Brazil reportedly plans to provide $38 billion to subsidize its sugarcane based ethanol. China heavily subsidizes its wind and solar industries. At the same time some US subsidies are rolling off, with the expiration of the ethanol VEETC subsidy and import tariff expired at the end of 2011. The protection tax credit so important to the ethanol and wind industries could very well expire at the end of 2012 given the lack of interest in Congress for extending it.
Here’s a comment from Growth Energy, the ethanol advocacy group:
“This shows the danger of unilaterally disarming, because it means that American ethanol producers are not competing just against Brazilian ethanol producers – but against the Brazilian government as well,” said Tom Buis, CEO of Growth Energy. “The U.S. unilateral disarmed at a time when Brazil is not just continuing to subsidize its industry, but is increasing its investment in a plan to undermine our domestic ethanol industry. This is a direct assault on the only American-made alternative we have to foreign energy.”
Kansas should be concerned because of our heavy investment – and potential – in ethanol and wind power. Although the surprising revival of the oil and gas industry in the U.S. is good, it only pushes back the inevitable decline by a few decades. The future still belongs to alternative energy and the US can’t afford to lose out on this.