Will ADM surrender gracefully to cellulosic ethanol?
Don’t miss a great piece by Sasha Lilley about Archer Daniels Midland and ethanol: "The dirty truth about green fuel."
The latter part covers the environmental sins of corn-based ethanol — familiar to Gristmillians — but the first part provides some crucial context. It’s about ADM.
Here’s a taste:
ADM has more than 25,000 employees, net sales last year of $35.9 billion, with $1 billion in profits, as well as a recent 29 percent profit increase in the last quarter. The company is a global force: ADM is one of the world’s biggest processors of soybeans, corn, wheat, and cocoa, which it buys from growers in the U.S. and around the world. …
… Since the 2000 election cycle, ADM has given more than $3 million in political contributions, according to the Center for Responsive Politics: $1.2 million to Democrats and $1.85 million to Republicans. These donations may have helped sustain a multitude of government subsidies to ADM, including ethanol tax credits, tariffs against foreign ethanol competitors, and federally mandated ethanol additive standards.
ADM’s political heft was behind the 54 cent per gallon tariff that the US government has imposed on imports of sugar-cane based ethanol from Brazil, which is cheaper than ADM’s corn-based fuel.
ADM secured that tariff from Jimmy Carter. They’ve been gaming the feds for favors for a long, long time and are deeply entrenched in the D.C. power structure.
Now. Consider. Any time the fatal flaws of corn-based ethanol are raised, ethanol proponents pivot to the glorious future of cellulosic ethanol. The latest is Indiana’s Dick Lugar, here on Grist:
It’s true that right now we’re not getting much in the way of cellulosic except rhetoric. And there’s no question that cellulosic is far preferable to corn in terms of oil savings. In 1999, Jim Woolsey and I in an article in Foreign Affairs magazine pointed out the vulnerability, strategically, of energy and talked about the promise of cellulosic ethanol. President Clinton praised it and said this is the way of the future.
But the fact is, the implementation of all this didn’t happen then and it isn’t happening now. The corn-based ethanol facilities are technologically several steps ahead of the cellulosic, but I have no doubt that the market will select for cellulosic in the long term, and I believe we have to incentivize it in that direction. Our ethanol targets in the American Fuels Act are weighted toward cellulosic.
President Clinton praised it. Bush Jr. praised it. Everyone’s praising it. And it’s still hovering just over the horizon.
Meanwhile, the corn-ethanol infrastructure is being built and any number of powerful constituencies are getting accustomed to corn-ethanol subsidies. Once this infrastructure is in place, once these subsidies are entrenched, do we really think it will all be abandoned in favor of cellulosic?
As Lilley puts it:
If [the shift to cellulosic] happens, it will be a marked reversal of many decades of government policy in support of Archer Daniels Midland — and the company may well wonder what it’s getting for its unceasingly ample gifts to both political parties. But with the "full-throated support of the Bush Administration", in the words of the Renewable Fuels Association, a corn ethanol-dominated, ADM-led trade group, that day doesn’t seem to be approaching any time soon.