That is the reason for the massive government subsidies. The federal government subsidizes every gallon with 51 cents and some states do not tax E85. They also impose a imposed a 54-cent tariff on Brazilian ethanol which is produced much cheaper than ours. This also creates an artificial demand for a farm product that used to be sold as food, thus driving up the cost of everything from home cooking oil to corn fed beef. It is a very expensive fuel when all the factors are included.
There is no direct subsidy.
The refiners get a “blending credit” of 51 cents per gallon. In other words, the refiners/blenders get to pay less in taxes when they blend in ethanol.