Washington, D.C., October 26, 2010 — Ethanol subsidies are set to expire at the end of the year, and, so far, American taxpayers have wasted a lot of money on ethanol subsidies and mandates while generating few environmental benefits, a new report from the Competitive Enterprise Institute finds. Yet, lobbyists and environmentalists are pushing for a slew of equally expensive-yet-unproductive wind subsidies and mandates
“Ethanol and wind energy have much in common: they are both expensive, inefficient, and less-than-green,” said Ben Lieberman, Adjunct Fellow at the Competitive Enterprise Institute and author of the new CEI OnPoint, Is Wind the Next Ethanol? One “Renewable” Energy Source Follows Another’s History of Failure.
In the report, Lieberman points out that the renewable fuels mandate has raised the cost of driving and produced no environmental benefits. According to the Congressional Budget Office, all the ethanol subsidies and mandates cost $1.78 for each additional gallon of gasoline displaced — on top of the higher cost to drivers, because the gas mileage is not as good.
Similarly, wind has long been a beneficiary of “generous and overlapping” tax breaks and subsidies, Lieberman explains. A production tax credit was created under the Energy Policy Act of 1992 and is currently set at 2.1 cents per kilowatt hour. Without all that, wind power would cost $149.30 per megawatt hour versus $100.40 for coal, according to conservative estimates from the Energy Information Administration. That means that businesses and consumers pay more for wind energy compared to coal energy. To put it in further perspective, Lieberman points out that “overall, subsidies for wind and other renewable electricity sources are more than 10 times higher per unit energy output than coal, which provides nearly half the nation’s electricity, and natural gas and nuclear power, which provide most of the rest.”
In other words, there’s no way that wind and ethanol could compete in an open, unsubsidized marketplace.
> Read the CEI OnPoint, Is Wind the Next Ethanol? One “Renewable” Energy Source Follows Another’s History of Failure