Preliminary and Incomplete Do Not Cite

Bioenergy is generating interest as an alternative energy source that is both en-vironmentally friendly and potentially economically competitive. Corn based ethanol has shown significant market growth in the last decade, increasing national production volumes by approximately a factor of 7. Some of this increase may be attributed to high oil prices but most is likely driven by a collection of economic policies. A combination of mandates, credits, and subsidies are employed in the US to en-courage biofuel production and consumption. Currently, there are three primary subsi-dies for domestic biofuel producers and blenders. The Volumetric Ethanol Excise Tax Credit (VEETC) is the primary tax incentive for ethanol. It provides blenders of fuel with a credit of 45 cents per gallon of ethanol blended with their gasoline. In addition, under the Small Ethanol Producer Tax Credit (SEPTC) small ethanol producers are allowed a 10 cents per gallon tax credit on up to 15 million gallons of production annu-ally, capped at $1.5 million per year per producer. The Cellulosic Biofuel Producer Tax Credit (CBPTC) allows a registered producer to claim a tax credit up to an amount of $1.01 per gallon of cellulosic biofuel. Consequently, tax incentives have likely been a major factor behind increased ethanol production, but all three credits are set to expire soon. The VEETC and SEPTC will expire December 31, 2011 and the CBPT