gasoline, result in $0.45 per gallon (of ethanol used) in tax credits. The subsidies are set to expire at the end of this year, when the issue will be revisited.

Government officials are in favor of cuts, as they believe they are a waste of taxpayer money, while some international organizations, such as the World Bank, link mass ethanol production in the United States and Brazil to increased food prices, and consequently, the risk of hunger and famine. Rising food prices have even contributed to the liquidation of U.S. poultry producers.

On the flip side, some environmentalists and scientists argue that ethanol produced from cellulose (non-edible portions of plants) is a greener alternative that could help the U.S., and other countries, gain energy independence.

The debate is certain to continue and intensify with so much money and influence at stake.

Image courtesy of smiteme