Energy Independence Goes Awry: Why the Ethanol Boom May Turn Conservation Land into Corn Fields
President Obama set the goal of moving America to 80-percent clean energy by the year 2035 in the State of the Union, only days after the EPA announced a decision to allow higher levels of corn-based ethanol in more vehicles. Obama did not mention ethanol in his speech, specifically, but he did call on us to "break our dependence on foreign oil with biofuels." And just before Christmas, Congress voted for a one-year extension of ethanol subsidies. Ethanol seems to get support on both sides of the aisle, as new House Agriculture Committee chair Frank Lucas, R-OK, has suggested removing acres of land from a conservation program in order to grow more corn for ethanol.
However, some say that ethanol is only marginally better than oil, and some blame ethanol for high global food prices. So what is the truth about ethanol? Is it the miracle fuel that will lead us to energy independence?
About 40 percent of U.S.-grown corn now goes to produce ethanol. In the last decade, ethanol production has risen dramatically, both in terms of total corn used (from 0.6 billion bushels in 2000 to 4.9 billion bushes in 2010) and as a percent of U.S. corn (from 8 percent in 2000 to 43 percent in 2010). In the same decade, U.S. farmers increased the number of acres planted in corn from 80 million in 2000-2001 to 88 million in 2010-2011. Increases in corn yields during the same period provided a 25-percent net increase in annual corn production over the course of the decade. But even with the increase in production, the price of corn soared, from around $2 per bushel at the dawn of the new millennium to $3, $4 and even $5 per bushel over the last several years.
Given America's enthusiasm for ethanol production, one might assume that ethanol is a miracle fuel, sent from heaven to lead the way to independence from oil. (One might especially believe this if he or she works on Capitol Hill, where the entire metro station was wallpapered with ethanol ads last June, reminding lawmakers that "no wars have been fought over ethanol," and "ethanol money does not support dictatorships.") But sources as diverse as Mother Earth News and Popular Mechanics provide evidence to the contrary.
Corn ethanol provides 1.3 Btu in energy for every 1 Btu consumed in producing and delivering it, according to the U.S. Department of Energy's National Renewable Energy Laboratory. A paper by SUNY professor Charles Hall defines this measure as EROI, Energy Return on Investment. According to Hall, a sustainable fuel should have an EROI above 5 to 1. Oil falls short of this measure with an estimated EROI of 3 to 1, if the measure accounts for the infrastructure and energy required to extract, refine and transport the end product. But ethanol, with an EROI of 1.3 to 1, falls even shorter. Measured in EROI, natural gas, wind, hydroelectric, and even firewood all rate better than either oil or corn-based ethanol.
If ethanol is such an inefficient fuel, why are U.S. policies so favorable to it? Popular Mechanics chalks it up to money. Specifically, the money that goes to commodity growers who profit from ethanol and the money -- and political influence bought with that money -- of giant agribusinesses like Archer Daniels Midland. That kind of power has won them (or bought them) the support of Washington heavyweights like Wes Clark and Newt Gingrich. Tellingly, the CEO of Growth Energy, the pro-ethanol group co-chaired by Clark, is none other than Tom Buis, the former president of the National Farmers Union, who has years of experience working on Capitol Hill. Small wonder that agriculture and farming interests favor ethanol, especially if it is responsible for the high commodity prices of the last few years.
It seems the Grocery Manufacturers Association also believes that ethanol is behind the high prices. Unlike farmers who sell corn and companies that refine it, the companies that make processed foods sold in the supermarket are buyers of commodities, and they are not pleased at all with recent high prices. They are joined by the livestock industry, which relies on commodities like corn and soy for animal feed. Last year, several livestock industry groups asked Congress to discontinue ethanol subsidies.
House Agriculture Committee chair Frank Lucas has floated the idea of reconciling commodity growers' interests with the grocery manufacturers' and livestock producers' interests by allowing some acres currently enrolled in the U.S. Department of Agriculture's Conservation Reserve Program (CRP) to be planted in corn. Presumably, by increasing the acreage planted in corn (and therefore the supply), farmers and refiners could continue to devote a large share of U.S. corn to ethanol, while buyers of corn are saved from high prices.
CRP was created in 1985 in the midst of a farm crisis. The initial goal of the program was both conservation -- taking highly erodable land out of production -- and a reduction of supply and hopefully, as a result, an increase in commodity prices. Farmers who enrolled their land in the program were paid to keep the enrolled land out of production. Over the years, the program has morphed into a true conservation program, no longer aiming to reduce supply and increase prices. While it sounds ludicrous to "pay farmers to not plant" (as critics of conservation programs often claim), the program allows farmers to keep environmentally sensitive lands out of production, instead serving as wildlife habitat -- a valuable use of land that the market does not normally reward financially. When asked his view on reducing CRP acres to allow more corn planting, the House Agriculture Committee's ranking member, Collin Peterson, D-MN, disagreed with the idea, saying that most of the acres currently enrolled in CRP should not be under cultivation for environmental reasons.
Of course, central to the debate over ethanol is the notion that it is responsible for recent high commodity prices and that decreasing ethanol production or increasing crop acreage will reduce those prices. But the Institute for Agriculture and Trade (IATP) policy cites ethanol and other biofuels as only one factor out of many responsible for high prices. "What we're seeing is an era of extreme volatility in agriculture markets," said IATP spokesman Ben Lilliston. "We believe it is a combination of factors that hit a perfect storm." IATP cites factors affecting actual supply and demand like increased demand for biofuels, low worldwide grain reserves, drought, and other climate-related disasters, but also manmade causes such as trade deregulation and commodity speculation.
IATP recommends taking several steps to stabilize prices, including tougher regulation of commodity markets, increasing (or creating) food reserves, increasing investment in more resilient, low-carbon agriculture, and greater trade policy flexibility. Would taking acres out of CRP to grow more corn for ethanol help? "If you believe biofuels have environmental benefits, you can start to lose those when you plant on environmentally fragile, protected land," says Lilliston. "But more importantly, it's a global market for commodity crops with many factors affecting prices, so crop expansion is not really getting to the heart of the problem. Mainly, we need government to step in and help better manage supply and price."
The future of conservation programs like CRP will not be decided until the passage of the 2012 farm bill, in a year. In the meantime, Congress will need to decide whether to renew ethanol subsidies when they expire again -- a move that some believe is less likely with the bipartisan calls to cut spending in D.C.