The Senate voted 73 to 27 on June 16, 2011 to repeal the Volumetric Ethanol Excise Tax Credit (VEETC) and ethanol tariff as part of an amendment to S. 782, the Economic Revitalization Act. Senators Dianne Feinstein (D-CA) and Tom Coburn (R-OK) led the effort to end the subsidies. The VEETC is a 45-cent per gallon tax credit for oil companies to blend ethanol with gasoline. Repealing it will save tax payers $6 billion a year.
Environmental groups have long criticized the ethanol industry. The Environmental Working Group (EWG) calls the ethanol industry a “mature industry that is pressuring farmers to plant environmentally-sensitive land and pushing up food prices that disproportionately affect the poor and hungry of developing countries.”
“The Senate has put American taxpayers and our soil and water ahead of special interests and the corn ethanol lobby,” said Sheila Karpf, a legislative and policy analyst at the Environmental Working Group.
The National Resources Defense Council called the vote a “truly extraordinary showing of bipartisanship and a decisive rejection of the use of taxpayer dollars to subsidize yet another dirty fuel.” Referring to the VEETC as “wasteful and redundant,” in a statement the NRDC said the vote “is a victory for taxpayers and the environment.”
From 2005 to 2009, $17 billion was spent in ethanol subsidies, according to an EWG report, Driving Under the Influence. During that time period ethanol blended into gasoline reduced overall oil consumption “equal to an unimpressive 1.1 mile-per-gallon increase in fleet-wide fuel economy.” A gallon of ethanol yields only two-thirds the energy as a gallon of gasoline. “At the national level, this means that the 10.6 billion gallons of ethanol burned in 2009 displaced just 7.2 billion gallons of gasoline,” the report stated.
The report pointed out that making ethanol is energy intensive, requiring natural gas to fire up the boilers at a corn ethanol plant. University of California (U.C.) Berkeley geo-engineering professor, Tad Patzek analyzed the environmental effects of ethanol and found that it takes more energy to produce ethanol than the energy in the fuel.
“In terms of renewable fuels, ethanol is the worst solution,” Patzek said. “It has the highest energy cost with the least benefit.”