Master of Public Administration
Department or Program
Dr. John L. Foster
This paper examines factors leading to state-level fuel ethanol subsidies. The federal Renewable Fuels Standard (RFS2) mandates a certain volume of ethanol production through 2022. However, the $6 Billion federal ethanol subsidy expired at the end of 2011. Because the mandated amount of ethanol production from corn continues to increase until 2015, there is evidence that ethanol producers may look to the individual states to ensure that higher levels of ethanol production remain profitable. This paper examines factors that have led to state-level policies favoring ethanol in order to predict which states will be more likely to increase subsidies in the absence of the federal program. Using a multiple regression model with data from 1996 through 2010, this project finds that states with larger agricultural sectors and with higher degrees of party competition are more likely to subsidize ethanol while party control has no significant effect.