We are approaching the expiration of tax subsidies for corn ethanol. Established in 2004, the initial purpose of the subsidy was to help nurture a nascent biofuels industry, help reduce America’s oil dependence, and serve as a stepping stone to cellulosic biofuels. However, the time has now come for us to stop subsidizing corn ethanol and let it compete as a fuel on its own economic and environmental merits.
Why should the corn ethanol subsidy expire? From a technological and economic standpoint, corn ethanol production has little potential upside left in process cost reduction; public interest subsidies should be used to introduce new competition to markets or support new technologies to get down the early cost curve, not to support mature technologies.
Additionally, the subsidies that are in place have enabled some very large businesses to collect hundreds of millions of dollars per year of taxpayer cash without truly fostering, with rare exceptions, new technology development from non-food crops that can scale enough to help wean America off of foreign oil. Corn ethanol has become a dead-end street with little public benefit. The same money could be more effectively spent on emerging cellulosic, non-food biofuel technologies that are in fact being suppressed by corn ethanol’s maturity and subsidies for both the corn and the ethanol.
To read the full, original article click on this link: Vinod Khosla on Corn Ethanol: Time to Move On : Greentech Media
Author: Vinod Khosla
