Report: Let's keep a closer eye on ethanol subsidies

We all know that the ethanol industry would barely register on anyone's radar screen if billions in government subsidies weren't available. Now a report prepared for the Global Subsidies Initiative of the International Institute for Sustainable Development says that the money needs more oversight. The report, titled "BioFuels: At What Cost," was written by energy subsidy analyst Doug Koplow. He brings up a number of valid points that state and local governments should consider before rubber stamping ethanol plant projects. For example, Koplow wants to know more about the risks if there is a plant failure. He wonders about water supplies and effects of odors on neighbors. And he has questions about farmland management.

A disturbing element in the story is a comment by Chris Hurt of Purdue University. He says federal subsidies will pay for the total construction cost of an ethanol plant in just three years. Now there are thousands of people who would like to start a business that would benefit mankind, but they're not going to get their construction costs paid for by taxpayers. He suggests a variable subsidy based on the price of oil. When the price goes up, the subsidy goes down. Koplow is also concerned about the current roster of E85 vehicles that are mostly big and gas guzzling. Since fuel mileage drops dramatically with ethanol, the subsidies keep building up. Basically, it's not a very efficient way to run a program.

[Source: Seth Slabaugh / The Star Press]