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Is It Time to Stop Putting Food in Our Cars?

Wednesday, October 31, 2012

The ethanol mandate continues to do more harm than good — inflicting environmental damage, raising food prices, and distorting energy markets.

Two recent developments warrant a reexamination of the fuel ethanol issue.

First, on August 20, 2012, the Environmental Protection Agency (EPA) issued a call for comments on suspending the renewable fuel standard (RFS), sometimes known as the ethanol mandate:

EPA is seeking comment on letters requesting a waiver of the renewable fuel standard and matters relevant to EPA’s consideration of those requests. Governors of the states of Arkansas and North Carolina submitted separate requests for a waiver. Section 211(o)(7)(A) of the Clean Air Act allows the Administrator of the EPA to waive the national volume requirements of the renewable fuel standard program in whole or in part if implementation of those requirements would severely harm the economy or environment of a state, a region, or the United States, or if the Administrator determines that there is inadequate domestic supply of renewable fuel.

Second, though it has not played a feature role in the 2012 presidential election, both Governor Mitt Romney and President Barack Obama have weighed in on ethanol fuel, staking out different positions.

Our conclusions are that the ethanol mandate continues to do more harm than good — inflicting environmental damage, raising food prices, and distorting energy markets.

Ethanol and Food Prices

Projections estimate that by 2016, the United States will have diverted up to 43 percent of its cropland toward ethanol production. Since such land is normally used to harvest grain for feeding livestock, any diversions to ethanol production would require either changing the use of other land to growing grain or sharp increases in the cost of grain and meat. Given these ramifications, it is no surprise that a myriad of global organizations have opposed the biofuel mandate, including the World Trade Organization, Food and Agriculture Organization of the United Nations (FAO), International Fund for Agricultural Development, International Monetary Fund, Organization for Economic Co-operation and Development, UN Conference on Trade and Development, World Food Program, International Food Policy Research Institute, UN High Level Task Force, and the World Bank. In a recent opinion piece in the Financial Times, José Graziano da Silva, director-general of the FAO, also called for the suspension of biofuel use. He noted that “an immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses.”

Ethanol and Gas Prices

Projections estimate that by 2016, the United States will have diverted up to 43 percent of its cropland toward ethanol production.

To offset the environmental harms listed above, many hope that ethanol will at least benefit the economy by helping to keep gas prices down. However, closer inspection reveals that this is yet another energy myth: ethanol will not shield us from high gasoline prices because, in a free market, the price of ethanol will be the same as gasoline, on an energy-equivalent basis — that is, the price of a gallon of ethanol should be around 66 percent of a gallon of gasoline, as it will take you the same distance when you drive on it. A 2008 report from the National Renewable Energy Laboratory confirms this fact: the report reviews five independent studies to assess the impact of ethanol blending on gasoline prices in the United States, and concludes that they all “overestimate the impact of the substitution effect on driver economics, because the reduced gasoline production costs do not translate fully into savings for end consumers.”

Environmental Impacts

Ethanol poses numerous environmental threats. One of the most serious is the overuse and destruction of land and water. According to scientists Jan Kreider and Peter Curtiss, refining a gallon of corn ethanol requires 35 gallons of water. But that is only the beginning. Kreider and Curtiss estimate that three times as much water is needed to grow the corn that yields a gallon of ethanol. That brings the tally to 140 gallons of water per gallon of corn ethanol produced. If their calculation is correct, the 5.4 million gallons of corn ethanol used in America in 2006 required the use of 760 million gallons of fresh water. Furthermore, note that these estimates are conservative by some more recent standards. As energy analyst Chris Nelder remarked:

Trying to find reliable data for on the water demand of U.S. corn ethanol production is a short path to utter insanity, with a ridiculously large range of estimates offered. After reviewing a dozen or so academic papers and other sources, I concluded that a 2010 study by the Argonne National Laboratory was in the right ballpark. It estimated that it takes 82 gallons of water on average to produce 1 gallon of ethanol in the regions responsible for 88 percent of U.S. corn production, where the vast majority of that water is used for irrigation. Multiplying that by the 800,000 barrels per day of ethanol production shown in last week’s IEA report suggests that the U.S. currently uses a little over one trillion gallons of water per year to make ethanol. But, as an indication of how widely divergent the estimates can be, a University of Minnesota study found that at the height of the ethanol boom in 2007, “approximately 9.6 trillion gallons of water were appropriated by the U.S. ethanol industry.”

In addition to overuse, ethanol production pollutes the water we do have: in “Water Implications of Biofuels Production in the United States,” the National Research Council points out that more corn raised for ethanol means more fertilizers, pesticides, and herbicides in waterways; more low-oxygen “dead zones” from fertilizer runoff; and more local shortages in water for drinking and irrigation. Fertilizer runoff does not just pollute local waters, it creates other far-reaching environmental problems — destruction that is already evident in the Gulf of Mexico and the Chesapeake Bay. More is sure to come if we allow ethanol production to continue at its current pace.

Land is also threatened by ethanol production. In a Science article in February 2008, researchers calculated that producing 15 billion gallons of corn ethanol to meet U.S. ethanol goals would require the diversion of corn from 12.8 million hectares of U.S. cropland and would, in turn, bring 10.8 million hectares of additional land into cultivation. Locations would include 2.8 million hectares in Brazil, 2.3 million in China and India, and 2.2 million here in the United States. Current and future projections look similarly bleak: Brent Gloy, associate director of research at Purdue University's Center for Food and Agricultural Business, estimates that 20 million acres of U.S. land alone were used in 2011 to feed corn to ethanol plants. To remedy the problem, many scientists are now fixated on finding ways to get more out of available lands. Though such analysis is promising, we could get a lot further if we were to eliminate the root cause by killing the ethanol mandate.

Finally, there’s the issue of climate change. In issue briefs and media reports, ethanol is often pitched as a good solution to climate change because it re-circulates carbon in the atmosphere; that is, it’s “carbon-neutral.” However, there is more than one kind of greenhouse gas to consider.

When blended with gasoline, ethanol actually increases the formation of potent greenhouse gases more than gasoline does by itself. As far back as 1997, the U.S. Government Accountability Office determined that the ethanol production process:

produces relatively more nitrous oxide and other potent greenhouse gases [than does gasoline]. In contrast, the greenhouse gases released during the conventional gasoline fuel cycle contain relatively more of the less-potent type, namely, carbon dioxide.

In 2008, Paul Crutzen, a Nobel Prize–winning chemist, validated these findings. Further research only confirms the trend: in February 2008, researcher Timothy Searchinger and colleagues calculated that “corn-based” ethanol, instead of producing a 20 percent savings, nearly doubles greenhouse gas emissions over 30 years and increases greenhouse gases for 167 years.

Although the EPA claims a net decrease in greenhouse gas emissions from using ethanol, it recognizes that ethanol creates air pollutants. Ethanol use, according to the EPA, will increase the emission of chemicals that lead to the production of ozone, one of the nation’s most challenging local air pollutants. The Office of Transportation and Air Quality notes, “other vehicle emissions may increase as a result of greater renewable fuel use. Nationwide, EPA estimates an increase in total emissions of volatile organic compounds and nitrogen oxides (VOC + NOx) between 41,000 and 83,000 tons [due to increased use of ethanol].” Furthermore, areas that experience a substantial increase in ethanol may see an increase in VOC emissions between 4 and 5 percent and an increase in NOx emissions between 6 and 7 percent from gasoline-powered vehicles and equipment.

The Fiction of Cellulosics

Ethanol actually increases the formation of potent greenhouse gases more than gasoline does by itself.

Given the aforementioned environmental hurdles to producing corn-based ethanol, numerous researchers have proposed a shift to cellulosic ethanol feedstocks such as switchgrass. Though more difficult to ferment, the theoretical appeal of cellulosic feedstocks lies in their abundance, availability, and cheap cost relative to corn. In actuality, however, cellulosic-based ethanol fails to make good on this promise. One need only look at how the Energy Information Administration’s projections for cellulosic-based ethanol have changed to see that switchgrass and company cannot measure up to the scale of production offered by corn and other foodstuffs. Furthermore, many of the same environmental harms inherent in corn-based ethanol apply to cellulosic materials. For example, Searchinger and colleagues found in 2008 that biofuels from switchgrass, if grown on U.S. corn lands, increased greenhouse emissions by 50 percent. Similarly, land use projections remain bleak — Kreider and Curtiss estimate that switchgrass would require between 146 and 149 gallons of water per gallon of ethanol produced from cellulose, depending on the scale of production.

Despite the difficulty and danger involved in producing cellulosic biofuels, the EPA has continued to push them as corn-based ethanol’s eco-friendly cousins. Though it is one thing to lobby hard for cellulosics like switchgrass, it is another entirely to force oil companies to make the switch, as the EPA did earlier this year when it began fining companies for failing to include non-existent cellulosic biofuels in gasoline and diesel. In January, the New York Times reported:

When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law. But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, remarked that the EPA’s action “belies logic.”

Past Politics

Ethanol was initially touted by promoters as the solution to all our energy woes — dependence on foreign oil, diminishing oil stocks, and environmental consequences of energy use, to name a few. As recently as 2006, ethanol was thought by President George W. Bush to be:

good for our rural communities. It’s good economic development for rural America … Ethanol is good for the environment … good for drivers … Ethanol’s good for the whole country.

It was this mindset that pushed Bush to sign the RFS into law in 2007, which mandated 13 billion gallons of ethanol (equivalent to 5 billion bushels of corn) be used in gasoline in 2012 alone, scaling up to nearly 14 billion gallons by 2013.

During the 2008 presidential election, both Obama and John McCain expressed similar support for ethanol, though it’s worth noting that McCain was far later in coming to the ethanol game. On the eve of the Republican primary, candidate McCain appeared to have an epiphany regarding ethanol, changing his position to a strong endorsement of the substance while on the Iowa campaign trail. Given the swift and sudden nature of the shift, it is all but certain that McCain’s support for ethanol was not a sincere endorsement grounded in scientific reasoning, but rather a political ploy conceived to curry favor with the Corn Belt crowd.

Obama’s Stance

The president, it should be noted, “has been a strong believer in ethanol.” Lest there be any doubt regarding Obama’s feelings for this powerful fuel, his traveling press secretary Jennifer Psaki put them to rest during the president’s recent trip to Iowa. When it comes to ethanol, she assured voters, “He absolutely believes in it.”

Given the recent problems that have cropped up around the government’s ethanol mandate, including rising food prices, drought, and a laundry list of waiver requests from ranchers and state governors, one might be curious as to why Obama is choosing this moment to so strongly support the mandate. Might it have anything to do with the fact that ethanol is a vital source of jobs in Iowa and other critical swing states in the November 6 election?

According to Psaki, the answer is (at least partially) yes: “he thinks it’s a driver of the economy here [in Iowa] and a key component of renewable energy.”

Given the numerous dangers of ethanol production outlined above, it is worth examining more closely how Obama and other politicians have responded to the ethanol mandate.

Romney’s Position

Although Romney has also expressed support for the ethanol mandate, he has not gone out of his way to offer particulars on his position. In his recently released white paper on energy independence, Romney only briefly mentions that he will maintain the mandate, proclaiming that his administration will:

Support increased market penetration and competition among energy sources by maintaining the RFS and eliminating regulatory barriers to a diversification of the electrical grid, fuel system, or vehicle fleet.

Note that Romney is particularly ambiguous on the details of how he will “maintain” the mandate, failing to include information about funding, an implementation structure, or even a timeline. And although Romney proclaimed during a May 2011 visit to Iowa, “I support the subsidy of ethanol. I believe ethanol is an important part of our energy solution for this country,” his spokeswoman Andrea Saul clarified last year that Romney “supports ethanol but … doesn’t believe any subsidy is permanent.”

If their calculation is correct, the 5.4 million gallons of corn ethanol used in America in 2006 required the use of 760 million gallons of fresh water.

Given his lack of details on the RFS, it seems that the Romney camp may be taking a page from McCain’s campaign playbook. In keeping his plans for the ethanol mandate under wraps, Romney gives himself the option to use the mandate as a bargaining chip, tweaking and refining his position to be the most politically viable at any given moment. For now, at least, the ethanol industry favors Romney’s position. In a recent statement, Bob Dinneen, the CEO of the Renewable Fuels Association, explained: “by working to remove barriers to market access for renewable fuels, as Governor Romney suggests, America can help spur an economic recovery while securing our energy future.”

What’s Next?

Only time will tell just how much harm the ethanol mandate might do to the environment. At the moment, all we can do is consider the evidence at hand. We now know that ethanol — whether derived from corn or switchgrass — has not only failed to live up to the hype, but will do America more harm than good as it continues wreaking havoc on our air, land, and sea, not to mention our wallets. It has yet to alleviate higher gas prices.

Perhaps Romney or Obama will have the courage to step up and tackle America’s ethanol problem in the way it should be solved: by having an open discussion, regardless of the political implications of the truth, about ethanol’s many costs and few benefits. Such a discussion will surely make the right course of action — to kill the mandate immediately — quite clear. For now, it is worth noting that a bright spot does exist: Romney’s running mate, Paul Ryan, has been quite vocal about his support for killing the ethanol mandate.

Kenneth P. Green is a resident scholar at the American Enterprise Institute, where Elizabeth DeMeo is a research assistant.

FURTHER READING: Green and DeMeo also coauthor “Presidential Power: Obama vs. Romney on Energy.” Green writes “Energy Is Everywhere” and “Subsidy-Powered Vehicles.” Aaron Smith contributes “Children of the Corn: The Renewable Fuels Disaster.” Mark J. Perry says “Gas Prices Are Complex, But Not Mysterious.” Christopher R. Knittel discusses “Corn Belt Moonshine: The Costs and Benefits of U.S. Ethanol Subsidies.”

Image by Darren Wamboldt / Bergman Group

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