So, could the ethanol tariff be good?
The Times Republican, which is edited in Iowa, has an article written by David Kruse which explains why ethanol should be subsidized, and then have an additional tariff when being imported. A mess? Let me try to explain his point of view a little bit.
First of all, all ethanol blended with gasoline in the U.S. has a tax credit of 51 cents per gallon. This, for WTO regulations, means that any blended ethanol is qualified, either if it's made stateside or it's imported from a third country. But, there is a 54-cents-per-gallon tariff on imported ethanol created to offset the previous credit. This protects U.S. ethanol against imports (and allows the claimed benefits of reducing foreign dependency on oil, job creation, etc.) and avoids foreign ethanol from being actually subsidized by the U.S.
Kruse tells a similar story about biodiesel in the EU, which actually has triggered a few complaints in the Old Continent. Europe subsidizes importation of U.S. biodiesel, which already qualifies for a $1/gallon tax credit. Kruse thinks that this is bad for the U.S., because it means less biodiesel is available for Americans.
So, definitely, Mr. Kruse is positioning himself to keep the imported ethanol tariff and the subsides on ethanol. What's your opinion on this?
Related:
- Video: Ron Paul on ethanol subsidies "I don't think we should do that"
- Could ethanol become a classroom political issue?
- European biodiesel manufacturers against US biodiesel imports (again)
Reader Comments (Page 1 of 1)
Wise Golden 5:35PM (2/12/2008)
He's correct. The tarrif is only designed to prevent a credit from going to another nation. Ultimately, our goal needs to be greater than pure environmentalism in order to succeed. Ethanol appeals to the concept of energy independance as well as environment, but not if it's imported. Secondly, imported ethanol requires energy to move it, weakening the environmental benefit. Thirdly, imported ethanol is likely to encourage deforestaion, weakening the environmental benefit even further. In the US, farms exist that can produce the feedstock and we do not require deforestation to get the feedstock grown. In fact, our woodlands and wetlands are largely protected at this point. If we do not grow corn or other produce on these lands, the land often times becomes subject to development that can be very counter productive to the environment.
The ethanol idustry that has developed in this country was designed to allow the government to eliminate subsidy to farmers for not producing. The amount spent on the ethanol credit saves the government 10 fold in farm credits.
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dhofmann 6:47PM (2/12/2008)
If exporting biodiesel is bad because it means less biodiesel is available to Americans, wouldn't that mean that a tariff on ethanol is also bad for the same reason?
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rgseidl 7:11PM (2/12/2008)
Scrap the $0.51 subsidy right away. Work with the EU on a definition of "sustainable" biofuels, in particular in relation to clearing virgin tropical rainforess just to grow energy crops. Narrow the tariff to biofuels and biofuel feedstocks that are not produced sustainably.
Meanwhile, create demand for biomethane instead, produced from non-woody cellulosic wastes such as corn stalks - as opposed to kernels or stover, which are valuable food and feed products. Focus on developing farm-to-grid feeder networks for the gas produced. Invest in ANG stroage technology research while promoting CNG vehicles more aggressively, especially to fleet operators.
Instead of merely raking in the profits from a captive market, ethanol refineries will have no choice but to push cellulose pre-processing technology to industrial scales earlier than intended.
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mpower 6:46PM (2/13/2008)
Ethanol is a farce... a scam... a disaster in the making.
Perhaps David Kruse and Wise Golden could explain how a net-negative fuel (which also displaces food crop acreage) deserves support of any kind, much less subsidies (paid for by taxpayers)?
Ethanol is the big loser in the biofuel debate. Why are we even discussing it? Sugar/corn-based Ethanol does not deserve attention (nor money) here or anywhere else.
Wake up and help shut-down the sugar/corn ethanol lobby!
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Wise Golden 4:36AM (2/19/2008)
Wake up and help shut-down the sugar/corn ethanol lobby!
Posted at 6:46PM on Feb 13th 2008 by mpower
You make me laugh. The powerful ethanol lobby? Have you heard of this thing called oil? The ten largest oil companies in the world have yearly sales that exceed $3 trillion. Ethanol is at about $6 billion or so.
Your opinion is counter to the official opinion of the U.S. Federal Government, the opinion of the governments of all 50 states, and the opinions of the governments of every nation on earth, with the exception of the OPEC nations. Your opinion is counter to the findings of Universities that include Harvard, MIT and Berkley. The premise that ethanol is a negative net fuel has been proven wrong, repeatedly. Ethanol continues to gain in energy net as new processes and plants are built. Ethanol is not made from products that would be used as a food supply. Corn production has increased each year by an amount that is larger than all corn used in ethanol. Food has become more expensive as a result of oil becoming more expensive.
The $0.51 credit can be done away with -- that's fine -- ethanol will survive. Oil has recieved huge subsidy by our government. What do you think we spend $500+ billion each year to protect? It's to protect oil (and other things.) Who do you think built the pipelines in our nation -- they were subsidized by tax revenue and some were built on lands owned by governments. Oil is drilled for on some public lands and oil companies pay very little for the right to do so. Oil is harvested from our oceans and oil companies pay very little to do so. The oil industry recieved huge boost of public funds in WW1 and WW2 and Korea to ensure we could fight.
Think! Think of how much treasure has been spent in the last 50 years to secure the middle east.
You are so wrong in your opinion that I can't really find ways to describ how wrong you are. The overall benefit of public funds runs 1000 times in the favor of oil as oposed to ethanol.
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Rob 1:56AM (7/31/2008)
David Kruse's arguement that the Ethanol tarrif is there as an offset to the ethanol subsidy so that foriegn exporters of ethanol would not in effect be benefiting from a U.S. subsidy is laughable in the extreme. In my opinion he obviously he is someone with a vested interest in seeing the tariff continue. He tries to make it sound like U.S. subsidy dollars would be directly deposited to these foriegn producers of ethanol when this is NOT the case. The subsidy goes to the oil REFINERS who blend in the ethanol with the oil. Not a penny of the subsidy goes to a single foreign ethanol producer. End the tariffs NOW. Pass a law stating that all new vehicles must be flex-fuel vehicles capable of burning gas, E85 ethanol, or compressed natural gas NOW. Sure, this means American dollars would now be going to Brazil. But it also means that less dollars would be going to Arab countries which hate our guts and will turn around and try to kill us. It sounds like a good trade off to me.
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