In response to the May 9 Cornell Perspectives article, "Why new U.S. biofuel legislation is on track to waste billions of tax dollars, while subsidizing oil consumption" by Harry de Gorter and David Just:
This is a marvelous academic argument, and I look forward to seeing if this actually happens long term, other than in theory.
Tax credits and mandates serve different purposes, and I believe both have achieved some success, so far. Though their convergence can and does distort market pricing, I believe that is an unavoidable but acceptable side effect, not a waste of money.
Tax credits are aimed at boosting commodity production. Given the impressive increase in ethanol production in the past five years, albeit from a poor source, corn, in the U.S., the credits have undoubtedly worked with the support of mandates.
Mandates are intended to cause vehicle and infrastructure development, and while some success has been seen in vehicle availability, the infrastructure is still lagging, though things like ethanol pipelines are being proposed. Perhaps the prospects of second-generation fuels like biobutanol, which does not require separate pipelines, tanks or pumps, combined with the significant costs of these things, have delayed their development. Pumps at gas stations are being subsidized now, I believe. I would not argue for subsidizing pipelines, yet.
It is absurd that so many E85 vehicles designed to run on 85 percent ethanol fuel are being made, and the fuel's availability in most places is so poor. This is a good reason to support end-point distribution.
Two major factors required for the ultimate success of biofuels have been ignored in this intriguing analysis, however.
Those of us who have been working on biofuels recognize that they cannot displace petroleum at current levels of use. Greater vehicle fuel efficiency and conservation efforts (simple things like consolidated trips and car pooling, through more intelligent long-term mass-transit, land-use and development planning) will be essential for biofuels to successfully reduce our use of fossil fuels.
The authors seem to assume consumption will continue to grow as in past decades, when it is clear that it must be reduced by all possible means.