The federal government has subsidized the U.S. biofuels industry – primarily corn ethanol and soy biodiesel – for decades. Over the last four decades, tens of billions of taxpayer dollars have been wasted on these mature industries. Despite this, the ethanol and biodiesel lobbies continue to seek more government hand-outs and special interest supports, spending millions each year on lobbying and political campaign contributions. Most recently, the biofuels lobby secured proposals for additional biofuels infrastructure and sustainable aviation fuel subsidies within the reconciliation package moving through Congress.

Since the creation of the domestic market for corn ethanol after the energy crisis of the 1970s, the federal government nurtured and maintained the ethanol industry with a steady stream of subsidies. Originally sold as a way to achieve energy independence and reduce greenhouse gas (GHG) emissions, ethanol has been a favorite of policymakers from the Corn Belt. Ethanol is generally blended into gasoline at a 10 percent level (E10). Ethanol producers have received favorable treatment under the tax code, tariff protection from foreign competition, a government mandate for its use, infrastructure subsidies, and more.

Since 2004, the government has also subsidized the U.S. biodiesel industry. Biodiesel – derived from soybeans primarily but also other vegetable oils, animal fats, and used cooking oil – is blended into fossil-based diesel fuel at various levels (B5, B20, etc.). Like ethanol, the biodiesel industry benefits from government-set biofuels mandates, tax breaks, and infrastructure subsidies.

According to the Center for Responsive Politics, the corn ethanol and biodiesel industries spent $257 million on lobbying from 2016 to 2020, in addition to $20 million on federal campaign contributions since 2014.

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