below show how expensive, useless and corrupt the ethanol subsidies are.

By Luke Rosiak on July 24, 2008 at OpenSecrets.org

Washington politicians' love affair with subsidies for corn products has been going strong since the early 1970s, when the CEO of corn processing company Archer Daniels Midland was said to have delivered a briefcase containing $100,000 to the White House for Richard Nixon's re-election campaign. Today ADM peddles its influence legally--through lobbying and campaign contributions--but as the pitfalls of corn-based ethanol have become more pronounced, legislators have been forced to consider moving on. While Congress plays catch-up, an array of next-generation biofuels have hit the scene, all grappling for government funding and feuding among themselves. Corn and other food prices have spiked dramatically in the last year, partially because of ethanol, as new technologies that use less valuable sources have languished on the horizon for lack of funding. Now, as forces of progress nudge a stodgy institution into the future, the major biofuels--ethanol from corn and biodiesel from soybeans, both backed by politically powerful farm groups--are fighting to hold on to what they have. New renewable fuel sources that were unknown when Congress first granted support for basic alternative energies are now vying to be included, but they lack the unity and political infrastructure of traditional biofuels. "The perception that all biofuels were somehow lumped in with corn is what spurred us to start Advanced Biofuels USA," said Joanne Ivancic, one lobbyist who's struggling to change that. "One of the challenges is it's hard to identify exactly who 'we' are." The group's disparate members were pleased when corn growers used their clout on Capitol Hill to say, "Here's our problem; ethanol can solve it," she said, but as attention was slow to move beyond corn--and later to acknowledge its shortcomings--other alternatives were left "in their wake saying, 'Whoa, there are other options!'" Those options include "cellulosic" ethanol made from plant matter or even waste, and eventually synthetic biogasolines that do not rely on fermentation. There's a lot of money to be made in algae, Ivancic said, which has the potential to both produce biodiesel and eliminate carbon dioxide. Yet corn and soy farmers have spent $2.3 million on lobbying since 2007, according to the nonpartisan Center for Responsive Politics, and the discussion has largely revolved around those feedstocks. "Algae just doesn't have that sort of presence on the Hill," Ivancic said. The 2008 farm bill will reduce subsidies for corn-based ethanol slightly, to 51 cents per gallon, while doubling subsidies for fuels produced more efficiently and from more abundant sources, to about a dollar. President Bush had championed a forward-looking ethanol mandate that required levels that will become feasible only once advanced cellulosic ethanol hits the market. So far, efforts to meet the mandate have come almost entirely from corn. Largely as a result, corn prices have tripled, and the economic calculations on which corn-based ethanol plans were predicated no longer apply. Last month, Texas Gov. Rick Perry traveled to Washington to implore the Environmental Protection Agency to reduce the requirements, saying high corn prices were hurting ranchers who use it as feed and driving up the price of beef and other foods. Environmental groups and the Grocery Manufacturers Association have also lobbied against the requirements. A year ago, oil interests said instituting a mandate when the necessary technology was only half-baked was a recipe for disaster, but congressmen, eager to do something to address the energy crisis, got cooking anyway. "Now we're saying 'I told you so,'" said Frank Maisano, a longtime lobbyist for oil refiners. The advent of corn ethanol subsidies is a case study in the role money can play in politics. For years, most of the country's ethanol was produced by Archers Daniels Midland, and the company and its employees have always been enormously politically active, contributing more than $8 million at the federal level since 1989. The company's interest in public policy was clear: It buys corn at prices reduced by subsidies and turns it into ethanol, which is further subsidized. Along with sugar producers, ADM also successfully lobbied for regulations that prop up sugar prices, keeping them higher than those of its corn syrup and ensuring soda manufacturers buy their sweeteners from ADM. Now, that sugar policy is having another major effect. Cheap, abundant ethanol produced from sugar in Brazil is essentially barred from the United States by a 54-cent per gallon tariff, despite the fact that there is no such tariff on oil imported from the Middle East. Though some legislators, including Sen. Rick Lugar (R-Ind.), have advocated for repeal, the protectionist forces were regarded as too strong to overcome this year. Lugar has yet to receive a dime from the sugar industry this election cycle. Since President Bush's ethanol mandate went into effect, public opinion of corn ethanol has throttled from boon to boondoggle. A wide variety of energy and agricultural groups "went along with the previous ethanol mandate because they felt a rising tide lifted all boats. But what we're seeing now is internal competition for limited resources," Maisano said, and the competition is no longer just gas versus ethanol, but early alternative energy technologies and more advanced, developing ones. "They're ready to throw corn ethanol under the bus because they've got another thing to talk about." Corn ethanol "may give the wrong impression that ethanol is not a solution," said Professor David Wu, a researcher at the University of Rochester who, with the help of a government grant, pioneered an enzyme that helps break down cellulose more efficiently. Wu predicts cellulosic ethanol will be available and competitive within five to 10 years, "though it's really anyone's guess." A government policy that focuses on long-term investments could pay off big down the road, he said, and "we can't wait 'til that time and then we say, 'Now we need ethanol.'" One company that insists cellulosic ethanol is viable now is BlueFire Ethanol. "Our technology has been ready to go since 1996," said CEO Arnold Klann. "The biggest barrier to entry has been the ability to fund these projects." His technology can generate ethanol from municipal waste at a cost of roughly a dollar per gallon--profitable even without subsidies--but since investors are risk-averse, "the tax credit provided the underlying economic security that can draw investors in," Klann said. "Once you build the first one, you don't need government support for the second one." In March 2007, BlueFire received a $40 million government grant that will allow it to bring its technology to the market, but last week "was the first time we're allowed to draw on that. Had we been able to draw on the money quicker, we'd be much further along. The Bush administration has been talking about [cellulosic plants], but never fully funding them." Even as most of the attention has focused on ethanol, behind the scenes, a big-dollar lobbying battle rages around diesel. The National Biodiesel Board (NBB), representing a first-generation fuel made largely from soybeans, has dramatically outspent rivals on Washington lobbying--$2.2 million since 2006. The group is looking to hold on to a dollar-a-gallon tax credit that expires at the end of the year, while arguing that "renewable diesel" should have to seek approval from the appropriate agencies--a time-consuming process--before it can be used. The Advanced Biofuels Coalition, representing second-generation diesel technology, successfully fought to be covered under the tax credit, and is now focused on getting it extended, spending $120,000 on lobbying since 2007. "When our objective is to move away from foreign oil, what you don't want to do is build roadblocks to protect first-generation fuels," said Mike McAdams, the group's executive director. "You'd much rather have better fuels. That's why the NBB is running scared: They know that on a performance basis, their fuels are not on par with the new ones." A major user of the new technology is an oil company, though, which angers the NBB, which believes alternative energy subsidies should go to new, standalone companies. ?Tyson and ConocoPhillips used their sizeable lobbying resources to significantly expand the definition of renewable diesel,? allowing the second-generation groups--even ConocoPhillips, which blends diesel made from animal fat with its petroleum product--to cash in, said NBB lobbyist Manning Feraci. (Those two companies have spent $8.5 million lobbying on various issues since 2007.) Sen. Max Baucus (D-Mont.), who sits on the Senate committees on agriculture and the environment and chairs the finance committee, has sought to prohibit oil refiners from receiving the credits. Excluding presidential candidates, Baucus has received well over five times as much in campaign contributions from the alternative energy community as has any other senator this election cycle, at $55,800. Next is Sen. Ken Salazar (D-Colo.), who was responsible for expanding the tax credit to renewable diesel, with $9,900. The debate over first- and second-generation biofuels has also emerged in the presidential race. As president, Sen. John McCain has said he would eliminate the tariff on Brazilian ethanol as well as subsidies for American corn ethanol. Sen. Barack Obama, who represents the corn-producing state of Illinois, would do neither, but emphasizes development of cellulosic technology. Obama has received $76,000 from corn, soybean, sugar and alternative energy producers, compared to $17,300 by McCain. Traditional energy and agricultural groups are among the most entrenched in Washington, however, and "there are market factors, political factors and control issues" for the president to contend with, lobbyist Maisano said. "It's much harder to govern on these issues than it is to campaign on them."