Should the White House and Congress incentivize corn-based ethanol in the transportation sector?
Following a decision last week by the EPA, newer-model vehicles can be blended with 15 percent ethanol. The agency punted on its decision for vehicles from model years 2001 through 2006 until later this year and did not approve the increase for older vehicles. The White House is in talks with ethanol groups to ensure a longer-term plan for the industry given the $5 billion worth of tax subsidies expected to expire at the end of this year amid mounting congressional opposition.
The ethanol industry has been lobbying hard to increase its market share, but it continues to face resistance from a disparate group of opponents, including automakers, oil companies, and environmentalists. That opposition aside, ethanol groups can count President Obama, who hails from a Midwestern state with a large biofuels industry, as a longtime supporter.
What should the government do -- or not do -- to incentivize ethanol? EPA has said its job is not to provide a market for the fuel, but to ensure it's safely blended with gasoline. What type of burden does that put on the private sector to promote the fuel? What role, if any, should Congress fill? Does incentivizing ethanol leave other alternative fuels, such as natural gas and electric vehicle technology, at a disadvantage?