Government-backed corn ethanol lurches on, paving a road to nowhere
During the Bush II administration, I used to groan that the closest thing we had to a concerted policy response to climate change was the federal government’s slew of goodies for corn-based ethanol. It was a monumentally depressing situation, because propping up corn-derived fuel is expensive and (despite industry hype) doesn’t actually do much, if anything at all, to mitigate climate change — but contributes actively to ecological disasters like the Gulf of Mexico “dead zone.”
Now, two years into the Obama administration, we still have no concerted policy response to climate change, and the corn ethanol program abides, sucking up resources that could be going to actual green technologies. Groan.
In 2009, the Environmental Working Group (EWG) put out an analysis showing that corn-based ethanol grabbed fully three-quarters of all federal “renewable energy” tax credits — while wind and solar combined just got 19 percent of that multi-billion-dollar pie. According to a new EWG report [PDF], the ethanol tax breaks have cost taxpayers $23 billion since 2005. Corn ethanol enjoys its massive tax subsidies on top of aggressive mandates from the 2007 Energy Act that force gasoline blenders to mix huge and increasing amounts of the stuff into the car-fuel supply.
In other words, the tax breaks are redundant; the Midwest’s farmers would still be growing millions of acres of industrial corn to convert into car fuel even without them — and indeed, the tax breaks are set to expire this year. In this time of hysteria over budget deficits, it would take a lot of chutzpah for farm-state lawmakers — many of whom have fanned the flames of deficit hysteria — to push for extending them.
Assessing the situation, the industry has given up trying to defend these indefensible handouts and shifted tactics. The industry trade group Growth Energy has launched the “Fueling Freedom Plan,” which would shift the billions of dollars taxpayers are now lavishing on ethanol tax breaks to a massive infrastructure program. It turns out, you see, that among ethanol’s many weaknesses, it requires an infrastructure entirely separate from that of gasoline, including vast pipelines from the Midwest to the Northeast and other regions where corn isn’t grown in huge quantities, as well as a new fleet of cars that can handle heavy concentrations of ethanol in the fuel supply.
The EWG has issued a devastating assessment [PDF] of the proposal:
Growth Energy has proposed that American taxpayers cover 80 percent of the cost of building ethanol pipelines through loan guarantees. The Department of Energy (DOE) found that Growth Energy’s proposal for a pipeline from Iowa to New Jersey would cost $7.7 billion in total, or $4.5 million per mile.
In addition, Growth Energy called for loans, grants or other taxpayer funding to install blender pumps at privately- or corporate-owned gas stations that dispense higher blends of ethanol and for mandates requiring production of flex-fuel vehicles that can use up to 85 percent ethanol fuel (E85). If the industry gets its wish, consumers would pay about $2 billion to install 200,000 new blender pumps. Under a flex-fuel mandate, auto manufacturers would pass about $1.2 billion per year in new costs on to consumers purchasing new vehicles.
Even if you’re a proponent of cellulosic ethanol — which, unlike conventional ethanol, can be made from any plant matter, not just sugary parts like corn kernels — the “Fueling Freedom” proposal is a bad joke. As the EWG puts it:
The “Fueling Freedom” subsidy proposal is not only a waste of scarce taxpayer dollars but also promises to lock the nation into dependence on the least efficient and most environmentally destructive biofuels — ethanol produced from corn grain or corn stover (crop residue) — and to slow the adoption of potentially more desirable cellulosic options. The route of the proposed pipeline runs through traditional corn-growing regions, but only 7 percent of existing or proposed cellulosic or advanced biofuel plants are near it.
Corn ethanol production has already reached 13.2 billion gallons per year, just 1.8 billion gallons shy of the 2015 RFS mandate of 15 billion gallons. The corn ethanol infrastructure projects would promote corn ethanol use well in excess of the RFS mandate while limiting production of more sustainable biofuels — the supposed objective of the mandate — to a trickle.
To me, the insane thing here isn’t the idea of government investment in public infrastructure; we meed much more of that. What galls me is the demand for government investment in ecologically useless public infrastructure — when we actually need to be investing much more in real green transportation systems like high-speed trains, powered by an energy grid shifted as much as possible over to wind and solar energy.
Rather than treat the ethanol industry’s proposal with the scorn it deserves, Congress seems set to embrace it. Sen. Amy Klobuchar (D-Minn.) has essentially packaged up the Growth Energy idea and made it into a bill called the Securing America’s Future with Energy and Sustainable Technologies Act. Her colleague Sen. Al Franken (D-Minn.) on Wednesday appeared at an ethanol plant in Glenville, Minn., owned by Poet, the nation’s largest biofuel company.
Sounding very much like one of the politicians he once satirized, Franken gushed support for Klobuchar’s industry-written bill, according to an account in the Albert Lea Tribune:
“We want to make sure there is a market for ethanol,” Franken said.
He said Midwestern senators from both sides of the aisle understand this but senators from oil-rich states work to suppress the comparatively young industry.
“Oil to gas is a 19th century fuel. This [corn-based ethanol] is a 21st century fuel,” Franken said.
He said some politicians make arguments about the fuel and fertilizer it takes to grow the corn, then to make the corn back into fuel. Some also make arguments about how ethanol affects food prices. Franken said they fail to understand renewable fuels are part of the answer to dependence on foreign oil and fail to realize how improvements in ethanol technology hold promise for the future. “I think Washington doesn’t totally get it,” Franken said.
Even though he was standing in front of a biofuel plant owned by distant shareholders in a large company, I wouldn’t be surprised if Franken unleashed some platitudes about how a government-financed ethanol expansion will bolster rural communities in the corn belt. If he did, I would direct him to yet another blistering report on ethanol, this one from Food & Water Watch. Titled “Crystal Eth: America’s Crippling Addiction to Taxpayer-Financed Ethanol” [PDF], the report documents the various ways that the industry benefits from public largesse, from both the federal and state levels. Most importantly, it shows how a few large corporations — including Poet and Archer Daniels Midland — are gobbling up more and more market share, taking control of an industry that was once largely farmer-owned:
Although the agriculture sector is generally very consolidated, ethanol was the one sub-sector where small and medium-sized, locally owned firms, and farmer-owned cooperatives represented a significant share of the market. In 2008 the largest five firms controlled over 24 percent of the market while the farmer-owned share of the market fell to 19.7 percent from a high of 38 percent in 2006.
As local ownership fades away, the profits generated by the government’s ethanol boosterism increasingly leak out of rural communities and accrue to distant shareholders. Not surprisingly, those very companies have significantly ramped up the lobbying cash they pump into D.C., according to Food & Water Watch.
So here we are, two years into the post-Bush II era. Still no comprehensive climate legislation, still no major push to invest in wind and solar. But government-backed corn ethanol lurches on, paving its road to nowhere.