The U.S. Government Accountability Office is questioning the generous government subsidies companies receive for producing maize-based ethanol for fuel. In a recent report, the GAO recommends that regulators look at the broader environmental impacts of raising crops for biofuels.
Promoting ethanol to lessen oil imports may have unintended consequences
In a bid to reduce dependence on foreign oil, Congress passed a law two years ago requiring U.S. motor fuels to include nearly 140 billion liters of ethanol or other biofuels by 2022, up from around 40 billion last year.
Demand for maize has grown as a result. That has been a boon for farmers but has raised costs for livestock feed and, to a lesser extent, food.
In a report out earlier this month, GAO says as the demand for biofuels continues to grow, air, water, and soil quality are likely to suffer, although the extent of the damage is unclear.
The report says a federal tax credit established in 1978 to help develop the ethanol industry is no longer needed because the industry has grown rapidly in the last few years. GAO says the tax credit cost the U.S. Treasury $4 billion last year.
Report recommendations raise concerns
Energy specialist Elizabeth Jones with the American Farm Bureau Federation says her organization has concerns about the report. Speaking to the Farm Bureau's Newsline program, she said farm groups worry that more environmental regulations will hinder the industry's continued growth.
"We're also concerned about their suggestion [that] Congress consider changing or eliminating the ethanol tax credit," she added. "That's something we've supported and think is important as the industry grows."
Jones says farmers who might be thinking of raising crops for biofuels need to be confident about the industry's future. She notes that President Obama supported biofuels development during his campaign for the White House last year and farm groups hope to work with his administration to help him keep that promise.