Even in a year when “billion” has replaced “million” as the standard unit to measure government bailouts or recently uncovered Ponzi schemes, numbers can still shock.  For example: $420 billion. 

As in, between 2008 and 2022, subsidies to the U.S. biofuels industry are likely to total $420 billion.

That staggering number comes from a new report by Earth Track and Friends of the Earth.  “A Boon to Bad Biofuels” explains how the U.S. biofuels industry has two main subsidy conduits: the Renewable Fuels Standard (RFS) and tax credits.  The RFS mandate creates a market for biofuels, providing the industry a value in excess of a dollar per gallon.  Biofuels also benefit from significant federal and state tax credits; subsidies that are not tied to any environmental performance standards.  This would explain why corn ethanol, a fuel that contributes to water pollution and soil erosion, and is estimated to require up to 50 gallons of water per mile driven, continues to benefit from these credits.

The report’s release comes on the heels of the Obama administration’s proposed plan to help prop up the biofuels industry during the credit crisis, as well as the release of the EPA’s draft rule to implement the Renewable Fuels Standard.  

The good news about the draft RFS rule?  When calculating ethanol’s greenhouse gas emissions, the EPA will factor in changes in land use stemming from more corn grown for ethanol. Such agricultural changes can, in turn, cause farmers to clear more grasslands and forests to raise food crops, resulting in an increase in carbon dioxide released into the atmosphere. According to the model underlying the EPA's draft rule, most corn ethanol is, in fact, more polluting than regular gasoline.

The bad news?  The proposed rule includes an accounting gimmick that would discount ethanol’s greenhouse gas emissions over a 100-year timeframe, a window that both undercounts the actual volume of emissions and puts off emission reductions too far into the future.  Under this century-long option proposed by the EPA, corn ethanol’s emissions would be lower than gasoline, but not until 100 years from now.  That’s a strange proposal from an administration that is spending tremendous amounts of political capital to make greenhouse gas emission reductions a priority.