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Is Ethanol Getting a Bum Rap? Corn-based fuel isn’t the villain critics contend, but shifting to other crops is critical

Posted by: Aqua Blog Maven on May 3, 2008 at 8:15 am

From Business Week:

Ethanol is taking a tumble. Once hyped as a magic brew for reducing both oil addiction and global warming, alcohol made from corn kernels is now being accused both of triggering a global food crisis and doing more ecological harm than good. Ethanol critics, ranging from environmental groups to pig farmers facing high feed prices, blame mandates from Washington and Brussels stating that billions of gallons of fuel must come from ethanol or other plant-based fuels. These critics are now fighting to get those laws repealed. “What started as an energy policy is leading to spreading hunger and political instability around the world,” charges Lester Brown, president of the Earth Policy Institute. Companies are piling on, too. The Grocery Manufacturers of America has substantially stepped up its lobbying efforts to reduce the corn in gasoline.

There are grains of truth in this backlash, experts say. “There are bad biofuels and good biofuels,” says Daniel Sperling, director of the Institute of Transportation Studies at the University of California at Davis. Corn-based ethanol ranks as mediocre. Yet it is only a minor cause of high food prices, and better biofuels are on the horizon. The transition to these superior fuels will get a boost from policies now being developed, with California leading the way.

First, a reality check on corn ethanol, which isn’t quite the villain critics make it out to be. Last year, American farmers grew a record 13.1 billion bushels of corn on 85 million acres. Of that, 22% went to make about 7 billion gallons of ethanol. That still left enough corn to supply the domestic market, increase exports to record levels, and stockpile a 10% surplus. McKinsey principal Bill Caesar estimates farmers will be able to keep increasing corn-based ethanol production to 15 billion gallons in 2015 (a level of output mandated by federal policy) without reducing the amount going for food and feed, and without increasing acres planted. The secret: continuing improvements in yields.

Of course, it’s impossible to divert nearly one-quarter of the corn crop to fuel without causing prices to rise. Corn is now around $5.50 per bushel, more than double its price in 2005. But this has had a relatively small impact on the broader runup in global food prices. Higher corn costs add 2 cents to a box of corn flakes, or 11 cents to a gallon of milk from corn-fed cows. Corn prices have little to do with the increases in rice and wheat, and only a small connection to soybean price jumps. “Biofuels are a very, very small factor” in rising food costs, says David Morris, vice-president of the Institute for Local Self-Reliance, a nonprofit group that tries to strengthen communities politically and economically around the world. Absent corn ethanol, food prices would still be up dramatically because of soaring global demand, fast-rising prices for oil and natural gas used to make fertilizer, and climatic factors such as Australia’s drought. It’s also worth noting that these high crop prices save taxpayers billions of dollars in reduced subsidies to farmers—far more than is spent to subsidize ethanol.

The one thing this article fails to mention is that corn is a very water-intensive plant, and with water shortages predicted in at least 36 states in the upcoming years, do we really want to be using water for this purpose? The main point of this article, however, is that there are better crops that can be used for biofuels: “the key is to speed up the transition from corn to crops that offer more benefits.”

The water issue regarding ethanol is rarely reported; click here for an article on ethanol production & water. Meanwhile, Bush recently defended his ethanol policy, saying “it makes sense for America to be growing energy.”

Read the full text of this article from Business Week by clicking here.

May 3, 2008 · Filed Under Biofuels

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