GOA report questions ethanol subsidy

The Government Accounting Agency (GAO) issued a report, GAO-09-446, in August 2009 on the tax subsidies and targets set forth in the Federal Renewable Fuels Standard for ethanol in gasoline.
The report questions the desirability of continuing the 45 cent/gallon Volumetric Ethanol Tax Credit for blending ethanol into gasoline. This is based on the ethanol industry now being considered mature, and capacity theoretically approaching the annual 15 billion gallon target set for 2015, corresponding to 10% inclusion of ethanol in gasoline.
The Renewable Fuels Association is currently lobbying the Environmental Protection Agency to raise the inclusion level to 15% to penetrate the 10% “blend wall.” The GAO recognizes the need to increase domestic production of biofuels, but considers funds should rather be expended on research and development of alternatives to corn-based ethanol.
Contrary to the assertions of the Renewable Fuels Association, diversion of corn to ethanol has resulted in increased prices of corn and other ingredients, and indirect increases of livestock production costs and consumer prices.