Posted by Jonathan Adler:
Biofuel Bubble Bursts:
http://volokh.com/archives/archive_2009_08_23-2009_08_29.shtml#1251402050
The [1]WSJ reports that the biofuel industry is introuble, billions in
federal subsidies notwithstanding. Biofuels received greater subsidies
than any other fuel source in 2007, according to the Energy
Information Administration, but it was apparently not enough.
Domestically produced biofuels were supposed to be an answer to
reducing America's reliance on foreign oil. In 2007, Congress set
targets for the U.S. to blend 36 billion gallons of biofuels a year
into the U.S. fuel supply in 2022, from 11.1 billion gallons in
2009. That would increase biofuels' share of the liquid-fuel mix to
roughly 16% from 5%, based on U.S. Energy Information
Administration fuel-demand projections.
Corn ethanol, which has been supported by government blending
mandates and other subsidies for years, has come under fire for
driving up the price of corn and other basic foodstuffs. While it
will continue to be produced, corn ethanol's dominant role in
filling the biofuels' blending mandate was set to shrink through
2022. Cellulosic ethanol, derived from the inedible portions of
plants, and other advanced fuels were expected to surpass corn
ethanol to fill close to half of all biofuel mandates in that time.
But the industry is already falling behind the targets. The EPA,
which implements the congressional blending mandates, still hasn't
issued any regulations to allow biodiesel blending, though they
were supposed to start in January. The mandate to blend
next-generation fuels, which kicks in next year, is unlikely to be
met because of a lack of enough viable production.
"I don't believe there's a man, woman or child who believes the
industry can hit" the EPA's 2010 biofuel blending targets, says
Bill Wicker, spokesman for Sen. Jeff Bingaman of New Mexico,
chairman of the Senate Energy Committee.
Biodiesel producers are scrambling for yet more government support to
bail them out, and are likely to get a receptive hearing. Farm-state
senators are calling for action, and the Administration promises more
grants and loans for "green" biofuel projects -- and corn barrel
politics continue.
References
1. http://online.wsj.com/article/SB125133578177462487.html
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