The Ethanol Policy Trap

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Mention the biofuel ethanol from corn in anything but glowing terms in Iowa five years ago and one had probably best apply for witness protection. Created by political pressure from the corn and the high  fructose corn syrup industry with the lobbying from ADM and later other corn-related lobby groups, corn ethanol went from a few million gallons, as an afterthought from the wet milling industry, to about 12 billion gallons per year today (the numbers are approximate, plants are opening and closing depending on market conditions). This will require close to 4 billion bushels of corn (each bushel of corn on average supplies about 2.8 gallons of ethanol). In the process ethanol production uses about 36 billion gallons of water just for processing, and requires about 20 million acres of corn land. All this to displace about 8.5 billion gallons of gasoline (ethanol has about 67% of the energy per volume as does gasoline). Further it requires about 7 gallons of diesel fuel equivalent to produce 10 gallons of ethanol when one accounts energy to grow the corn, deliver it to the processing plant, and to process the corn to ethanol. Therefore the net energy gain is about 3-4 billion gallons of gasoline equivalent. We have about 245 million cars in this country. If each car used 20 gallons of gas per year less–by improved efficiency and driving less–we could save nearly 5 billion gallons of gas, more than the ethanol that is being produced by the industry when put in energy equivalents.

Corn is King in the Midwest. Iowa produces over 2.2 billion bushels and sends about one-third of its crop to ethanol plants. That is the base of the ethanol madness–create a market for more corn where no existed before. And it has worked so far, thanks to government support.

Much of the rest of the corn goes to feed livestock and for export. Only about 10% can truly be said to be made into food products, and that includes the unhealthy HFCS. Trailing corn, but still very important is the legume, soybeans. Biodiesel from soybean oil has been on the burner for several years but the economics have never worked out.

The corn ethanol lobby has been hoisted on its own petards. They calculated that if they mandated ethanol use, the market would follow. This worked for the first 7 billion gallons. Since we burn about 130 billion gallons of gasoline a year, the blend of up to 10% ethanol would not be an issue. But in 2007 the mandate was progressively increased and soon will be 15 billion gallons. Simple math says that there will have to be more than 10% ethanol in all of our gasoline to meet the mandate. So the industry asked EPA to raise the “blend wall” to 15% by the end of 2009. EPA is still studying the request. They are concerned with engine component damage and air pollution issues. Time will tell. Another industry answer was a blend of up to 85% ethanol. That has not worked out, because the extra pumps cost more than they return in profits, and few buy E85 both because it performs less satisfactorily and because not many cars and trucks are capable of using E85 without engine component damage. Read More >