30-year-old corn ethanol subsidy nixed by Washington

Corn-based ethanol is a controversial fuel in its own right, and a long-standing government subsidy for blending the biofuel with gasoline has been an additional source of consternation over the last 30 years. The United States Congress wrapped up its work for 2011 without extending the incentive, a move that's drawn praise from environmental groups and taxpayer advocates.

Hand-in-hand with the discontinuation of the tax subsidy, an import tariff on ethanol imported from Brazil has also been cancelled, which opens the tap for a source of ethanol that doesn't have the reputation of being a dirty diversion of a food crop that corn-based ethanol carries. That means that while the blenders' tax credit is no more, the 2007 legislation calling for a significant increase in the use of renewable fuels is likely not going anywhere if the abundant ethanol produced from Brazil's sugarcane economy can be used instead.

The corn lobby is naturally not thrilled with the news, but has put on a brave face. Tom Buis of Growth Energy, a group that supports and fosters the cause of domestic ethanol production, told The Detroit News "without the tax credit, the ethanol industry will survive; it will continue to reduce our dependence on foreign oil, create jobs, and strengthen our economy." That statement isn't exactly at odds with the actions of Congress, since there's now about $6 billion per year that could be plowed into further renewable fuel research and development that would ensure corn ethanol is indeed a stepping-stone fuel, as it was supposed to be in the first place.

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