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The Great Corn ConThe Senate's preposterous new ethanol bill.
By Robert BrycePosted Tuesday, June 26, 2007, at 3:09 PM ET

The ethanol madness continues! Last week, the Senate passed an energy bill mandating the production of 36 billion gallons of ethanol per year by 2022—a sevenfold increase over current levels. Senators congratulated themselves for their environmental foresight. The president, a biofuels advocate, has enthusiastically endorsed the ethanol surge. But it's almost certainly a fantasy, since no one in Washington seems to have thought for five minutes about where or how that much ethanol could be produced.
There are two domestic sources for that ethanol in such quantities: corn or cellulose. (Sugar cane is an excellent feedstock for ethanol, but the United States grows relatively small amounts of cane, particularly when compared with Brazil, the world's largest producer.)
Let's look at corn first. The Senate's ethanol mandate will increase the consumption of corn, the single most subsidized crop in America. In 2005 alone, according to the Environmental Working Group, corn subsidies totaled $9.4 billion. By increasing ethanol production—and thus corn production and consumption—the mandate will likely cost taxpayers extra billions both in the form of higher subsidy payments and higher food costs. But set aside the budget concerns for a practical one. How much ethanol can be produced from corn?
According to the U.S. Department of Agriculture, distillers can produce about 2.7 gallons of ethanol per bushel of corn. In 2006, U.S. farmers produced about 10.5 billion bushels of the grain. So, even if Congress mandated that all of America's corn be turned into ethanol, it would yield only about 28.3 billion gallons, far less than the mandated volume. And, clearly, most of America's corn is still going to be used for animal feed, family barbecues, and high-fructose corn syrup.
So, let's assume that only half of U.S. corn gets used for ethanol production. That would provide about 14 billion gallons of the 36 billion gallons demanded by the Senate. The other 22 billion gallons of alcohol will have to come from cellulosic ethanol—a fuel that can be made from cornstalks, wood chips, or grass (that legendary "switch grass" that President Bush likes to talk about). But cellulosic ethanol is like the tooth fairy: Many people believe in it, but no one ever actually sees it.
Last year, former Vice President Al Gore claimed 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." In his 2006 State of the Union speech, President Bush announced increased federal funding for cellulosic ethanol research with the goal of making "this new kind of ethanol practical and competitive within six years." Former CIA Director James Woolsey is among the most vociferous boosters of the fuel. Back in 1999, in an article published in Foreign Affairs, he and Sen. Richard Lugar, an Indiana Republican, declared that cellulosic ethanol would "democratize the world's fuel market."
Maybe. But there's no reason to expect that the cellulosic ethanol industry will be able to grow fast enough to supply the 22 billion gallons in question.
Developing an ethanol production system based on biomass will likely take decades. It took more than 25 years of federal subsidies before corn ethanol production reached 5 billion gallons per year. In fact, it took 13 years just to get to 1 billion gallons. Given the massive investments required for new distilleries, storage tanks, and transportation networks, it's reasonable to assume that it will take at least that long for cellulosic ethanol to reach similar production levels. And yet, the Senate expects the cellulosic ethanol business will grow to be four times as large as the corn ethanol sector is today, and do so in just 15 years.
Remarks from the Fray:
The argument that we can't produce enough corn to fulfill the mandate seems disingenuous. Given 2006 crop yields, it would indeed be impossible. But with a firm projected future demand, we can ramp up domestic corn production significantly, both through shifting crop priorities and using currently unfarmed land.
We're already shifting reducing soybean production in favor of corn. Also, crop rotation between corn and soybeans [to] reduce pathogen buildup and replenish soil nutrients, will have its equation tilted in favor of continuous corn plantings; as corn prices go up, farmers can use currently cost-prohibitive herbicides, fungicides, insecticides, and fertilizers on cornfields. There's also a lot of federal land that currently lies fallow or is used for cattle grazing; as corn prices rise, political pressure will increase to turn it into "productive" farmland.
Corn for livestock, weekend barbecues, and corn syrup does not need to be domestically produced (in fact cattle don't need to be domestically produced) - the Senate doesn't ban corn imports, it only requires domestic corn for ethanol production. That means that Mexican farms previously decimated by US dumping of our subsidized corn will suddenly have the equation tilted in their favor; there are already articles about Mexican farms replacing agave plantations in favor of corn this year. And the Amazon rainforest is some of the most fertile land in the world...it's already being burned for farmland and livestock pasture at record rates, and increasing corn prices will hasten its conversion.
I'm not saying this makes economic or environmental sense, but it's easy to foresee how we can grow enough corn for ethanol domestically, and still acquire enough to fill our non-energy needs.
--Arg
(To reply, click here.)
I presume we have corn subsidies to encourage farmers to plant corn where otherwise the market would not encourage them to do so. What about the market is failing to encourage them to do so? Again, I presume it's because the price, without subsidy, would not be high enough to attract farmers to plant it. But if we suddenly jack up demand for corn by mandating huge ethanol production, wouldn't that jack up the price? And as the price comes up, should it not be possible in equal measure to bring the subsidy down?
In other words, wouldn't ethanol production tend to reduce federal spending on corn subsidies?
--RonB52
(To reply, click here.)
On one hand, we have super-expensive corn subsidies that any reasonable economist will tell you are ridiculous and which cannot help our clean-fuel needs even under the most optimistic scenarios. On the other hand, we have super-high import tariffs on Brazilian sugar-cane ethanol, which is not only produced far more cheaply than corn ethanol, and not only exists in surplus, and not only comes from a pleasant democracy in our hemisphere, but is a proven technology currently fueling millions of Brazilian cars.
There may be no better sign of how America has lost is place as a world leader than its blinders-on ignorance of the Brazilian sugarcane example. To visit Brazil and see its gas stations delivering sugarcane ethanol (a real gas substitute, not a paltry 5% additive) to its thirsty cars -- one can only shake your head. Will is the issue, not technology, folks.
--Rebelde
(To reply, click here.)
I find the ethanol bill an interesting example of what seems to me a trend in "environmentally-sound" legislation. Instead of legislation that actually is aimed at achieving a particular environmental goal, the legislation is written in a way that almost certainly will benefit a few choice lobbies and will be of questionable value toward achieving the stated goal.
In this case the bill targets ethanol specifically when it could instead mandate an increase in biofuels more generally...or perhaps even most generally fuel alternatives. This would leave open the possibility that someone might develop another technology that might yield higher energy return and lower economic and atmospheric cost. A bill such as this, however, actually stifles innovation b/c it narrowly directs the scope of R&D. It's hard not to see it as a pander to the corn lobby. I understand that there are probably some well-meaning senators who really got caught up in they hype about ethanol saving the world...but [...] the problem here isn't that the Senate is shooting for the moon, the problem is they are also dictating the kind of rocket we have to use to get there.
--SlateSurfer
(To reply, click here.)
The problem isn't energy independence, it's energy diversity. Right now, we're dependent on one source for fuel: oil. As such, we're totally vulnerable to its risks and shortcomings. Replace it with ethanol, we'd still be vulnerable, just to a different set of risks and shortcomings. You can replace ethanol with any other proposed alterna-fuel and come up with the same conclusion.
Every source of energy has its risks and limitations. The solution isn't picking one ideal source to research and subsidize, but how to bring as many of them online as possible, with as great an efficiency as possible, to limit our exposure to the different sets of risks.
--feline74
(To reply, click here.)
(7/2)
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