Ethanol subsidies in the US have caused controversy, with some arguing that subsidies are unnecessary and divert funding from other sustainable energy sources. Ethanol production may also contribute to higher food prices and shortages, and the fuel itself has questionable merits. Critics argue that government funds should be focused on promoting truly renewable and innovative energy sources.
Ethanol propaganda by many governments, especially the United States, has led to much controversy. In the United States, where billions of taxpayer dollars are spent on ethanol subsidies, the controversy has become particularly bitter, and there are a number of reasons behind it. Many boil down to a fundamental dispute as to whether ethanol, especially corn ethanol, really is as miraculous as people claim it to be.
Some economists argue that when a product has intrinsic merit, people will pay for it, making subsidies unnecessary. Subsidizing ethanol production costs taxpayers money, albeit indirectly, and keeps prices artificially low, rather than allowing them to be set at fair market value. Economists who want to see more general promotion of sustainable energy also argue that ethanol subsidies divert funding from other sources of sustainable energy, including sources that are cleaner, more efficient and easier to obtain than ethanol.
Ethanol subsidies may also play a role in escalating food prices and the ongoing food versus fuel debate. The argument is that it costs farmers more to produce food crops, as these crops are less subsidized and pass the prices on to consumers. Food supply is also reduced by ethanol subsidies, according to this argument, because farmers have an incentive to grow crops for ethanol, so they divert fields that were once used for food crops to grow corn. Reducing supply can lead to higher prices and, in some cases, even shortages.
Ethanol itself is a fuel of questionable merits. It requires special handling, including uniquely formulated gasoline for fuel blends and special transportation procedures that can make it expensive. It also doesn’t burn terribly clean and is less energy efficient than gasoline, meaning a car that runs on ethanol or an ethanol/gasoline blend will have lower mileage. Also, ethanol generation itself is not very energy efficient, and in some cases the fuel can cost more in energy to produce and transport than it produces.
Critics of ethanol subsidies argue that government funds should be focused on promoting truly renewable and innovative energy sources, rather than being spent on fuel of questionable value. Maintaining ethanol subsidies is considered wasteful under this argument. Choosing where to direct funds would appear to be more beneficial in the long run, even if the new technologies are not immediately successful.
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