Despite the recent hearing on massive fraud connected with the Renewables Fuel Standard, the Senate Finance committee has approved the friendly-sounding “Family and Business Tax Cut Certainty Act of 2012.” Among other provisions, the Act would extend the $1/gallon tax credit for biodiesel producers through 2013, a measure estimated to cost $2.1 billion (in forfeited tax receipts) over 10 years.
Thus, the government continues to lavish massive support—both with tax credits and outright mandates for purchase—on a sector without addressing the obvious problems in implementation. Furthermore, even if the programs were administered flawlessly by angels, the government’s encouragement of renewables is an inefficient distortion of energy markets.
