Tight budgets and skeptical judges have delivered some early (temporary?) wins to a public clamoring for an economic recovery combined with a smaller, less intrusive, more fiscally responsible government. In my previous post I already noted that three of the four types of federal supports for electric vehicles are being allowed to lapse (and a bill has been introduced to end the $7,500.00 tax credit for the purchase of electric cars—though its fate is far from certain).
Now comes news that after three decades, the tax credit for ethanol is being allowed to expire. Long seen as untouchable, the current focus on deficits and the debt, this albatross of corporate welfare is going the way of the dodo. The government has spent more than $20 billion over the years on ethanol subsidies –now that‘s over. This will not, unfortunately, mean ethanol goes by the wayside, however. Markets still are not being allowed to weed out this particularly pernicious, inefficient, environmentally harmful source of energy because the federal government has mandated that a certain number of gallons of ethanol be blended into the nation’s gasoline supply. Mandates are even better than subsidies since refineries have to use ethanol regardless of the costs. Still, it’s a step in the right direction and we can now work toward ending the mandate.
Good news has also come from federal courts in recent days. The U.S. Circuit Court of Appeals for the District of Columbia has placed a stay on the EPA’s new cross-state pollution rules. Now this was not a ruling on the merits, however, it certainly gives utilities both more time to comply and/or challenge the new rules. The court expects to hear oral arguments in April, which means, whatever the court decides, any action is delayed giving Congress time to try and halt the rules.
Finally, a federal judge in California blocked California’s low-carbon fuel standard. In a ruling that will almost certainly be challenged by the state, Judge Lawrence O’Neill found that California’s fuel rules violate interstate commerce by discriminating electricity and transportation fuel providers outside of California. Good news, but will it stand.