Surging food prices fuel ethanol critics

April 11, 2011 by Rob Lever
A surge in global food prices has prompted fresh criticism of US subsidies for ethanol, which diverts massive amounts of corn from global food supplies for energy.

A surge in global food prices has prompted fresh criticism of US subsidies for ethanol, which diverts massive amounts of corn from global food supplies for energy.

Producers of argue that the biofuel helps blunt the impact of high imported prices, but critics say the US policy giving tax breaks for ethanol used in motor fuel ends up being bad for food, energy and the environment.

The issue has created unusual political alliances, with environmental groups and some lawmakers from both parties clashing with farm interests and legislators from the corn-producing midwest states.

Senators Tom Coburn, a Republican from Oklahoma, and Ben Cardin, a Maryland Democrat, introduced a measure last month to scrap the tax credit of 45 cents per gallon for ethanol in gasoline.

"The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers' pockets where it can be used to spur innovation, stimulate growth and create jobs," said Coburn.

The lawmakers cited a Government Accountability Office report describing the tax credit as "largely unneeded today to ensure demand for domestic ."

C. Ford Runge, a University of Minnesota professor of applied economics and law, argues that ethanol from crops has many "hidden costs" that should dissuade the government from subsidies.

Runge, who raised concerns about ethanol policy as early as 2007, says his research suggests some 30 percent of food price increases come from diversion of US corn for ethanol.

"If you're taking 40 percent of the US corn crop, the largest of any country on earth, and putting it to one use... you don't have to have a Ph.D in economics to know that's going to put upward pressure on prices," he told AFP.

In an essay written for Yale University's Environment 360 online magazine, Runge cites "strong evidence that growing corn, soybeans, and other to produce ethanol takes a heavy toll on the environment and is hurting the world's poor through higher ."

The UN's Food and Agriculture Organization has warned that rising food prices are driving unrest around the world, including recent uprisings in the Middle East and North Africa.

Runge said high food prices -- including corn at record highs -- are a factor in the unrest, saying "these countries have been subjected to the pressures in their household costs," adding to the political pressures.

Economist Ed Yardeni at Yardeni Research said diversion of crops to fuel is important because the US provides more than half of global corn exports and over 40 percent of soybean exports.

"So our ethanol policy is exacerbating the global food fight, destabilizing the Middle East... Is that insane, or what?"," Yardeni said.

Yet ethanol has its staunch defenders including Senator Tom Harkin the corn-belt state of Iowa, who told a recent hearing that ethanol "has dramatically reduced our need for oil."

Harkin said the focus on ethanol diverts attention from the oil industry's "very lucrative and unnecessary subsidies."

Bob Dinneen, president of the Renewable Fuels Association, said ethanol is important for the goal of energy security, and he dismisses its impact on food prices, saying refiners use only the starch component of feed corn, and produce animal feed as a byproduct.

"Ethanol is the only thing we have today to moderate skyrocketing prices of gasoline and crude oil," Dinneen told AFP.

"If the chaos in the Middle East teaches us anything, it should be that America must forcefully begin down the path of energy self-reliance. Increasing the use of domestic renewable fuels like ethanol is the first, and arguably, the easiest step we can take," he said at a congressional hearing.

US President Barack Obama said in a March 30 speech on energy policy that ethanol should be part of the US energy future as part of an expanded effort for biofuels.

He said there is "tremendous promise" in renewable biofuels, "not just ethanol, but biofuels made from things like switchgrass, wood chips, and biomass."

A White House official said that "corn ethanol is already making a significant contribution to reducing our oil dependence. But going much further will require commercialization of advanced biofuels technologies."

Dinneen argued the US will need a variety of biofuels, but added "the existing ethanol industry is providing the foundation on which those other biofuels will be able to grow."

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3.3 / 5 (7) Apr 11, 2011
Except nuclear, fuel cannot renew faster than 1350 Watts per square meter without indebting the future just as fossil fuel has done. Practically the sustainable rate is much smaller.

To burn food for fuel is folly.

3.5 / 5 (8) Apr 11, 2011
It never makes sense to convert your food to fuel, period.

1) There is the burden of tax subsidies to ethanol production.
2) There is the burden of increased cost for food.
3) There is the burden of decreased lifespan of motors using ethanol
4) There is the burden of decreased mileage from ethanol blends versus pure gasoline.

Ethanol is grown with fertilizers made from fossil fuel.
Ethanol is heated and distilled with energy from fossil fuel.

Nothing about ethanol production is positive.
1 / 5 (3) Apr 11, 2011
Maybe this will soon be a non-issue. Check out the latest on the Rossi cold fusion reactor:
3 / 5 (6) Apr 11, 2011
I agree with the first two comments.

It really makes no sense at all to burn food.

The whole point of gasoline and automation was to be able to make more food, faster, and for cheaper. The U.S. really became a world power because of our highly efficient and cheap food production, and now we are burning 40% of corn...destroying valuable natural fertilizers so we can make more fuel.

Subsidies are not saving money, because when the government either pays for something or gives a tax break that adds to deficits. Deficits = debt, and debt = interest, which means more debt.

Since they gave all the tax breaks to multi-millionaires and billionaires (right now, poor people are actually paying a higher tax percentage than many multi-millionaires and billionaires,) so the wealthy people's money isn't going to make up the difference, so debt is accumulated... then it would be better to pay the extra price at the pump than to pay more in interest later.
2.3 / 5 (6) Apr 11, 2011
So I mean, republicans won't admit this, but our deficits in the past 8 years or so were caused no by spending, but by the Bush tax cuts, which amounted to about 800 billion per year. Do the math 800 billion per year * 8 years = 6.4 trillion dollars less money.

And what do you know? Debt went from about 7.6 trillion at the end of Clinton's term to 14 trillion right now...

The unfair tax cuts for the ridiculously wealthy are one part of what is destroying the U.S. economy.

The other part is stupid crap like this article addresses, namely burning food to make fuel...

This is one of the most insane eras in human history with some of the most insane and irrational leaders in the history of the world.
2 / 5 (4) Apr 11, 2011
Maybe this will soon be a non-issue. Check out the latest on the Rossi cold fusion reactor:

Based on that article, the net energy gain was around 25Kwh in 6 hours, which would be 52 times more energy dense than would be possible if the machine was burning gasoline. However, I didn't count the volume of oxygen that would be needed to burn with fuel (to pull off a hoax) against the volume in the reactor. Therefore, when you take that into consideration there would be much less room for fuel inside the reactor in the event of a hoax, since you'd need to add oxygen too.

Therefore, during that 6 hour test, the reactor produced a net gain at least 104 times more energy than could have been produced by gasoline burning in the pressence of oxygen in the same volume.

We should note that only a fraction of a percent of the fuel source mass was consumed in this 6 hours test...
not rated yet Apr 11, 2011
This really should be a non issue. Between the algae based production which produces about 50x more than corn per acre and the newer ways of using the cellulose residues from other crops there really shouldn't be any need to divert food crops. I was decidedly bored one day and figured that a few thousand acres of algae "ranches" out in the desert would have been enough to completely supply the fuel for the US. Was very eye opening as to the possibilities. Instead of subsidizing companies that are doing ok already why aren't we spending the money where it looks like it would really make a useful difference?
5 / 5 (4) Apr 12, 2011
There is another issue with food based ethanol that is overlooked. It is the demand for lots of water to grow those plants. Clean water is resource that is in restricted supply and it should be used for better uses than making ethanol for cars.
1.8 / 5 (5) Apr 12, 2011
There is general agreement here at least that ethanol subsidies are a waste of money and are largely ineffective as a policy. Just due to the inefficiencies of the overall process, ethanol from corn doesn't work as an energy policy. No one talks much about the energy in vs. energy out equation. This has finally improved in recent years to something just a bit better than break even.

@ Quantum much of what you say on this I actually agree with, however your analysis of the Bush tax cuts is built on a faulty premise. Taking your zero-sum-gain logic to it's ultimate conclusion, we should just tax all personal and commercial activity in the country at a rate of 100% (confiscate the entire GDP of the U.S.) and pay off the entire debt in 1 year!
1.8 / 5 (5) Apr 16, 2011
"If you're taking 40 percent of the US corn crop, the largest of any country on earth, and putting it to one use... you don't have to have a Ph.D in economics to know that's going to put upward pressure on prices,"

Duuh! But isn't that the whole point? This is a farmer lobbyist's dream. Anything that will reward farmers with more revenue. People are now starving? Harkin and Obama could care less. This isn't about ethanol being a smart choice for the environment or energy policy. This is about politics and the support of the farm belt. Otherwise, we'd drop our Brazilian sugar ethanol tariffs down to zero and import our ethanol.

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