Growing corn in America’s Heartland, distilling it into alcohol and mixing it with gasoline to power vehicles may sound like an ingenious way to be freed from dependency on foreign oil, cut down on air pollution, prop up sagging corn prices and begin the transition to a renewable energy source. But depending on where you stand, ethanol is either the answer to the nation’s energy concerns or a too-good-to-be-true boondoggle that serves only to pad the pockets of those who manufacturer it.
Ethanol has been touted as the fuel of the future. Made with a renewable resource — mostly corn — vehicles running on ethanol help the environment, put money in the pockets of family farmers and reduce the United States’ dependence on foreign oil.
“I think it’s a good thing for everybody,” said Lawrence, Kansas farmer Pat Ross, who feeds his livestock a high-protein byproduct of ethanol production. Ethanol is produced by fermenting food crops, such as corn, and grain sorghum.
The most common blend of vehicle fuel with ethanol is called e-10, which is 90% gasoline and 10% ethanol.
About 145 billion gallons of gasoline is used in the United States per year. Two years ago, ethanol represented three billion gallons of that amount; now it is six billion and is expected to double in two more years. Iowa and Illinois rank first and second in the nation in producing ethanol, and Kansas seventh.
But ethanol is coming under increased scrutiny. The additive does not produce as much energy as gasoline and results in fewer miles to the gallon. The logistics of supplying ethanol are complicated; it cannot be shipped in pipelines because ethanol can be contaminated.
Corn-based ethanol, the skeptics say, has been competitive on price only because of big corn subsidies and tax breaks for blending the additive with gasoline. The federal government spends $33 billion every year to subsidize the fuel additive at the pump.
“There are huge hidden costs,” said Ken Warren, managing director of the Land Institute, a Salina, Kansas-based research organization that supports sustainable agriculture.
In the long run, he said, the amount of energy needed to make and transport ethanol exceeds the energy it generates. “It depends on how you want to do the accounting,” he said.
One study claimed that ethanol production using corn grain “required 29% more fossil energy than the ethanol produced.”
Clouding the issue is a U.S. Department of Energy study conducted in 2005 that concluded that the fossil energy put into growing corn for ethanol is lower than the amount of energy produced. The study further noted that some of the energy used to produce ethanol is “free solar energy used to grow corn in the first place.”
Then there is the matter of how the manufacturing of ethanol competes with food production for the availability of corn. This in turn has caused the price of corn to skyrocket, reaching ten-year highs, surging 73% in the past year, to a record $8 per bushel in June 2008.
Feedlot owners, who intensely feed corn to cattle and pigs for four to six months before slaughter, have seen their costs rise dramatically because of ethanol production. Not surprisingly, the increasing competition for corn has already created price hikes that are being passed on to consumers who buy anything from milk to pork chops.
Hog-processor Smithfield Foods Inc. and poultry-producer Pilgrim’s Pride Corp., say corn-based animal feed is their biggest expense.
Ethanol’s drain on the corn supply has been blamed for contributing to the devastating global rise in food prices. The huge demand for corn to feed the 178 U.S. distilleries that now dot the Heartland has diverted the supply from food markets and distorted international trade. About 139 million metric tons of corn will be needed for ethanol during the 2008 harvest season, or roughly half of the nation’s crop, according to U.S. Agriculture Department estimates.
This unprecedented diversion of the world’s leading grain crop to the production of fuel will affect food prices every year, according to the Earth Policy Institute (EPI). As the world corn price rises, so too does the price of rice and wheat as consumers substitute one for the other and the crops compete for land.
The U.S. corn crop accounts for about 40% of the global harvest and 70% of the world’s corn exports. On average, every year the United States exports 55 million tons of corn, which is fully 25% of the world’s total grain exports.
“Substantially reducing this grain export flow would send shock waves throughout the world economy,” says EPI president Lester Brown, whom the Washington Post calls “one of the world’s most influential thinkers.” Describing the automotive demand for fuel as “insatiable,” Brown estimates that the same amount of grain needed to fill a 25-gallon tank with ethanol one time can feed one person for a whole year.
“The competition for grain between the world’s 800 million motorists who want to maintain their mobility and its 2 billion poorest people who are simply trying to survive is emerging as an epic issue,” he says, and “could create food riots in low-income areas around the world.”
Andrew Thorne-Lyman, a nutritionist with the United Nations World Food Program said that “global price rises mean that food is literally being taken out of the mouths of hungry children whose parents can no longer afford to feed them.”
The expert said that even temporarily depriving children of the nutrients they need to grow and thrive can leave permanent scars in terms of stunting their physical growth and intellectual potential.
He said that families in the developing world are “finding their buying power has been slashed by food price rises, meaning that they can buy less food or food which isn’t as nutritious.”
A World Bank report agrees with the U.N. official. It says that increased bio-fuel production has contributed to the rise in food prices. Concerns over oil prices, energy security and climate change have prompted governments to increase ethanol production and use leading to greater demand for raw materials including wheat, soy, maize and palm oil.
It is undeniable that the enormous investment in biofuels in the U.S., the European Union, Canada and elsewhere, is fueling a food crisis in poor countries. In fact, last Fall, Jean Ziegler, the United Nations’ “special rapporteur on the right to food,” claimed it was a “crime against humanity” to divert corn from food to fuel.
But ethanol advocate Jay Stevens counters “If it is a crime against humanity to convert corn from food to fuel, then it must follow that it is a crime against humanity to convert corn to whiskey (or grain to beer, grapes to wine). It is also a crime against humanity to feed livestock because we all know that to be a very inefficient way to produce food. It is a crime against humanity when sub-par produce is thrown into big garbage cans at the grocery store. It is a crime against humanity to go boating, or take vacations. All of these things are wasting the earth’s resources. Yet only ethanol is being singled out as causing food shortages.
“The message here is that it’s okay to waste resources,” Stevens observes. “Just don’t use any resources to replace that which the oil industry makes a killing off of. Exxon Mobile is suddenly concerned about starvation. I wonder why.”
Toni Nuernberg, executive director of the Ethanol Promotion and Information Council based in Omaha, Nebraska, asserts, “I can unequivocally state that ethanol does not take food from the mouths of starving people.
“Ethanol production uses field corn — most of which is fed to livestock with only a small percentage going into cereals and snacks,” she insists. “In fact, only the starch portion of the corn kernel is used to produce ethanol. The vitamins, minerals, proteins and fiber are converted to other products including sweeteners, corn oil and high-value livestock feed —feed which helps livestock producers add to the overall food supply.”
Bob Dinneen , president of the Renewable Fuels Association, a Washington-based lobbying group for the ethanol industry, said worry about starving people was overblown. Dinneen said in-creased farming of corn could offset much of the increase in demand for ethanol.
Corn production has risen to an estimated 86 million acres in the last year, up from 76 million acres in 2005, largely because of the demand for ethanol, he said. “I have more faith in the marketplace,” Dinneen opined.
There are, however, problems with increased corn production. There is concern that the recent increase in corn crops used to make ethanol will further deplete dwindling groundwater reserves, and increase the use of fertilizers that run off into waterways and kill aquatic life.
Farmers who grow corn both for food and for ethanol are pressing the federal government to allow them to plant corn on protected wetlands, grasslands and swamps. These lands, protected for 30 years under the Conservation Reserve Program, prevent 400 million tons of erosion every year. This is soil, pesticides, and herbicides that would otherwise drain into the Mississippi River watershed, impacting water quality in the rivers and streams — not to mention the quality of drinking water. Much of this gunk would then make its way to the Gulf of Mexico and contribute to an ever-expanding dead zone that is making vast areas of marine ecosystems unfit for life and fishing.
Closer to the farms, protected areas provide homes for millions of waterfowl, migrating birds, and other plants and animals. Some Washington politicians seem ready and willing to dump these protected lands in order to allow farmers to cash in on record profits. As usual, greed is so often the driving force in decisions people make about the landscape, and they never for a moment stop to consider the wider implications, and longer-term effects of trashing the world we live in.
U.s. farmers growing more corn also drives the destruction of tropical rainforest in Brazil as more land is converted there to soybeans.
In Minnesota, the state Environmental Quality Board is examining water usage by ethanol plants after a plant in Granite Falls, which had been allocated sufficient groundwater for its proposed needs, began pumping water from the Minnesota River. With 16 new ethanol plants in the proposal or construction stage, the state is facing a doubling of water demand from ethanol producers. The industry is consuming 2 billion gallons of Minnesota groundwater per year. The Board plans to look at whether ethanol producers have understated their needs, or ground water reserves are less than projected.
A report from the National Research Council suggests that ethanol production could affect water levels in the Ogalalla aquifer, which runs from west Texas to South Dakota and Wyoming. Extensive parts of the aquifer are showing drops in the water table of more than 100 feet.
U.S. ethanol production is centered, however, on the much deeper Prairie Du Chien-Jordan and other aquifers, which supply Iowa, Illinois, Wisconsin, and Minnesota, and they are not under threat, according to the report.
Nevertheless, the Granite Falls Energy ethanol plant was fined $300,000 by Minnesota — the largest-ever environmental violation fine for a biofuel plant.
As for the criticism that ethanol plants use fossil fuels in the manufacturing process, the “closed-loop” ethanol plant, like the e3 Biofuels Plant in Mead, Nebraska, attempts to address this criticism. In a closed-loop plant, the energy for the distillation comes from fermented manure, produced from cattle that have been fed the by-products from the distillation. The leftover manure is then used to fertilize the soil used to grow the grain. Such a process is expected to lower the fossil fuel consumption used during conversion to ethanol by 75%.
There are an estimated 79 more ethanol plants under construction nationwide, and another 200 planned.
Greg Krissek of ICM, a company that is involved with the development of approximately 60% of the ethanol plants in the country, says “We see a tremendous impact in the community where the plant is being built. You may be looking at $80 million to $160 million in construction costs and that helps local suppliers and we usually use local labor.”
When the plant is finished, he said, “you have a $100 million to $200 million revenue generating company.”
Many economists, consumer advocates, environmental experts and tax groups have been critical of corn ethanol programs as a boondoggle that benefits agribusiness conglomerates more than small farmers. They point out that ag giant Archer Daniels Midland is the nation’s largest ethanol producer.
There is no doubt some farmers have enjoyed a financial windfall as well. Corky Jones is a fourth-generation Nebraska farmer who grows corn and soybeans on a 2,400 acre farm worked with his three sons. The ethanol bonanza has increased his yearly income by more than $500,000 just through the rise in corn prices. “Alternative energy is the cry of the land,” he says.
He also rejects criticism of the fuel as propaganda put about by the oil companies. “The oil giants don’t want to give up a drop of their oil to anybody else.”
Says one North Dakota farmer (who wishes to remain anonymous): “The main reason for rising corn prices is that China is now not exporting corn. The staples that are in short supply are wheat and rice. Wheat became totally un-economical to grow. I searched for any other crop that I could grow so that I wouldn’t lose the farm.
“The other main factor behind rising food costs is the rising cost of oil. Without the ethanol a gallon of gas would be .25 to .30 higher. Do we want that? And the [positive] economic impact of producing ethanol to our suffering rural areas is tremendous.
Some studies suggest that ethanol is really no better than oil in terms of carbon emissions, even though reducing greenhouse gases was one of the main reasons to try to switch to ethanol in the first place. A Princeton study found that when land-use changes are factored into the equation, any possible climate benefit from corn ethanol is canceled out. Corn is a particularly hungry crop, requiring lots of water and nitrogen fertilizers. The application of fertilizers creates nitrous oxide, which is about 120 times more potent than co2 at trapping heat. And this transformation of land spews huge reservoirs of carbon stored in that land into the atmosphere in the form of co2, leading to further global warming.
But as ethanol proponent Doug Wagner asks: “How much carbon dioxide is produced by shipping...oil to the United States? Or food that requires massive investments in refrigeration? Ethanol is not a cure-all, but more carbon dioxide is created by burning fossil fuels, shipping food internationally to keep apples in season, and shipping dangerous dog food in from China than from American-made ethanol.”
Clearly, the best way for American motorists to use less gasoline is to drive fewer miles in lighter vehicles, rather than rely on biofuels.
An array of ideas are afloat to encourage a more sustainable biofuels expansion: a diversified renewable energy policy that, rather than expanding corn crops, promotes more wind power and cellulosic energy from switchgrass, crop residues and agricultural waste (which may favor localized, small-scale production); a federal version of Minnesota’s model, creating targeted incentives for farmer co-ops; and increased research spending by the U.S.D.A.. and Department of Energy to develop smaller-scale biofuels processing plants.
Some worry that the ethanol bubble may be about to burst. Rapidly falling oil prices in the wake of the Wall Street crash have damaged demand for alternative fuels. Ethanol plants are struggling under reduced orders, and some have closed; with it the price of corn has also begun to decline.
At elevators across the Upper Midwest, cash corn in early October ranged from $3.89 to $4.10 per bushel, a decline of 85 cents in two weeks, as worry about Wall Street woes affected corn prices.
This comes after ethanol companies like VeraSun Energy Corp. recorded big losses after corn prices dropped around $2. Those companies had locked into $7 corn earlier. Officials from VeraSun, of Sioux Falls, announced in September a third-quarter loss of $63-$103 million.
Currently, the federal mandate for ethanol use is supporting the corn market. As time passes, however, the market is likely to find and develop other, more promising and cost-effective sources of energy, meaning that the future of using corn to produce ethanol is in doubt. With a soaring federal deficit, Washington may eventually look for ways to cut spending. If you are a corn producer, you need to ask yourself: What will the price of corn be if it is not used to make ethanol and am I prepared for that to happen?
“The world desperately needs a strategy to deal with the emerging food-fuel battle,” concludes Lester Brown. “We need to make sure that in trying to solve one problem — our dependence on imported oil — we do not create a far more serious one.”
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