What is the True Cost of Ethanol?

A copy of Flyrod & Reel Magazine landed on the desk in the CARE offices because of an article it contained about ethanol. A fishing magazine talking about ethanol? Interesting. A further look revealed that it is indeed interesting. This article, written by Flyrod & Reel’s “Conservation Editor” piqued our interest in ethanol—of course, as an advocacy organization for responsible energy, CARE has always been interested in ethanol. But, here we offer you some fresh perspectives gathered from several sources (with some editing for brevity). Give them a look. Does this make you think? What does this have to do with the price of tortillas? More on that later.

Under the Influence of Ethanol
America's Corn-Based Ethanol Program Carries High Costs In Fish, Wildlife And Tax Dollars

Ethanol is even more popular now than when Americans made it to fuel themselves rather than their cars, and some of the behavior it generates is no less silly. The cornbelt, Congress, and the departments of Energy and Agriculture are hawking the stuff as if it were Dr. Kickapoo's Elixir for Rheum, Ague, Blindness and Insanity. In the last five years the amount of corn poured into ethanol distilleries has tripled to 55 million tons. At this writing, projections by the Department of Agriculture have world grain use growing by 20 million tons in 2006, 6 million tons of which will be consumed by the world's rapidly proliferating and hungry human beings, 14 million tons of which will be consumed by America's proliferating and gas-guzzling cars. Eighteen percent of all the corn we grow goes into ethanol production, and goals mandated by Congress will sharply increase that percentage.

It all started in 1990 with amendments to the Clean Air Act, revolutionary in that they regulated not just how we burn gasoline but how we make it. In areas out of compliance with air-pollution standards, gasoline had to include at least two percent oxygen-containing chemicals (oxygenates), the better to combust carbon monoxide, toxic hydrocarbons, and smog-producing volatile organic compounds. There were only two choices—ethanol and the petroleum-based methyl tertiary butyl ether (MTBE). This was precisely what the cornbelt had fantasized about and lobbied for. Suddenly the moribund ethanol industry had a future. City air would become breathable. We'd have plenty of fuel. It was going to be a win-win-win.

But instead of cleaning up America, ethanol has added to the mess we're making out of our water and air. Now the Bush Administration has decreed that ethanol replace the far more efficient MTBE as an oxygenate. But with current refining technologies and anti-pollution paraphernalia on motor vehicles there's no need for any oxygenate, a fact the powerful agribusiness lobby doesn't want you to know. Under its withering pressure, Congress and the executive branch have committed the nation to ethanol as both oxygenate and fuel.

The Energy Policy Act of 2005 requires that US gasoline contain 7.5 billion gallons of ethanol by 2012, up from 4 billion. One hundred and one ethanol plants are online, and 44 are under construction. Eighty million US acres were planted to corn in 2006; and the ethanol boom will require 10 million more just in 2007. Ethanol, we are being told, is going to "reduce our dependence on foreign oil" and "lead us to energy independence." "Live Green, Go Yellow," effuses General Motors—one of the major roadblocks to fuel-efficiency standards. "Fill Up, Feel Good," gushes the Ethanol Promotion and Information Council, a front for agribusiness.

How will ethanol affect fishing? First, no crop grown in the United States consumes and pollutes more water than corn. No method of agriculture uses more insecticides, more herbicides, more nitrogen fertilizer. Needed for the production of one gallon of ethanol are 1,700 gallons of water, mostly in the form of irrigation taken from streams either directly or by snatching the water table out from underneath them. And each gallon of ethanol produces 12 gallons of sewage-like effluent.

Ethanol plants are gross polluters of air and water, and because of the exorbitant price of natural gas some of the new ones will be coal-fired, adding to the already dangerous mercury content of fish. The response of the Bush administration has been a proposal to relax pollution standards for ethanol production.

The toxic, oxygen-swilling stew of nitrates, chemical poisons and dirt excreted from the corn monocultures of our Midwest pollutes the Mississippi River and its tributaries, limiting fish all the way to the Gulf where it creates a bacteria-infested, algae-clogged, anaerobic "Dead Zone" lethal to fish, crustaceans, mollusks and virtually all gill breathers. In some years, depending on seasonal heat and water conditions, the Dead Zone can cover 8,000 square miles. And it's expanding.

No habitat is more important to fish and wildlife than wetlands. They filter out pesticides and sediments, and they consume phosphates and nitrates. At least 70 percent of the wetlands in the cornbelt have already been lost. But, in order to produce surplus corn for ethanol, remaining cornbelt wetlands are being drained. In some areas—Nebraska, for instance—corn has to be irrigated by pumps that suck water from the ground faster than it percolates back in.

Where is the land to grow all the extra corn needed for ethanol supposed to come from? Well, the Bush administration has an idea: In testimony to Congress, the USDA's chief economist, Keith Collins, has raised the possibility of using land enrolled under the Farm Bill's Conservation Reserve Program (CRP). Not so coincidentally, it happens that this is precisely the idea that the corn lobby had come up with. In an op-ed in the December 6, 2006 Des Moines Register, Bruce Rastetter, CEO of Hawkeye Renewables, Iowa's largest ethanol producer, writes: "First, the government should immediately release some of the 37 million acres that now sit idle in the US Department of Agriculture's Conservation Resources [sic] Program."

"We're hearing rumors every day that the [USDA's] Farm Services Agency is on the verge of announcing they're going to allow people to liquidate CRP contracts to grow more corn for ethanol," says Julie Sibbing, point person for the National Wildlife Federation's agriculture and wetlands program. "That's a huge concern. They've been studying CRP to see if there's land they can pull out to grow more corn. We're hearing from folks up in the plains that farmers are going in and breaking up virgin prairie. It's lousy land for agriculture, but they're planting it because of the high price of corn brought on by this ethanol boom. It's scary. And there are huge water requirements. People are building these ethanol plants anywhere, paying no attention to the water needs. We're worried about instream flows."

Thanks to CRP and other Farm Bill conservation programs, Iowa—the corn capital of the nation—is suddenly teeming with smallmouth bass and, in the state's northeast hill country, wild trout. Yes, wild trout. "Our trout fishery is one of the best kept secrets in the country," declares Rich Patterson, who directs the Indian Creek Nature Center in Cedar Rapids and serves on the Circle of Chiefs of the Outdoor Writers Association of America. "When I first came here 28 years ago it was all put-and-take, guys tossing corn to stupid hatchery trout. I'm catching incredible wild trout in streams that were mucky in the 1980's. And there has been a tremendous turnaround on smallmouths. They're sight feeders, and with clearing water they're increasing like crazy."

But America's ethanol orgy frightens Bill Kalishek, northeast fisheries division's supervisor, and his colleagues. "I've seen some of the results already," he says. "The bulldozers are out there on the little corners of cornfields that used to be brushy draws or old fence lines so farmers can grow more corn. A lot of our general-signup CRP enrollments—where whole, erodible fields were taken out of production—are expiring in the next two or three years. And I'm worried that with this increase in corn production we're going to take a big step backwards in water quality and stream habitat and in our trout populations."

Well, as we so frequently tell ourselves and are told by our federal government, we all have to make sacrifices for energy self-sufficiency. But the sacrifices fish-and-wildlife advocates and taxpayers are being asked to make for ethanol do not and cannot decrease our dependency on foreign oil. In fact, they do just the opposite. This is because it takes more energy in the form of fossil fuels to make corn-based ethanol than we get from it.

Some researchers dispute this, but almost without exception they are directly or indirectly funded by or otherwise allied to agribusiness or the USDA (a wholly owned subsidiary of agribusiness). The credible stats issue from independent researchers whose studies have been published in peer-reviewed scientific journals and who have no irons in the fire. Two of the more notable ones are Dr. Tad W. Patzek, a chemical engineer from the University of California at Berkeley, and Cornell University's Dr. David Pimentel.

Pimentel, author of 24 books and nearly 600 scientific papers and selected by the Department of Energy to chair two scientific panels on ethanol production, told me this: "Ethanol is a boondoggle. Optimistically, using Department of Energy numbers, it amounts to one percent of our petroleum use. Ethanol requires almost 40 percent more energy to produce than you get out of it; we're having to import oil to make this stuff. And, of course, the environmental impacts to water, air and soil are enormous. During the fermentation process, when yeast is working on the starches and sugars, large quantities of carbon dioxide are released. In fact, some plants collect it and sell it to beverage companies. So it's a double whammy for global warming—not only burning fossil fuel but carbon dioxide production."

Pimentel reports that ethanol, which yields only two-thirds the energy of gasoline, gets 45 times more federal subsidy per gallon than gasoline. "That's what's attracting all the flies," he says. All told, you and I are spending at least $3 per gallon on ethanol subsidies for a total of $6 billion per year. Without all this gravy train, Pimentel has calculated that the cost for 1.33 gallons of ethanol (the equivalent in energy yield to a gallon of gasoline) would be $7.12.

The subsidies aren't going to family farms but to bloated, effluent-spewing agribusiness giants that get hungrier and dirtier with each feeding. According to one estimate—by financial analyst James Bovard of the Cato Institute—every dollar in profits earned by the nation's largest ethanol producer, Archer Daniels Midland (ADM), costs taxpayers $30.

In February 2006 Energy Secretary Sam Bodman showed up at ADM's Decatur, Illinois, headquarters to pose with CEO Allen Andreas and announce that the Department of Energy would offer $160 million for the construction of three biorefineries for ethanol production. "This funding will support a much-needed step in the development of biofuels and renewable energy programs," declared Bodman. "Partnerships with industry like these will lead to new innovation and discovery that will usher in an era of reduced dependence on foreign sources of oil, while strengthening our economy at home."

This is the same ADM that made it to number 10 on the University of Massachusetts' Political Economy Research Institute's "Toxic 100" list of America's worst corporate polluters, the same ADM that in 2003 was assessed $351 million in fines by the EPA for Clean Air Act violations at 52 plants in 16 states, the same ADM currently slugging it out with the state and feds in 25 judicial and administrative proceedings regarding its contamination of air, soil and water. ADM is just one of many offenders.

"I've been following this ethanol development very closely," says Iowa Fish and Wildlife's Kalishek. It looks like the demand for corn for ethanol is going to continue to increase. Every prediction I've seen, and the most recent one came out of Iowa State University, is that demand for corn is going to outstrip Iowa's ability to produce corn. If you've ever driven across our state, you'd scratch your head and say, 'Huh? All that corn is not going to be enough to feed the ethanol plants?'"

So, if not corn based ethanol, where are we going to find the fuel to run our cars? Berkeley's Dr. Tad Patzek makes the point that corn is merely one way of converting solar energy to fuel. Solar cells, far more efficient, could make hydrogen fuel. That's where the subsidies need to go, he contends. But technology for practical, affordable hydrogen fuel, like technology for practical, affordable ethanol fuel, doesn't exist yet.

We do, however, possess the technology to build fuel-efficient automobiles. In the current charade designed by and for agribusiness we're allocating 18 percent of the corn we grow to ethanol, thereby cutting our petroleum consumption by one percent. But Patzek has calculated that if we doubled automobile fuel efficiency, we'd cut petroleum consumption by 33 percent or, put another way, we'd increase our petroleum supply by a third. It's a revolutionary concept that America has never tried. Fish-and-wildlife advocates are calling it conservation.

Ted Williams, Conservation Editor, Flyrod & Reel Magazine

*****

The Iowa Imperative: Ethanol
When looking for a root cause of the ongoing ethanol scam, look no further than Iowa. Indeed, the dearth of rationality in America’s choice of motor fuels can be blamed on a single fact: the Iowa Caucus is the first presidential primary. That accident of the calendar has led to some of the most egregious examples of flip-flopping, pandering, and groupthink in modern American political history. The Iowa imperative has also allowed the U.S. to continue tariff policies that are blatantly protectionist and anti-consumer. The ethanol madness now underway is largely due to the economic needs of a state with less than 1 percent of the U.S. population—or to be more precise, the economic desires of a tiny subgroup of that 1 percent: Iowa’s corn farmers and ethanol producers.

There’s plenty of evidence of the way the ethanol lobby made Iowa the make-or-break state for presidential contenders. Back in the 1990s, former New Jersey senator Bill Bradley was a leading critic of ethanol, saying the ethanol subsidy meant higher gasoline prices for his New Jersey constituents. But once Bradley began eyeing the White House, he became an ethanol convert. Thus in 1999 and 2000, he campaigned in Iowa claiming he had changed his mind on ethanol, stating that the U.S. had to “help our family farmers get a bigger chunk of the food dollar.” During the 2000 presidential race, every candidate who campaigned in Iowa supported the ethanol subsidy. The only candidate opposing it: Republican John McCain, who refused to campaign in Iowa.

During the 2000 race, the campaign coverage made much of the ethanol issue, with several newspapers taking a dim view of it. The San Diego Union-Tribune, in a January 2000 editorial, wrote that there was “simply no justification” for the continued ethanol subsidies. Esquire magazine lauded Bradley’s opposition to ethanol prior to the Iowa causes, calling the subsidies a “preposterous boondoggle.” As the primaries ended, the late, great Texas columnist Molly Ivins declared the ethanol subsidy was “a useless piece of junk” and a “total failure.”

But now eight years later, with energy independence as key buzzwords in Washington, ethanol subsidies are alive and well, the media is largely prostrate, and old opponents of the corn-based fuel are flip-flopping like a fish on a hook. Why? The numbers explain it: Iowa produces about one-third of all of the ethanol in the U.S. Since 2002, the amount of Iowa corn going into ethanol production has tripled. The state has 21 producing ethanol plants and another 23 plants are planned or under construction. About 2,500 jobs in Iowa are directly related to ethanol production and another 14,000 have jobs—according to IowaCorn.org—that are “affected” by ethanol.

For John McCain, it appears that genuflecting before Iowa’s ethanol interests is now more important than sticking to his long-held belief that ethanol is a bad deal for taxpayers. Back in 2002, the Republican senator from Arizona declared that ethanol is a “giveaway to special interests in corn-growing states at the expense of the rest of the country.” In 2003, McCain declared that ethanol wouldn’t exist if Congress hadn’t “[created] an artificial market for it.” He also said it “does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality.” In 2005, McCain voted against the big energy bill that passed Congress because its ethanol mandates would “result in higher gasoline costs for states, like Arizona, that do not have an abundant in-state supply” of ethanol.

That was the old McCain. The new McCain, who has his eyes on the Oval Office, loves the stuff. In August 2006 during a speech in Grinnell, Iowa, he said ethanol is “a vital alternative energy source not only because of our dependency on foreign oil but its greenhouse gas reduction effects.”

The same flipping and flopping is afflicting Hillary Clinton, who as senator from New York voted against ethanol some 17 times. In 2002, she signed a letter saying that the ethanol subsidies were “equivalent to a new tax” on gasoline and that there is “no sound public policy reason for mandating the use of ethanol.” But in January, during a visit to Des Moines, Clinton said that the U.S. needs to work on “limiting our dependence on foreign oil. And we have a perfect example right here in Iowa about how it can work with all of the ethanol that’s being produced here.”

Then there are the protectionists, a group that includes another presidential contender, Barack Obama. Last year the Democrat from Illinois, along with four other farm-state senators, sent a letter to President Bush asking him to ignore calls to reduce tariffs on Brazilian sugarcane-based ethanol. Lowering the tariff, they said, would make the U.S. dependent on foreign ethanol. “Our focus must be on building energy security through domestically produced renewable fuels,” they wrote. Perhaps it’s just a coincidence, but during his first year in office, Obama twice used corporate jets belonging to agribusiness giant ADM, the world’s biggest producer of corn-based ethanol.

Many of the neoconservatives who pushed for the war in Iraq and are now pushing for the U.S. to decrease its imports of foreign oil, are trying to get the import tariffs on ethanol removed. In January, one of that group’s leaders, Ariel Cohen, a prominent neocon who works at the Heritage Foundation, lauded Bush’s State of the Union speech, in which he laid out a plan to reduce American gasoline consumption. Cohen claims that imported oil is a “dire geopolitical threat.” But he complained that Bush’s proposals do not “address the need to bring into the U.S. the most competitive ethanol, sugar-cane ethanol, which is now penalized with punitive tariffs.”

Those tariffs are going to stay in place for one simple reason: they protect the Iowa ethanol business. That point was made clear by Iowa Senator Charles Grassley, a Republican, shortly after Bush’s speech. “Lifting the ethanol tariff would undermine faith in the domestic renewable fuels industry,” Grassley declared. “We need to continue the current supportive policies of the domestic industry….Lifting the tariff would only undercut our domestic efforts, virtually eliminate any chance of developing ethanol from other sources, and potentially leave us dependent on foreign sources for our ethanol.”

Thus, for Iowans like Grassley, and for the leading candidates for the White House, foreign oil is bad. But foreign ethanol is even worse. And that worldview is going to get a lot of play between now and January 18—the date of the Iowa Caucus.

Robert Bryce's work has appeared in numerous publications including Atlantic Monthly, Slate, New York Times, Washington Post and The Guardian. A contributing writer for the Texas Observer and managing editor of Energy Tribune, he lives in Austin.