Rethinking Biofuels Policy
As Congress debates extending biofuel tax credits and the ethanol import tariff, questions are being raised about the broader policy mix that includes subsidies, tariffs, mandates, and sustainability standards. As a recent CBO report revealed, some of these policies — the Volumetric Ethanol Excise Tax Credit (VEETC) in particular — are quite expensive. Although biofuels were once hailed as a panacea to global warming and energy security while helping farmers and generating jobs, recent analysis has shown that some of these policies work contrary to such goals and negatively impact air and water quality, wildlife habitat, and food affordability as well. What does the evidence indicate about energy security and green jobs creation claims? Are there any compelling reasons to subsidize biofuels, or should policymakers simply eliminate such preferences?