Give Green, Go Yellow: How cash and corporate pressure pushed ethanol to the fore


This article provides a detailed and interesting history of the origins of US ethanol subsidies and ethanol promotion. It should be read in full. We were happy that our work on ethanol subsidies was useful in the write-up as well:

...In a landmark study this year for the Geneva-based International Institute for Sustainable Development, researcher Doug Koplow attempted to come to terms with the situation. Here’s how he described the “major challenge” of quantifying the value of government support for ethanol and other biofuel: “Virtually every production input and production stage of ethanol and biodiesel is subsidized somewhere in the country; in many locations, producers can tap into multiple subsidies at once.”

After 50 pages of detailing seemingly every one of those supports, Koplow reaches his estimated bottom line: total government support for ethanol clocks in at somewhere between $6.3 billion and $8.7 billion per year.

Let’s crunch numbers here. ADM controls a third of the ethanol market, so (taking Koplow’s lower estimate) let’s say it benefits from about $2 billion in government largesse. If we use its third-quarter profit report as a base, ADM can be expected to make about $700 million in profit from ethanol over the next year. That means that every dollar in profit ADM makes from ethanol costs the public about $2.85. Note that Koplow’s analysis doesn’t even attempt to reckon with the sugar quota, which has played such a powerful role in corn ethanol’s ascent.

Nor is that vast public investment doing much to reduce carbon emissions, the most powerful case for government support for alternative energy sources. According to Koplow, for every metric ton of CO2 displaced by corn ethanol use, the government pays $500 in subsidies. For the same amount, the government could buy “more than 140 metric tons of [carbon] removal on the Chicago Climate Exchange, or more than 30 metric tons on the European Climate Exchange..."