Despite Its Huge Flaws, Ethanol Is Political Holy Water in DC
This article is located at http://www.washingtonspectator.org/index.php/Archive/ethanol-is-the-agricultural-equivalent-of-holy-water.html which I linked to in my article Ethanol: the Inconvenient Truth; however my readers encountered the following error when they accessed that page: "Your host needs to use PHP 5.3.1 or higher to run this version of Joomla!"
For the convenience of my readers I reproduce the original text of the article here:
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"Ethanol
is a magic elixir. It allows politicians and political operatives to promise
voters that America can achieve "energy independence." In this
new energy Valhalla, American farmers will be rich, fat and happy, thanks
to all the money they will be making from "energy crops." Better
yet, U.S. soldiers will never again need to visit the Persian Gulf - except,
perhaps, on vacation. With enough ethanol-blended motor fuel, America can
finally dictate terms to those rascally Arab sheikhs with their rag-covered
heads, multiple wives and supertankers loaded with sulfurous crude.
George W. Bush believes. In January, he declared that the U.S. should
be producing 35 billion gallons of ethanol and other alternative fuels by
2017. During a March trip to Latin America, where he signed an agreement
to expand ethanol-related trade between the U.S. and Brazil, Bush said that
he was "very upbeat about the potential of biofuel and ethanol."
Not to be outdone, former North Carolina senator John Edwards declared
that the U.S. should be producing 65 billion gallons of ethanol per year
by 2025. He claims that his proposed New Economy Energy Fund will "develop
new methods of producing and using ethanol, including cellulosic ethanol,
and offer loan guarantees to new refineries."
Even longtime ethanol foe Senator John McCain - who in the past has called
ethanol "highway robbery" and a "giveaway to special interests"
- has become an ethanol evangelist. Last August during a visit to Iowa,
the Republican presidential hopeful called ethanol "a vital alternative-energy
source not only because of our dependency on foreign oil but its greenhouse-gas-reduction
effects."
Every major presidential candidate has come out in favor of ethanol.
So have the Democrats on Capitol Hill. Speaker of the House Nancy Pelosi
wants automakers to build more ethanol-fueled vehicles and wants to see
"America's farmers fueling America's energy independence."
It all sounds wonderful. But there are a bushelful of problems with ethanol,
none of which fit neatly into a politician's soundbite. Of those many problems,
four stand out: the massive subsidies; ethanol's inability to displace significant
amounts of imported oil; its deleterious effect on air quality; and its
effect on food prices.
Inconvenient Facts
First, the subsidies. Making ethanol from corn borders on fiscal insanity.
It uses taxpayer money to make subsidized motor fuel from the single most
subsidized crop in America. Between 1995 and 2005, federal corn subsidies
totaled $51.2 billion. In 2005 alone, according to data compiled by the
Environmental Working Group, corn subsidies totaled $9.4 billion. That $9.4
billion is approximately equal to the budget for the U.S. Department of
Commerce, a federal agency that has 39,000 employees.
Need another comparison? The $9.4 billion is nearly twice as much as
the federal government spends on WIC, short for the Special Supplemental
Nutrition Program for Women, Infants and Children, a program that provides
health care and nutrition assistance for low-income mothers and children
under the age of five.
Corn subsidies dwarf all other agricultural subsidy programs. The $51.2
billion that American taxpayers spent on corn subsidies between 1995 and
2005 was twice as much as the amount spent on wheat subsidies, more than
twice as much as the amount spent on cotton, four times as much as the amount
spent on soybeans and 96 times as much as the total subsidies for tobacco
during that period.
But the ethanol lobby isn't satisfied with the subsidies paid out to
grow the grain. They are also getting huge subsidies to turn that grain
into fuel. According to the Global Subsidies Initiative, meeting Bush's
goal of producing 35 billion gallons of renewable and alternative fuels
per year by 2017 will require total subsidies of $118 billion. The group
claims that this price tag "would be the minimum subsidy" over
the eleven-year period. In a report released on February 9, the group said
that adding in tax breaks that the corn distillers are getting from state
and local governments and federal tariffs imposed on foreign ethanol (mostly
from Brazil) "would likely add tens of billions of dollars of subsidies"
to the $118 billion estimate.
Despite the subsidies, ethanol has always been more expensive than gasoline.
Between 1982 and 2006, the price of ethanol never dropped below that of
gasoline - even though ethanol contains just two-thirds of the heat energy
of gasoline. That lower energy content means a car using ethanol gets worse
gas mileage than one that uses gasoline.
The second problem: no matter how you slice it, ethanol production is
just too small to have a significant effect on the overall energy market
in the U.S.
Ethanol advocates talk about the ability of domestically produced alcohol
to reduce the amount of oil America imports. But by any measure, the total
energy produced by America's ethanol plants borders on the insignificant.
In 2006, the U.S. produced about 5 billion gallons of ethanol. That's the
equivalent of just 215,264 barrels of oil per day. For comparison, the U.S.
now consumes over 21 million barrels of oil per day. Thus, ethanol provides
just one percent of total U.S. oil consumption.
Ethanol will never make a big dent in America's oil imports. And that's
true even if all the corn grown in America were turned into ethanol. The
U.S. Department of Agriculture estimates that distillers can get 2.7 gallons
of ethanol out of one bushel of corn. In 2006, U.S. farmers produced about
10.5 billion bushels of corn. Converting all that corn into fuel would produce
about 28.3 billion gallons of ethanol. However, ethanol's lower heat content
means that the actual output would be equivalent to 18.7 billion gallons
of gasoline, or about 1.2 million barrels per day. (The U.S. currently imports
10.1 million barrels per day.) Even if the U.S. turned all its corn crop
into ethanol, it would supply less than 6 percent of America's total oil
needs.
What about cellulosic ethanol, the fuel that can be made from grass,
wood and straw? Al Gore claims that cellulosic ethanol will be "a huge
new source of energy, particularly for the transportation sector. You're
going to see it all over the place." Bill Clinton says there's enough
biomass to "make cellulosic ethanol all over America." Bush, in
his 2006 State of the Union speech, said that he wanted to make cellulosic
ethanol "practical and competitive within six years."
Alas, cellulosic ethanol is like the tooth fairy, an entity that many
people believe in, but no one ever sees. Despite years of hype, there is
no significant production of cellulosic ethanol, except in very small, non-commercial
distilleries. Maybe that's a good thing, because the more ethanol that's
burned in American automobiles, the worse the air quality gets - a fact
that leads to the third problem.
The Environmental Protection Agency's website says the agency's mission
is "to protect human health and the environment." And yet when
it comes to ethanol, the EPA has stated in very clear language that increased
use of ethanol in gasoline will mean worse air quality in America.
Of course, that's not the official story. In an April 10 press release
announcing the Renewable Fuel Standard - the federal program mandated by
Congress when it passed the Energy Policy Act of 2005 - EPA Administrator
Stephen L. Johnson declared that the use of more ethanol "offers the
American people a hat trick - it protects the environment, strengthens our
energy security, and supports America's farmers."
Yet on that very same day, Johnson's agency issued a fact sheet that
said using more ethanol will result in major increases in the release of
two of the worst air pollutants: volatile organic compounds and nitrogen
oxides. The fact sheet said that "Nationwide, EPA estimates an increase
in total emissions of volatile organic compounds and nitrogen oxides (VOC
+ NOx) [of] between 41,000 and 83,000 tons." It went on, saying, "areas
that experience a substantial increase in ethanol may see an increase in
VOC emissions between four and five percent and an increase in NOx emissions
between 6 and 7 percent from gasoline powered vehicles and equipment."
VOCs Populi
NOx is a precursor to fine particulate, which is known to cause thousands
of premature deaths each year. VOCs lead to the creation of ground-level
ozone, one of the most dangerous urban pollutants. According to the EPA's
website, ozone "can trigger a variety of health problems, including
chest pain, coughing, throat irritation, and congestion. It can worsen bronchitis,
emphysema, and asthma."
The negative health effects of ethanol-blended gasoline have placed the
EPA in the odd position of enforcing rules that run directly counter to
its stated goals. On its website, the agency says that "reducing emissions
of NOx is a crucial component of EPA's strategy for cleaner air." Nevertheless,
when asked about the higher emissions related to ethanol, EPA spokesperson
Jennifer Wood insisted that they are "very minimal increases."
She also told me that the agency has other "tools under the Clean Air
Act to reduce NOx."
Wood's claim leaves clean air advocates like William Becker of the National
Association of Clean Air Agencies gasping. He said the EPA is "scoffing
at a 4 to 7 percent increase in air emissions at a time when agencies across
the country would do anything to achieve that kind of a reduction in VOCs
and NOx." Becker's Washington-based group represents the interests
of air pollution control authorities from 49 of the 50 states and several
territories, as well as local agencies from 165 metro areas around the U.S.
He said the pollution increases admitted by the EPA are "a significant
amount of emissions in any location in this country. And we can't just willy-nilly
be giving it away, particularly when states are struggling to meet current
ozone standards."
The EPA's ethanol fact sheet infuriates Debbie Cook, mayor pro tem of
Huntington Beach, a city located west of Los Angeles that struggles with
air-quality problems. "The EPA's air quality rules in Southern California
are largely a joke," Cook told me shortly after the EPA announcement.
And the agency's April 10 statement touting ethanol, she says, "makes
the joke worse."
It's not just the EPA that says ethanol is bad for air quality. Numerous
studies have reached the same conclusion.
In 2004, the California Air Resources Board released a study saying that
gasoline containing ethanol increased VOC emissions by 45 percent when compared
with pure gasoline. In 2006, the South Coast Air Quality Management District
- the agency that oversees air quality issues for some 15 million people
living in or near Los Angeles County - determined that gasoline containing
5.7 percent ethanol may add as much as 70 tons of VOCs per day to the state's
air. This means that the Los Angeles area alone would account for about
25,500 tons of additional volatile organic compounds per year - or more
than half of the minimum amount (41,000 tons) estimated by the EPA in its
April 10 fact sheet.
In April, Mark Z. Jacobson, an engineering professor at Stanford University,
published a study concluding that the widespread use of E85 (fuel that contains
85 percent ethanol and 15 percent gasoline) "may increase ozone-related
mortality, hospitalization, and asthma by about 9 percent in Los Angeles
and 4 percent in the United States as a whole" when compared to the
use of regular gasoline. Jacobson also found that because of its ozone-related
effects, E85 "may be a greater overall public health risk than gasoline."
The Grocery Tax
While Americans are breathing more polluted air because of ethanol, they
are also paying more at the grocery store, a fact that leads to the fourth
problem: ethanol is increasing food prices.
Last month, researchers from Iowa State University's Center for Agricultural
and Rural Development released a report that looked at how ethanol production-which
consumed 20 percent of America's corn crop in 2006-is affecting overall
food prices. They found that increased ethanol production has resulted in
higher prices on a panoply of foods, including: cheese, ice cream, eggs,
poultry, pork, cereal, sugar and beef. The researchers reported that between
July 2006 and May 2007, the food bill for every American has increased by
about $47 as a result of surging prices for corn and the associated price
increases of other grains like soybeans and wheat. In aggregate, they concluded
that American consumers will face a "total cost" for ethanol "of
about $14 billion."
Let's put that $14 billion in perspective. Last year, the U.S. produced
five billion gallons of ethanol. That means that Americans are effectively
paying a new tax (in the form of higher food costs) of nearly $3 for each
gallon of ethanol produced. And that doesn't count any of the subsidies
for corn production mentioned above or the 51-cents-per-gallon federal tax
credit given to companies that blend ethanol into gasoline. Worse yet, it's
not just Americans who are being fleeced. The Iowa State researchers determined
that, thanks to ethanol's voracious appetite for grain, "the rest of
the world's consumers [will] also see higher food prices."
Iowa Rules
Given the many problems associated with ethanol (this story provides
a partial list), why are members of Congress and presidential candidates
eager to embrace it? Why has such an expensive, polluting fuel become what
one critic calls "the agricultural equivalent of holy water"?
There are two plausible explanations: the value of empty-but appealing-political
rhetoric; and the Iowa Imperative.
Ethanol boosters claim that ethanol is part of the prescription for energy
independence - a concept that polls extremely well. The idea of energy independence
appeals to a wide range of voters from the left and the right. The result:
almost anything that promises to move America toward that goal - a goal
that is neither achievable nor desirable because of the enormous costs it
would entail - quickly garners wide support and massive subsidies.
Second, it's about Iowa, America's leading ethanol producer. Any candidate
who wants to win the White House must have a good showing in the Iowa caucuses,
which will be held January 14. The numbers explain the imperative: Since
2002, the amount of Iowa corn going into ethanol production has tripled.
The state now has some 21 ethanol plants and another 23 either planned or
under construction. About 2,500 jobs are directly related to ethanol production
and another 14,000 - according to IowaCorn.org
- are "affected" by ethanol. Those jobs are supported by huge
federal subsidies. In 2005 alone, according to the Environmental Working
Group, Iowa got $1.8 billion in corn subsidies - about $608 for every Iowan.
Given those numbers, it's hardly surprising that a January 2007 poll
found that 92 percent of Iowa voters believe ethanol is important to the
state's economic future. That explains why, "when politicians come
to Iowa, they have to say ethanol is great," says Iowa State University
political science professor Steffen Schmidt. Alas, what makes the ethanol
business great for 3 million Iowans is bad for 297 million other Americans:
It's bad for taxpayers, bad for air quality, bad for people who like to
eat, and it will have no real effect on America's overall energy mix.
Aside from those little quibbles, ethanol truly is a miracle potion.
Expect to hear more about it as the presidential campaign continues."
(Robert Bryce, The Washington Spectator, June 15, 2007)
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Texas-based journalist Robert Bryce is the managing editor of Energy Tribune magazine. His third book, about the mirage of energy independence, will be published early next year.