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Corn Ethanol: Right Problem, Poor Solution

IP-5-2008 (June 2008)
Author: Gary A. Young

PDF of full Issue Paper
Scribd version of full Issue Paper

Executive Summary

The corporate welfare program for corn ethanol is inefficient and environmentally harmful. Energy independence is a genuine problem, but subsidizing corn ethanol is a bad solution:

• Burning corn ethanol instead of gasoline releases 1.7 times more carbon dioxide for every vehicle mile traveled.

• Corn ethanol is so inefficient that the energy contained in a gallon of ethanol is about 7 percent less than the total amount of energy from coal, oil, and natural gas that is required to produce the ethanol.

• The taxpayer subsidies for making ethanol from corn are equivalent to more than a dollar a gallon for gasoline.

• Subsidizing the use of corn for fuel significantly raises food prices.

• The United States has too little cropland available to come close to replacing gasoline through ethanol production.

• The best ethanol policy would be to repeal the laws which artificially raise the price of cane sugar. Corn ethanol is economically viable only with massive subsidies. In contrast, ethanol from cane sugar could be a legitimate part of the U.S. energy supply—if the feedstock sugar were available at world market prices.