Ethanol Producers Feeling the Pressure

By David L. Brown

An outfit called the Renewable Fuels Association is attacking claims that ethanol is a factor in the rising cost of food in the world. The members of this group are those who make and market ethanol and other biofuels. You can visit their web site here.

They claim that the real reason why food is becoming more expensive is because of high oil prices, which are the fault of the Saudis and other petro-hogs. And, of course, biofuels can be credited with holding down the cost of oil so ethanol producers are the Good Guys in this story. So there!

Hmm, let me understand this. Just because the members of the RFA are diverting food from the world markets and using it to make fake fuel doesn’t mean it’s their fault that people are going to starve en masse in the Third World. And in fact, as they make clear, it’s probably all the fault of the evil Saudis who are charging too much for their oil.

The president of the RFA, Robert Dinneen, recently went so far as to address a letter to the Saudi Minister of Petroleum and Mineral Resources complaining about the minister’s recent statement that biofuels “do not decrease dependence on petroleum, do not increase energy security and do not reduce pollution”. Here is part of what Dinneen said in his letter:

For the Saudi Oil Minister to assert that biofuels are not an effective energy alternative is no different from the wolf complaining that Little Red Riding Hood was interrupting his dinner plans.

What is also galling about your statement is the claim that biofuels negatively impact the “food market.” The evidence demonstrates that the number one negative impact on the food market is the high price of your primary export — oil. One hundred dollar per barrel oil has driven up the cost of everything from fertilizer to diesel oil used to transport food, to plastics used in food packaging. You must also be aware that growing demand for food in rapidly industrializing countries like China and India are putting additional pressure on food prices as are adverse weather conditions in growing regions, like Australia. Blaming high food prices on ethanol is deliberately misleading.

Well, Dinneen has thrown up a cloud of (mostly) indisputable facts — but the effect is to divert attention from the realistic fact that turning food into fake fuel when there are hungry people in the world is an atrocity. Yes, we have or will soon pass the Oil Peak and the end of cheap energy is well and truly over. But there is little evidence that present biofuels programs in the US are effective or economic answers to the problems that raises. Some estimates reveal that more energy is used in the process of making ethanol than is produced when it is burned. Meanwhile, it is a government subsidized bonanza for farmers who could equally as well be cashing in on the rising food prices due to the inflationary factors to which Dineen refers.

Understand, I am no fan of the Saudis but they have been allowed to place the West in the present position of oil dependence through our own lack of foresight and courage to develop alternatives. It is ill-judged to point the finger of blame for our addiction to those who supply the addictive substance.

The RFA also has attacked the recent TIME magazine cover story that I discussed in my essay “Wine to Water: Unveiling the Ethanol Con,” posted here on April 1. It is amusing to read the list of quotes they present to rebut the article, starting with one from Dinneen himself who says in part that “to dismiss the important role biofuels must play in our quest to reduce oil independence and mitigate global climate change in favor of questionable science and overheated rhetoric is foolhardy.”

Gee, there are a lot of “givens” in that statement. It is presented that we “must” rely on biofuels (says who?), and that objections are based on “questionable science” and “overheated rhetoric.” That reeks of blatant propaganda and Orwellian logic.

Others who are quoted in the news release slamming the TIME article include the president of the National Corn Growers Assn. and the executive director of the Ethanol Promotion and Information Council. Gee, talk about unbiased sources. Instead of talking about the wolf and Little Red Riding Hood, perhaps we should draw attention to the story of the fox being set to guard the hen house.

Despite the strong rhetoric reflected in the RFA statements, I detect a hint of desperation behind the facade. These people are running scared. They recognize their present course is running afoul of economic, social and political pressures and have already gone too far down the road of building several hundred ethanol plants to convert corn to fake fuel. The business models on which those plants were based did not, I suspect, take into account the fact that corn could rise so dramatically in price, nor that the diversion of acres from other crops to produce corn would have a similar effect on the prices for wheat, soybeans and other crops. Nor did they recognize that spreading world famine would create a political climate that would almost demand that the government take steps to eliminate subsidies on crops being used for ethanol and support instead the export of food.

This is an industry that is in serious trouble, and predictably so for anyone who realized there are no free lunches and that every action has its unintended consequences. Already in Europe, governments are backing away from mandates to produce more fake fuels from crops.

Biofuels can and will have a place in our future energy economy, but not through the process of turning food into fuel. Dinneen lumps the US programs in with the successful Brazilian ethanol program, but the two are vastly different. Brazil has the available land suited to grow large quantities of sugar cane, and the cane is a very efficient source for ethanol. Every automobile in Brazil can burn pure alcohol and the country has made itself nearly energy self-sufficient through that path by using an available resource.

But something else is happening in Brazil, and that is at least in part due to the US craze for the corn-to-ethanol process. Because US farmers are planting former soybean acres to corn to feed the new ethanol plants and growing amounts of soybeans are being used to make fake diesel fuel, as mentioned before the world price of soybeans has soared. And thus, Brazilian entrepreneurs are chopping down vast swaths of the Amazon rain forest to grow … soybeans for sale on the world market. It’s not a direct cause-and-effect, because as Dinneen points out the rising price of oil is also affecting food prices in general, but it is an effect nonetheless. An unintended consequence.

The American ethanol craze is coming under growing scrutiny from all around the world. Even if Dinneen were correct that the diversion of food to fake fuel is not in any way responsible for food prices and scarcity, it is appearances that count and the appearance of turning food into fuel as millions starve is, well, just awful. Imagine when CNN leads each day’s news report with images of food riots, dying children, and angry peasants. In the end I predict that the backlash will be so severe that many of the ethanol plants now being planned will be cancelled, and many existing distilleries will be shut down or converted to some other use. The incentives will have evaporated like morning mist and the perpetrators will be seen for what they are: Morally deficient opportunists.

We need to develop biofuels that utilize non-food materials. In the past I have made fun of the idea of switchgrass as a feedstock for ethanol, and there are serious problems with that, but we need to explore how to use that and other alternatives such as wood chips, algae, and other bio-resources. It makes far more sense than to use corn or soybeans. Some have proposed using crop residue such as corn stalks for ethanol production, but that is another bad idea. Crop residue needs to be returned to the soil to maintain organic matter and tilth that are important to keep the precious soil from becoming sterile and washing or blowing away.

There will be answers to our changing energy needs, but the ones championed by the RFA are neither sustainable nor sensible. In closing, I will repeat the line with which I concluded my April 1 essay and which could be a mantra for the opposition to the corn-to-ethanol craze:

“The mythic teacher Jesus was said to have turned water into wine, but only a living Satan would turn wine into water or food into fuel.” Amen.

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