The EPA again lowered its projection in meeting the 2011 “mandate” on cellulosic ethanol. (Is it really a mandate when the end result meets 1.5 percent of its goal?) The original mandate was revised from 250 million gallons to 5-17 million gallons this summer. This week brought even lower projections: 3.94 million gallons, about 1.5 percent of the original target. Rather than scrapping a bad idea, the RFA is clamoring for more and more money.
Many of the problems with bringing cellulosic ethanol relate to a lack of demand, the recession, large capital costs for new ethanol plants, regulatory uncertainty, etc., but apparently the DOE has been very slow and ineffective in handing out free taxpayer money guaranteed loans. Note the irony — an incompetent federal bureaucracy is inhibiting the government’s ability to damage the economy.
In other ethanol news, Growth Energy is optimistic about the new Congress’ attitude towards ethanol. Bob Dineen writes:
Ethanol is not now, nor has it ever been a partisan issue,” RFA President and CEO Bob Dinneen said. “There were strong ethanol proponents lost last night, but there were many more ethanol advocates that won last night, too. And, more importantly, for the most part those that may have been defeated were replaced with equally strong advocates for value-added agriculture and ethanol.”
It’s more appropriate to call ethanol a regional issue, where congressmen whose constituents benefit from federal biofuel policy show strong support for the status quo and the rest of Congress doesn’t pay much attention to such a remote issue. If ethanol tax policy is extended, it’s easy to see the public choice explanation of what happens when costs are spread across the entire nation and benefits are concentrated with a small, vocal minority.
It is appropriate for ethanol opponents to be cautiously optimistic. As noted in the link above, there isn’t much time for Congress to pass legislation before the tax credit expires, and there are certainly many more important issues that will occupy the majority of the remaining time.