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Corn+Soybean Digest

CBO Report Doesn't Tell the Whole Story On Ethanol Tax Incentives

A new report from the Congressional Budget Office (CBO) takes the issue of ethanol tax incentives out of context, providing no comparison to other technologies or contrasting the benefits of biofuels against the clear destruction wrought by fossil fuels, according to the Renewable Fuels Association’s (RFA) initial review.

“It may seem penny-wise, but would be pound-foolish to dismiss the benefits of current biofuels in light of the havoc wrought by our dependence on fossil fuels,” says RFA President Bob Dinneen. “Analyzing American energy policy cannot occur in a vacuum. To effectively address the energy, environmental and economic problems caused by our addiction to oil, we need to take a holistic approach. All comprehensive analyses demonstrate that ethanol provides a real world, cost effective tool to reduce dependence on oil and create domestic jobs. Additionally, as CBO rightly notes, ethanol also reduces carbon emissions compared to gasoline.” 

RFA is currently analyzing the entire report and will have a detailed analysis up on its blog as soon as it is ready.

Tackling the energy problems the country faces will neither happen overnight or for free. It will take time and money to transition from a pollution-intensive energy economy to one relying on clean, renewable energies like ethanol.

It will also take a redirection of funds away from fossil fuels to these renewable technologies. As a recent International Energy Agency report details, the world spends more than $500 billion annually on fossil fuel subsidies. The results have led to geopolitical instability, economic havoc as seen by the spike in oil prices in 2008, and environmental destruction that is unfortunately on display today. 

Also lost in the CBO discussion is the constant state of evolution underway in ethanol production today. A recently published study in Biotechnology Letters found that American ethanol production has reduced water use and overall energy use by 20% and 28%, respectively, in less than a decade. Simultaneously, ethanol biorefineries are increasing ethanol yields, providing a high value livestock feed and producing additional coproducts like corn oil that can be used to further displace petroleum in products from diesel fuel to lubricants. 

Buttressing this report was another study published in the Proceedings of the National Academy of Sciences that determined advancements in farming saved the world from more drastic climate change by mitigating greenhouse gas emissions that might have otherwise occurred.

Correctly, CBO excluded the unproven theory of international indirect land use change (ILUC) in its estimates of CO2 reduction costs. This theory has been roundly refuted and there is no consensus on the best methods or tools for analyzing indirect emissions.

“There is no renewable technology available today that can match ethanol’s ability to reduce oil use and create jobs, all while emitting fewer climate changing gases than gasoline,” says Dinneen. “New biofuel technologies, like cellulosic ethanol, promise to provide even greater benefits. Unfortunately, it appears CBO has chosen to take a narrow, time constrained look at the issue and has failed to consider the much larger picture.”

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