At the end of the first decade of the 21st century, corn-based ethanol is an emerging industry propped up by government policies and subsidies. The ethanol industry faces difficult obstacles in the future. Those obstacles include –
- political shifts that could weaken the government’s commitment to, and monetary support of ethanol;
- competing demands for corn between food and energy uses;
- competing demands for the natural resources, like water and energy, needed to produce the corn.
Political shifts. In the U.S. and most other countries, producers of both ethanol and oil receive various forms of government support. One estimate from the Environmental Law Institute says that the U.S. spent $72.5 billion on subsidies and tax breaks for fossil fuels between 2002 and 2008. Ethanol subsidies are harder to put numbers to because there are both federal and state support programs. But, Nebraska’s ethanol administrator, Todd Sneller, says that Congress subsidizes the oil industry to the tune of around $11 billion a year and the ethanol industry at only $2 billion. At whatever level, the subsidies are vitally important to both industries.
The problem is that political opinions and power can change. Both Presidents Bush and Obama have strongly supported ethanol, and there is a strong, bipartisan coalition of supporters in Congress.
But competing scientific studies of the net benefits of corn-based ethanol are widely different. Some studies claim that it takes more energy to make ethanol than there is in the ethanol produced – particularly when you take into account the oil in tractors, fertilizers and pesticides. Others say that there is a small but significant net increase in energy gained in the ethanol process. Economists are all over the map, as well. Paul Krugman – the professor of economics, New York Times columnist and Nobel Prize winner – calls the substance “demon ethanol.” He advocates that rather than subsidize ethanol and mandate its use, we should be emphasizing conservation.
In 2008, 24 Republican senators asked the EPA to cut back the mandate for increased use of ethanol in the future. But so far, the argument that ethanol is a home grown, renewable energy source has won out.
Food vs. Fuel. As we’ve seen, in 2008, the price for a bushel of corn spiked to over $5.00. In some markets it reached over $7.00 a bushel. At the same time, food prices spiked, and many assumed that the boom in ethanol was causing the spike in food prices. Poor people around the world faced hunger, and there were food riots. “Food vs. Fuel” was the headline in several newspapers.
The rhetoric became so heated that a United Nation’s report on “The Right to Food” labeled biofuels a “crime against humanity.”
But in 2009, the non-partisan Congressional Budget Office (CBO) refuted the contention that ethanol is a major cause in high food prices. The report noted that ethanol had a significant impact on the market for corn in that, “roughly one-quarter of all corn grown in the United States is now used to produce ethanol.” However, the CBO said that had a minor impact on food prices:
The increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008… Last year, the use of ethanol reduced gasoline consumption in the United States by about 4 percent and greenhouse-gas emissions from the transportation sector by less than 1 percent.
The modest effects on gasoline consumption and greenhouse-gas emissions need to be viewed in light of the modest amount of ethanol consumed. It’s estimated that in 2009, U.S. drivers filled their cars with 345.7 million gallons of petroleum-based gasoline every day, according to the U.S. Energy Information Administration. In 2008, around 24. 7 million gallons of ethanol was used every day. That’s significant, but ethanol accounts for less than 7 percent of the total auto fuel used in the U.S.
Environmental concerns. One of the arguments for ethanol is that it’s both renewable and a cleaner burning fuel than gasoline alone. So, it’s ironic that opponents attack ethanol as being bad for the environment. Again, there are advocates and scientific studies on both sides of this issue.
Several studies have shown that ethanol when used in cars produces a smaller volume of greenhouse gases than oil. But other studies have suggested that ethanol may produce higher volumes of ozone, one of the major components of smog.
There is a heated debate between scientists over the net energy derived from the production of corn-based ethanol. Studies have tried to factor in the energy costs of all of the inputs needed to grow the corn, transport it to an ethanol plant, distill it into ethanol and transport it to the refineries. Some studies show a small net gain in energy output and others show a huge net loss.
Other critics are concerned about the industry’s impact on water supplies – particularly in semi-arid areas like Nebraska.
For instance, just one typical center pivot irrigation system used to grow corn will use 39 million gallons of water a year. The ethanol plant also uses water – about 150 million gallons of water are needed to produce 50 million gallons of ethanol a year. Those are huge numbers. But, for comparison, a city the size of Lincoln (with 238,000 people) will use 14 billion gallons a year – almost 100 times more water.
Todd Sneller (left), administrator of Nebraska’s ethanol board, says that we may be coming to the end of the “Oil Age” and that ethanol will be at least part of the answer. “We are clearly on a downward decline in terms of oil supplies, and they continue to be in unstable parts of the world, or fragile parts of the world,” he says. “Those of us who have been advocates of ethanol have never said that ethanol is the answer. We knew better than that. But ethanol is part of the answer.”
For now, corn is a plentiful source for fuel that we can grow right here in the U.S. and farmers already have the equipment and knowledge to grow it efficiently. The challenge for the future is to find even better sources that won’t harm the environment or our food system. Those alternatives will allow the industry to grow and maintain its political and public opinion support.