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Ethanol Subsidies: Adding Fuel to the Fire?

EXECUTIVE SUMMARY

In the wake of the Republican Party’s capture of the House of Representatives at the midterm elections, U.S. policy toward the use of biofuels for transportation could be about to change. U.S. policy has been based on the use of blender credits to encourage the mixing of biofuels with gasoline, and a tariff levied on imports of ethanol—the most widely used biofuel. These subsidies and the ethanol import tariff are due to expire at the end of this year and (Republican) deficit hawks do not want to see them renewed. This is despite an estimated net (of subsidies)[...]

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