Promoted as a farm economy miracle and green solution to energy independence and global warming, can ethanol deliver?

by Janet A. Ginsburg

It is no accident. The city is where it is because of shipping-friendly continental divide a few miles from the shores of Lake Michigan. Streams either flow into the Lake or off to the Mississippi and down to the Gulf of Mexico. Thanks to clout and some major engineering (the Chicago river now flows backwards), Chicago became the country’s commodities capital. It was here that the concept of farm crops as fungible commodities was born, making it possible to trade farm futures. Ceres, the goddess of grain, reigns over LaSalle Street from a heavenly perch atop the Chicago Board of Trade.

She has had a banner year. Corn prices are up about 80% from what they were 12 months ago, which, in turn, has kicked up prices for soy, rice, wheat, and oats. Manufacturers dependent on those other grains are concerned about farmers putting more acreage into corn, which would reduce their supplies. For once, it would seem, the perennially put upon grain farmers are coming out on top. And they’re toasting their good fortune with ethanol, the alcoholic brew that made it all possible.

Ethanol literally has given farmers a way to squeeze more gold out of each golden kernel.

In 2006, fully 20% of the crop went towards the production of 5 billion gallons of ethanol. That sounds like a lot, but is just 3% of the roughly 150 billion gallons of fuel used in the U.S. annually. Since corn ethanol produces about 25% less energy per gallon than gasoline -- which means fewer miles per gallon -- ethanol is closer to 2% of the fuel total: a drop in the national tank. The Energy Information Administration predicts fuel usage to increase by nearly 2% annually for the next 25 years, so ethanol production would have to increase dramatically just to hold market share. That’s a tough proposition since it takes the equivalent of 7 gallons of gasoline in fossil fuel inputs such as fertilizer to produce just 10 gallons of ethanol. According to some studies, it is a complete wash-out.

Contrary to what the Renewable Fuels Association’s perky press releases would have you believe (“America Continues Down Path of Greater Energy Independence”), OPEC has nothing to fear from ethanol. If the entire crop, down to the last kernel, were distilled into automotive moonshine, it would take care of slightly more than 10% current demand, according to a study recently published in the Proceedings of the National Academy of Sciences.

With just 1/5 of the crop tied up in fuel, record high grain prices are now squeezing margins for livestock farmers and manufacturers, and will almost undoubtedly be felt by consumers in higher food costs. Globally, higher prices are already forcing poorer countries to cut imports, according to the U.N.’s Food and Agriculture Organization (FAO).

Ethanol’s intoxicating promise has buoyed U.S. farmers, commodity traders, rural economic development, and agricultural commodity processors such as ADM1, but has left pretty much everybody else with a hangover.

JUST ADD COW PIES

Over the last 20 years, the rise of CAFOs2 -- Concentrated Animal Feeding Operations -- capable of handling tens of thousands of animals at any given time has produced a bumper bonus crop of methane. More than enough, says David Mager, vice president of Public Policy for New York City-based Bion Environmental Technologies, to power an ethanol plant. So much, according to Mager, that harnessed correctly it could boost corn ethanol production 20-fold to 100 billion gallons per year, while cleaning up waste water outputs and substantially reducing livestock GHG emissions. Cattle production (which includes growing feed corn with fossil fuel-based fertilizers) releases more GHGs into the atmosphere than driving, so this is significant (see FAO report: “Livestock’s Long Shadow – Environmental Issues and Options”).

Key to the system’s environmental balance, however, is the use of wet distiller’s grain, which is difficult to ship, so the proximity of CAFO to refinery is critical. Although the mash can be dried and shipped anywhere, the drying process is so energy intense, it seriously erodes any energy gains. But the relentless push to pop more profit from each golden kernel has spurred efforts to build the market for dry distiller’s grains (DDGS). It is an uphill battle. Cattle can only tolerate a limited amount in their diet; hogs and poultry have a hard time digesting it at all; and the quality varies from batch to batch.

Or a Land Rover powered by pond scum. A third route to biofuel gold is algal. Algae, which has a high fat content, is a good source for biodiesel, and, according to its boosters, would require just a fraction of the acreage of corn ethanol to grow exponentially more  fuel. Even urban sewage works could be enlisted in the effort. Since oil itself is a product of ancient algal mats, there is also a certain sense of poetic justice: young upstart microbes taking over from old establishment fossils. But growing algae in any sort of industrialized quantity is tricky, as aquaculturalists growing fish food well know. So far, the quantities produced are measured in liters. 

NUMBER DEVILS

Even if all the problems with biofuels were solved tomorrow (including vulnerability to droughts and floods, which are expected to increase as the climate warms), would they make a difference?

Backers of corn/cow, cellulose and algal-based biofuels each boast that their schemes could produce upwards of 100 billion gallons in the U.S. annually. Taken together, that’s about twice current U.S. fuel needs, or more than enough to kiss Big Oil good-bye for good. That assumes, of course, that all the biofuel stays in the U.S., or that global production can meet global demand.

But in terms of climate change, the biofuel hype is more wishful than real: The numbers simply don’t add up. They can’t.

As Paul Flannery notes in “The Weather Makers” (who, btw, are us), while fossil carbon is locked away for millennia, forests used for sequestration store carbon for at best a few centuries. “In effect, by trading coal storage for tree storage of carbon, we are exchanging a gilt-edge guarantee for a junk bond.”

By comparison, sequestering carbon in annual crops used for biofuels is the equivalent of a checking account that barely balances.

As it is, it’s going to take another 45 years for the atmosphere to absorb all the GHG’s that have already been spewed; and a collective 70% reduction of GHGs from all sources a.s.a.p. to effectively put the brakes on global warming. “Carbon neutral” isn’t nearly good enough.

1 By most estimates, Decatur, Illinois-based food processor Archer Daniels Midland – ADM – controls about a third of the ethanol market. By comparison, the top three oil refiners control about the same amount of the U.S. gasoline supply (see chart, p. 19). Last August, after the consumer advocate group Public Citizen filed a complaint with Congress questioning ADM’s efforts on Capital Hill -- including over $2 million in campaign contributions made by its political action committee and employees, the company officially registered as a lobbyist. ADM has benefitted tremendously from government policies, receiving the lion’s share of $2 billion in taxpayer-supported subsidies for ethanol producers, according to Tyson Slocum, director of Public Citizen’s energy program. Tom Philpott’s article, “Give Green, Go Yellow: How Cash and Corporate Pressure Pushed Ethanol to the Fore” provides an excellent history of  ADM’s decades-long pursuit of favorable government policies; and includes mention of two high-profile price fixing case involving food additives lysine and high fructose corn syrup that cost the company a half billion dollars in fines.

2 CAFOs are controversial, with some attributing dense concentrations of animals with increased disease risk and the emergence of “superbug” bacteria through the overuse of antibiotics. Michael Pollan’s book, “The Omivore’s Dilemma,” provides a good overview on the history of corn and cows. Eric Schlosser’s book, “Fast Food Nation,” looks at the implications of factory farming.