Ending Corn Ethanol Subsidies
By STEVE BREYMAN
Many observers are still abuzz from the surprise move by the US Senate to try to end subsidies for corn ethanol. The subsidies, which run out at year’s end, come in two forms, direct and indirect. Refiners, including Valero Oil, Marathon Oil, and Koch Brother interests receive direct payments of $.45/gallon from the US Department of Agriculture. Nearly as sweet is the $.54/gallon tariff on imported ethanol (cheaper sugar cane derived alcohol from Brazil).
Both are likely to be altered significantly—though not ended—in a deal under negotiation by Senators Feinstein, Klobuchar, and Thune. This is a step in the right direction. A federal mandate that gasoline contain ethanol (a replacement for MTBE) gave birth to the corn ethanol industry, and the generous subsidies for it. Now some 35-40% of US corn—some 5 billion bushels per year–is turned into ethanol. Only 7% of the crop became ethanol in 2001. This radical shift led to surging global food prices as the US produces about 39% of the world’s corn, and exports some 16% of that. Even the World Bank has condemned the use of food for fuel.
The legislative threat to subsidies sent corn prices plunging from record highs on the Chicago Mercantile Exchange. How much of the $6 billion per year direct subsidy might return to the public coffers remains an open question. Corn state senators would funnel most of it to ethanol infrastructure, including pipelines and blender pumps. Biofuels proponents feel unfairly singled out; they complain that legislators failed to kill oil industry subsidies (mostly tax breaks) despite record oil industry profits. But corn ethanol too is profitable without subvention.
As subsidies for corn ethanol fade, subsidies for “corn waste” or cellulosic ethanol arise. It is harder, more expensive, and currently unprofitable to produce ethanol from cellulose (woody biomass) as compared to corn kernels. The US Department of Energy will, according to the New York Times, provide a $105 million loan guarantee for the expansion of an ethanol refinery in Iowa. Times science reporter Matthew Wald claims that “Commercial production of ethanol from waste products like husks is the holy grail of the ethanol industry, and other companies have stumbled in their quest to achieve that goal.” The “waste” also includes cobs and leaves, what corn farmers call stover. DoE’s underwriting joined $800 million in loan guarantees provided the cellulosic ethanol industry earlier this year by the US Department of Agriculture.
Does the DoE not have a plant ecologist or soil scientist on staff? Where’s the science behind USDA’s generosity? Where do these agencies think soil comes from? Understanding the carbon cycle is a basic lesson of Biology 101. Mother Nature reuses or recycles everything, including cellulose. Students learn early on that waste is unknown in nature; it is solely a human construct.
The plant material left behind following harvest–“crop waste”–is a major ingredient of soil formation, and also holds soil in place. Soil erodes in the US ten times faster than it can replace itself. A millimeter of soil eroded from a hectare weighs 13 tons and takes 20 years for nature to replace. $40 billion in lost productivity washes away every year in the US along with the soil. The world loses about 37,000 square miles of topsoil every year as the number of hungry people grows.
Much of eroded soil ends up in lakes and rivers where it contributes to flooding, food web disruption, and water quality problems. To remove “crop waste” (biomass) from farm fields to convert to ethanol is to intentionally promote erosion and to starve the soil of needed nutrients and organic material. Agricultural soil quality in the US has been on a steady decline for decades; petrochemical soil additives are not a sustainable solution.
Corn feeds far more people than does sugar cane. Corn ethanol is only slightly energy positive. The best US corn farmers and ethanol refiners (using natural gas) can do is less than 2:1. That is, for each unit of energy input, there are fewer than 2 units of energy output. Cane ethanol has an energy balance of 8:1. Sugar cane depletes soil of nutrients slower than does corn. When burned, ethanol from both corn and cane produces greenhouse gases comparable to gasoline.
This is not an endorsement of cane ethanol. One reason Brazilian cane has such a positive energy balance is because refiners burn cane stalks rather than natural gas for power. Not a sustainable soil management practice in the long run. But if biofuels are unavoidable, we should select, and not subsidize, the least worst option.
Steve Breyman teaches at Rensselaer Polytechnic Institute. Reach him email@example.com
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