3 votes

Consumer Reports: The great ethanol debate

Government support for ethanol

For decades, the federal government has promoted ethanol as a renewable, homegrown alternative to gasoline in three distinct ways. Proponents see this support as necessary to get the alternative fuel into widespread availability and usage.

The first effort to support ethanol usage is a 51-cent-per-gallon tax credit to "blenders," the companies who blend ethanol into gasoline. This tax credit is intended to raise the price of ethanol for ethanol producers and corn farmers to encourage production, and to lower the price of ethanol products for consumers. It is strongly supported by farm lobbyists.

Despite the tax credit, however, E85 costs about 70 cents a gallon more than gasoline on an energy equivalent basis on average, according to the Department of Energy.

Second, the government provides significant fuel economy credits to automakers who build flex-fuel vehicles that can run on E85.

Continues: http://www.consumerreports.org/cro/2011/01/the-great-ethanol...