Can the Government Take a Mulligan on Ethanol?

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by Shawn Regan

Ethanol is back in the news, but as Politico reports, there are contradictions within the government on the fuel source's viability:

Energy Secretary Steven Chu on Monday said that the future of transportation fuels shouldn't involve ethanol, the gasoline additive that historically has received billions of dollars in federal subsidies.

"Ethanol is not an ideal transportation fuel," Chu said during an event hosted by the National Press Club.

But while Chu publicly questions ethanol's efficacy, the EPA is ramping up production mandates:
Responding to a congressional mandate, the Environmental Protection Agency will require that 13.95 billion gallons of transportation fuel comes from renewable sources in 2011, or about 8 percent of domestic gasoline and diesel supplies.
Of that, 12.6 billion gallons will come from ethanol. Congress requires that figure to nearly triple (!) to a whopping 36 billion gallons by 2022.

Why such a contradiction? There's a reason this one's filed under "Politics."

Shawn Regan is a research fellow and PERC and the director of outreach and publications. He holds a M.S. in Applied Economics from Montana State University and degrees in economics and environmental science from Berry College. His writing has appeared in the Wall Street Journal, Quartz, High Country News, National Review, Reason, Regulation, Grist...
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