The Expiration of the Ethanol Tax Credit: An Analysis of Costs and Benefits

  • Amy Diggs
Keywords: Volumetric Ethanol Excise Tax Credit, cost-benefit analysis, ethanol, innovation, imports


The Volumetric Ethanol Excise Tax Credit expired on December 31, 2011. This cost benefit analysis concludes that without the tax credit, the net benefits will be $168.1 billion in net present value from 2012 to 2022. The total costs will be $116.8 billion, primarily imposed upon ethanol producers and farmers. The benefits, realized through improved environmental conditions and stabilized food prices, will save society a total of $284.9 billion. Alternative considerations beyond the scope of this assessment are presented, such as the role of innovation and foreign alternative fuel imports. These considerations will play a significant role in future outcomes from the expiration of the tax credit.

Author Biography

Amy Diggs
Amy Diggs is pursuing her Master of Public Policy at the Trachtenberg School of Public Policy and Public Administration, focusing on social policy and international affairs. Currently, Amy works at the US Department of State, in the Bureau of Economic and Business Affairs, in the Office of Bilateral Trade Affairs. Amy has previously worked for the Texas House of Representatives and for the National Association of State Budget Officers. She received her BA in economics from Trinity University in San Antonio, Texas.