Tax expenditures are a major source of support for energy related activities in the federal budget exceeding direct budget support for energy by a factor of nearly six. Focusing on the policy goals of reducing greenhouse gas emissions and petroleum consumption, I find these tax expenditures highly cost ineffective at best and counterproductive at worse. The tax credit for ethanol is an example of a cost ineffective subsidy. The cost of reducing CO2 emissions through this subsidy exceeded $1,000 per ton of CO2 avoided in 2006. A change in the way the subsidy is administered provides an opportunity to measure its incidence. I find that the entire subsidy is passed backward to ethanol producers and possibly farmers. Consideration of market structure suggests that farmers receive little of the subsidy.