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Abstract
The purpose of this article is to analyze how a variable corn-based ethanol blender’s credit might work in comparison with the current fixed per gallon credit. We first review some specifics regarding the current fixed-credit policy and then discuss basic issues pertaining to a variable credit policy. We follow this with a comparison of the historical performance of two variable blending policies, namely one that is based on crude oil prices and one that is based on ethanol-blending margins. A comparison of a variable credit and the present fixed rate policy shows that a variable tax credit can achieve program savings, by providing incentives to the ethanol industry only when it would experience losses without support from the tax credit.
Financial & competing interests disclosure
The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.
No writing assistance was utilized in the production of this manuscript.