Betting the Farm on Corn Ethanol

By Joseph Romm,, December 20, 2007

“The energy bill mandates that the U.S. increase the use of renewable fuels to 36 billion gallons by 2022, of which 15 billion can be corn-based ethanol. Bush is betting the farm that the best alternative fuel for the foreseeable future is corn ethanol. It isn’t… Biofuels from most food crops or from newly deforested lands do not provide a significant net decrease in greenhouse gas emissions — and some may cause a net increase. Most life-cycle analyses show that corn ethanol has little or no net greenhouse gas benefit compared with gasoline because so much energy is consumed to grow and process the corn. In fact, recent research, led by Nobel laureate Paul Crutzen, found that corn ethanol might generate up to 50 percent more greenhouse gases than gasoline, when you account for the extra emissions of nitrous oxide, a potent greenhouse gas, from increased use of artificial fertilizer. That same study found that the favorite biofuel worldwide, biodiesel from rapeseed, releases up to 70 percent higher total greenhouse gas than regular diesel. As for developing countries, ‘Biofuels are rapidly becoming the main cause of deforestation in countries like Indonesia, Malaysia and Brazil,’ explains Simone Lovera, managing coordinator of the Global Forest Coalition. In part because of the burning of forests to clear land for palm oil production, Indonesia has become the world’s third-leading producer of carbon emissions! It is also worth noting that ethanol is not a clear win for local air quality, either. The Environmental Protection Agency concluded [PDF, 20 pages] earlier this year that ‘ozone levels generally increase with increased ethanol use.'”

Battered Ethanol Stocks Saved by Energy Bill By Matt Daily, Reuters, December 19, 2007

“The new U.S. energy bill that will prop up the battered ethanol industry has triggered a rebound in the shares of ethanol makers, but hurdles to growth and volatile commmodity prices will keep them on rocky path into 2008. Shares in VeraSun Energy have rallied 58 percent since November 20, while U.S. BioEnergy Corp has jumped 90 percent, Aventine Renewable Energy Holdings Inc 49 percent and Pacific Ethanol Inc 73 percent… Even with the recent rally, ethanol company stocks remain down between about 25 to 50 percent since the end of 2006 as profit margins for the fuel faded because of a supply glut from the fleet of newly constructed plants… A year-ago, ethanol was widely hailed an antidote to the U.S. addiction to foreign oil and a tool toward cutting carbon dioxide emissions. But that glow faded because of the 40 percent jump in production capacity to 7.4 billion gallons per year that depressed margins, a subsequent rise in food prices that has been blamed on the industry’s huge appetite for corn and only modest carbon reductions compared to traditional oil refining… For now, ethanol makers’ stocks will depend largely on whether volatile commodity prices keep gasoline prices high enough to cover the high corn costs. The surge in oil prices to more than $90 a barrel this year has helped make ethanol more competitive, even as corn prices rallied to record levels above $4 per bushel.”

‘Wonderment’ at the Scope of New Ethanol Mandates. s&oref=slogin By Clifford J. Krauss, The New York Times, December 18, 2007.

“One measure [in the recently passed energy bill] calls for a huge increase in the amount of ethanol used in the nation’s fuel supply. Much of it would be made from corn, as ethanol is today… Congress wants to double that level of production, to 15 billion gallons [and] calls on the country to use, by 2022, an additional 21 billion gallons a year of ethanol or other biofuels… [Fifteen] billion gallons by 2015 [is] a big jump, considering that 20 percent of the American corn crop is already going into ethanol… Energy experts express wonderment at the scope of the new mandates and the short timelines, 5 to 15 years, for achieving them… Aaron Brady, an ethanol expert at Cambridge Energy Research Associates… estimates that more than 100 additional corn ethanol plants will be required, along with at least 200 other biomass fuel plants, a number that could rise depending on how the technology develops… Many environmentalists remain uneasy about corn ethanol because it requires energy and fertilizer made from natural gas, oil and coal, and they are concerned that biomass fuels may also have unexpected environmental consequences. According to food producers who oppose expanding ethanol production, the additional eight billion gallons of corn ethanol use outlined in the bill will require growing 20 million more acres of corn. ‘That means fewer acres for fruits, vegetables, soybeans, alfalfa and other crops, and higher food prices,’ said Jesse Sevcik [of] the American Meat Institute. Ethanol producers say… ethanol made from other plants not vital for food production is the answer… Energy Department and Congressional reports suggest the country has sufficient land and biomass to replace a third or more of American gasoline needs, depending on how efficient cars become in the future. In theory, that could cut the nation’s emissions of carbon dioxide… However, scientific reports about biomass ethanol raise some of the same concerns that have been raised with corn ethanol, including potential problems with soil erosion, runoff and soil fertility. The sheer bulk of many of the necessary biomass sources is one of the biggest problems, posing challenges for harvest, transport and storage. Mr. Brady estimates that 700,000 tons of biomass would be needed each year for a distillery to produce 50 million gallons of ethanol. ‘You’re talking about a huge amount of material that has to be hauled back and forth, and that will cost energy,’ [he] said. ‘I don’t know if it will be a deal-breaker, but I don’t think the logistics of this have been worked out.'”

Crops Grown for Biofuels and Cattle Feed Exacerbating ‘Perfect Storm’ of Hunger By Elisabeth Rosenthal, International Herald Tribune, December 18, 2007.

“In an ‘unforeseen and unprecedented’ shift, the world food supply is dwindling rapidly and food prices are soaring to historic levels, the top food and agriculture official of the UN warned Monday. The changes created ‘a very serious risk that fewer people will be able to get food,’ particularly in the developing world, said Jacques Diouf, head of the UN Food and Agriculture Organization. The agency’s food price index rose by more than 40 percent this year, compared with 9 percent the year before — a rate that was already unacceptable, he said… Diouf blamed a confluence of recent supply and demand factors for the crisis, and predicted that those factors were here to stay. On the supply side, these include the early effects of global warming, which has decreased crop yields in some crucial places, and a shift away from farming for human consumption toward crops for biofuels and cattle feed… ‘We’re concerned that we are facing the perfect storm for the world’s hungry,’ said Josette Sheeran [of] the World Food Program.”