One more time: 79 cents of every dollar the federal government invests in renewable energy goes towards corn ethanol, a heavily subsidized boondoggle that is little better than gasoline.

Actually, it's worse than that.

As ReasonOnline’s Ronald Bailey observed April 8, “the result of these mandates is that about 100 million tons of grain will be transformed this year into fuel, drawing down global grain stocks to their lowest levels in decades. Keep in mind that 100 million tons of grain is enough to feed nearly 450 million people for a year”

And guess who supports it? You guessed it!

http://obama.senate.gov/press/050729-_obama_says_energy_bill_helps_/

The ethanol issue is not just a story about how ag state senators have power. As Ezra Klein notes, ethanol is not much better than gasoline. It is also not much different from gasoline - so the shift to using it faces fewer barriers.

A public choice critique is usually only pseudo-convincing. Times change, people change, and the influences on legislators change. And a public choice critique only looks convincing because it assumes that a dispassionate, objective policy choice exists - only to have it be corrupted.

The ideal does not exist. But you can still advocate and work for a good targeted investment strategy. If you don't get it, try again.

Oh Ezra, why, pray tell, would a carbon tax not also become exempted and rebated and set aside? Congress seems, if anything, to have a special talent for creating tax loopholes.

Why do you hate America so much Ezra? Ethanol subsidies are revenue positive yet you hate on them and prefer we send our money to the Middle East to support terrorist. Are you raking is some serious terrorist ad dollars or something?

Gallons of Ethanol Made 9 billion
Reduced Energy Content 66%
Net Gallons Gasoline replaced 5.94 billion
19.5 gallons gas to barrel oil 304,615,384 barrels
$60 per barrel $18,276,923,076.92 sent to terrorist
Elasticity of Money Factor 10
Increase to US GDP $182,769,230,769.20
Federal Taxes as % of GDP 18.40%
Tax revenue received $33,629,538,461.54
Subsidy $5,100,000,000.00
Net Gain $28,529,538,461.54

Please explain Ezra why you wish to give away 28 Billion in net benefit to US tax payors in order to give terrorist $18 Billion more of our dollars? Yes we all know you hate middle America and where abused by a corn cob as a child or something that lead to your current anti-corn zeal but is your hurt back side really worth 28 Billion a year to the US? Short of giving nations that don’t care for us 18 Billion a year isn’t there something else we can do besides cutting out Ethanol?

Every gallon of ethanol produced costs federal taxpayers 51 cents in subsidies. That means the 9 billion gallons of ethanol the 2007 energy bill mandates for production this year cost us $5.1 billion in tax breaks to the companies that blend ethanol with gasoline.

It's not like I get off on nit picking or anything, but math is really quite simple:

9 billion x 0.51 = 4.59 billion

or, if you prefer:

9 billion x 0.5667 = 5.1 billion

Yay algebra!

I'm hoping the stimulus investments aren't so much in energy alternatives as in new infrastructure: an upgraded electrical grid to get power to the East Coast from wind farms in Kansas and brand-new subways for everyone, that kind of thing. Something everyone in Congress could get a piece of without screwing up the overall goal.

Cap-and-trade is better than what we have but a carbon tax is better still. It is simpler, more visible, less likely to overshoot its value, easier to remove if it is found to be unnecessary but you will get a carbon tax over the dead bodies of UAW members (who BTW own a few congressmen).

BTW a Carbon tax or Cap-and-trade is better than CAFE for a similar reason. CAFE means that a car company cannot specialize in large vehicles. CAFE can cost more for people who use less fuel by driving less but like lager cars (old people). Etc.

Hi Ezra.

You are comparing a perfect carbon tax or cap & trade to an awful public investment policy. Tip the scales like that and of course price looks better.

But as others have pointed out carbon trading or even carbon taxing will be carried out imperfectly.

Also it takes really big price increases to get results. Gasoline prices had to nearly triple to get marginal decreases in gasoline use. Weather sealing and duct sealing can pay for itself in months but most residences are are inadequately sealed in both shell and ducting.

Aside from that there things price won't do. No amount of carbon pricing will get you trains without public investment in those trains. And I doubt we will get a super-grid or storage for renewables without public investment. Note that what I outlined was very careful about what and what was not driven by public investment. Of 1.7 trillion annual expenditures between 265 billion and 475 billion was public investment.

Lastly as to CAFE standars. It is less unfair that someone who drives short distances still have to drive an efficient vehicle than that we still burn tons of fuel. And my contention is that is alternative. Pricing alone, or even pricing (or cap & trade) as the main means of eliminating fossil fuels won't do the job.