Biofuels are not a fledgling industry: last fall the biofuel industry celebrated 30 years of subsidization. Yet, the industry continues to recieve singificant taxpayer funds. Friends of the Earth is working to reform these subsidies so that only the most truly sustainable biofuels benefit from subsidization
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There are many ways that biofuels are subsidized. The Renewable Fuels Standard Mandate creates a market for biofuels, which provides the biofuel industry with significant economic incentive. But this is not the only way that the biofuel industry benefits.
Biofuels also benefit from tax credits of significant proportions. Friends of the Earth and EarthTrack analyzed these subsidies and found that the combination of the RFS and the tax credits could provide biofuels will receive $400 billion in subsidies through 2022. Our analysis is found here.
Tax credits are specific allotments of money that are given to oil companies when they blend biofuels into their fossil fuels or to the biofuels industry itself. The tax credits come in many forms.
| Tax Credit Name | Where Applicable | Value |
| Volumetric Ethanol Excise Tax Credit |
To companies that blend ethanol into gasoline, including imported ethanol. | $0.45 per gallon |
| Volumetric Biodiesel Tax Credit |
To companies that blend biodiesel into diesel fuel, excluding imported biodiesel. | $1.00 per gallon, except fuels co-processed at petroleum refineries |
| Renewable Biodiesel Tax Credit | A parallel tax credit to the Volumetric Biodiesel Tax Credit if the excise tax credit could not be claimed | $1.00 per gallon, except fuels co-processed at petroleum refineries |
| Small Producer Tax Credit | To any biofuel producer (ethanol or biodiesel) | $0.10 per gallon on the first 15 million gallons per year produced at facilities smaller than 60 million gallons per year |
| Production Tax Credit for Cellulosic Ethanol | To producers of cellulosic ethanol only. | $1.01 per gallon total support, but Volumetric Ethanol Excise Tax Credit payments must be netted first |
These tax credits are not tied to any sort of environmental performance standards. This means that even the most ecologically destructive biofuels, such as corn ethanol, are receiving immense funding despite their poor ecological performance. Meanwhile, precious dollars that could be devoted to truly sustainable energy production and transportation solutions are wasted on these outdated and ecologoically harmful technologies.
Below are links and updates on the different actions that Friends of the Earth has taken to try and prevent environmental damage from the Biofuel Subsidies from Tax Credits.
Senator Amy Klobuchar has released a fine piece of legislation promoted by the corn ethanol community. Among other things, it categorizes corn ethanol as an "advanced" biofuel, meaning it will be considered as one of the "cleaner" biofuels. It also removes critical components of the global warming lifecycle account, such as indirect land use change. Best of all? It extends the wasteful ethanol tax credits as well as a whole slew of other biofuel subsidies. Why would Klobuchar put together a bill like this? Maybe she just wants to impose her corn country interests upon the rest of the US.
FoE Letter Opposing Klobuchar | Community Letter Opposing Klobuchar
The wave is shifting for the ethanol tax credit VEETC, as it is up for expiration in December 2010. Scientists, legislators, and even advocates of the ethanol industry are coming out and saying that it is unnecessary... Seriously, everyone from the Congressional Budget Office, to ethanol-supporter Bruce Babcock, to Valero oil, to Growth Energy, to congressmen across the political spectrum. So why is congress still thinking of extending this wasteful subsidy? Good question. Time to say no to wasteful subsidies for dirty energy.
Hunger, religious, farmer, and development groups came together on July 21, 2010 to oppose the renewal of the Volumetric Ethanol Excise Tax Credit (VEETC), which is set to expire at the end of this year. In a letter to the Senate Finance Committee and the House Committee on Ways and Means, the groups asked Congress to refuse to introduce new legislation to extend this tax credit, which costs taxpayers $5 billion a year.
Letter to House | Letter to Senate
Special interests representing the ethanol industry are lobbying congress to extend the Volumetric Ethanol Excise Tax Credit until 2015 through passage of the 2010 Green Jobs Act. Extension of the credit would lead to over 30 billion dollars in taxpayer money going to Big Oil over the next five year as well as failing to increase ethanol production.
Bob Dinneen, president of Renewable Fuels Association, a corn ethanol lobby group, calls for "battle" with us and other groups opposed to extending wasteful tax credits for corn ethanol. Read our response!
While you have probably been facing tax day with a bit of dread, large corporations are taking it easy. In fact, they get billions in subsidies each year. Keep reading to find out more, watch a video, and take action!
Learn More | Take Action | Watch Video
Biodiesel currently received a $1.00 per gallon subsidy when blended into diesel fuel. This subsidy is through a tax credit, which is to expire at the end of 2009. This credit is given irrespective of the impact that this fuel is having on the environment or economy. In fact, it is possible for the subsidy to apply to the dirtiest of biofuels, including imported palm oil from Malaysia or soy biodiesel from Brazil. Friends of the Earth and other environmental organizations called for this subsidy to be renewed for only a year--instead of the five year norm. This way, next year when other biofuel subsidies are up for renewal, the utility of these subsidies can be weighed based on performance instead of fuel type.
Friends of the Earth released a report in May 2009 that examined the extent to which biofuels are subsidized by the
"A Boon to Bad Biofuels" Report | One Page Report Summary | Press Release
Friends of the Earth recognized the 30th year of subsidization for the biofuels industry in November 2008. Since the Energy Tax Act of 1978 gave the first subsidy to biofuels, not a single biofuel subsidy has been repealed. Thirty years later, it may be time for the industry to stand on its own, or at minimum accept performance criteria in order to receive funds. In 2008, the biofuels industry recieved nearly $8 billion dollars from tax credits. Friends of the Earth and coalition partners wrote to then-President-Elect as well as congressional leadership calling for the end of unsustainable biofuel subsidies.
Letter to Obama Transition Team and Congressional Leadership
In September 2008, there was an attempt to prematurely extend the Volumetric Ethanol Excise Tax Credit, an enormous subsidy to ethanol. This tax credit is one of the single largest energy subsidy in existence, yet has no performance criteria, such as environmental safeguards, associated with it. Friends of the Earth and coalition partners wrote to congresssional leadership asking them not to extend the tax credits at this time or in their current form.
Letter to Congressional Leadership
