Reducing Ethanol Tariffs to Combat High Prices

Developing ethanol for electricity generation

is a way to lessen the 

nation's dependence on fossil fuels

Photo Credit: LuckyLuke / pixabay.com

Postponing the development of ethanol may have adverse consequences in the future. If we stick with using fossil fuel and not develop any infrastructure for alternative fuel, and if fossil fuel prices go up, which is very likely in the future, the economy may be placed at a large risk due to the dictates of the prices of alternative fuel should the country not have one fully developed at that time.

Take the case of the rare earth minerals for example, they are minerals used in making fluorescent bulbs, wind turbines, magnets and others. When China restricted its exportation of rare earth minerals, which they monopolize because 95% of the world’s supply comes from them, many companies relocated to China in order to continue their production. A much more severe case happened in 2010 when Japan had a dispute with China. China stopped shipping rare earth minerals to Japan, which, in effect, caused an upset in Japan’s industry.

If this happens to the ethanol supply of the country in the future, by not being fuel independent, the economy would suffer major losses.

This is not to say that we should instead prioritize ethanol over food but instead, we should continue on finding ways that would make this alternative fuel cheaper and more viable. As of now, with corn as one of the country’s major product, the best possible alternative is to fully develop cellulosic ethanol. At least with cellulosic ethanol, alternative fuel will not compete with food.

Current large scale corn based 

ethanol production methods 

compete with food

Photo Credit: LuckyLuke / pixabay.com

But, amidst the increasing prices of food, the country should also find a way to prepare the market for ethanol use without compromising the agriculture industry. The government should lessen the tariffs against imported ethanol and reduce the nearly 40% of the corn production destined to be used for making ethanol.

Unless there is a major development on cellulosic ethanol, the more sensible thing to do is to let imports come in with a lower tariff while, also, imposing strict policies for safeguarding the future of cellulosic ethanol production within the country. This would make prices go down a bit.

In line with this, the research and development sector for cellulosic ethanol or other forms of alternative fuel must also be given a large boost in order for them to come up with a very competitive and viable cellulosic ethanol made from corn stovers and other plant parts. This must be done for them to compete with the imported ethanol currently in the market before 2022.

My view is: until the country can produce its own cellulosic ethanol that is proven to be a viable fuel for introduction to the market, the high tariffs on imported ethanol and the 40% quota on corn for ethanol production must be reduced. Let the imposition of high tariffs take place when the country is capable of producing its own cellulosic fuel and there is a need to introduce it to the market.