[steve-b]

The problem is that the subsidies shift biofuel production to favored producers (i.e. corn farmers) rather than the ones the market would naturally select (i.e. developers of techniques to produce fuel from otherwise worthless — and therefore dirt cheap — biomass).

[rusty millet]

First, with oil at $100/barrel, ethanol still cannot be produced without a subsidy....the ethanol crowd pushed for ethanol at $30/barrel with all sorts of competitive claims.

Collecting the subsidy is not the same as needing one. If money is being offered for a practice and it is not collected, that is a poor business decision. I always claim my mortgage exemption on my tax returns, even though in theory I should be able to pay more taxes.

The problem is that the subsidies shift biofuel production to favored producers (i.e. corn farmers) rather than the ones the market would naturally select (i.e. developers of techniques to produce fuel from otherwise worthless — and therefore dirt cheap — biomass).

Making ethanol from "worthless" biomass is in fact a very expensive process, and requires substantially more subsidies than corn fermentation just to entice any investment at all. Without excessive subsidies, the process actually makes little or no economic sense.

[iopscusa]

Subsidies screw up everything they are applied to, the Opportunity Cost equation becomes skewed and that means that resources are wasted. Just like the Welfare system makes for bad investment of scarce resources and resulting in a negative ROI.