CITIZEN POWER ALLIANCE

New U.S. energy legislation mandates the use of renewable fuel but calls for continuing current biofuel subsidies that will cost taxpayers billions of dollars. The subsidies -- tax credits -- by themselves encourage ethanol production as a replacement for oil-based gasoline consumption. Instead, the tax credits will play a major role in unintentionally subsidizing gasoline consumption. This contradicts the new energy bill's stated objectives of reducing dependency on oil, improving the environment and enhancing rural prosperity.

Furthermore, this policy mistake is not unique to the United States but is a worldwide error of judgment as most countries use both mandates and tax credits simultaneously. The policy implication is clear: allow the mandate to work by itself, so eliminate the tax credits and save billions in taxpayer monies. This involves only a modest change in biofuel policy while dramatically improving policy achievements.

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