Should the U.S. Halt Corn Ethanol Production During the Drought?

Last week, the director-general of the UN Food and Agriculture Organization, José Graziano da Silva told the Financial Times (login required) that the U.S. should suspend its binding biofuel mandates in light of the looming food crisis. “An immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channeled towards towards food and feed uses.”

U.S. Agriculture Secretary (and former Iowa governor) Tom Vilsack pushed back, saying that the U.S. biofuel industry had reduced gasoline prices and created jobs. He doesn’t bother to mention that corn ethanol has a 20 percent lower carbon footprint than gasoline or that “growing our own,” is helping to move the U.S. closer to energy independence.

So what is really at stake here and what is the right thing to do? That’s up to you to decide, but let’s look at some of the background.

The food crisis
Because of the drought and the extreme heat this summer, the level of U.S. corn stocks is the lowest it’s been since 1995. The USDA forecasts a U.S. corn production drop of almost 13 percent from last year. Exports will be the lowest in 19 years. In recent years some 36 percent of those exports have gone to developing countries. In fact, the U.S. expects to double the amount of corn it will import this year (to 1.9 million tons).

Rising prices are expecting to lead to increased planting in South America and elsewhere which will pick up some of the slack. But production increases overseas will not offset the falloff in U.S. production. Overall global production, of which the U.S. contributes one-third, is expected to fall 3 percent. That may not sound like a lot, but considering population growth and the fact that the severe weather that has impacted some areas disproportionately, it is.

Drought conditions in Russia and Eastern Europe have cut production there as well. And excessively heavy rains have had the same effect in other areas, such as Brazil, Indonesia and Australia. All of this has led to higher food prices. Most of the impact on food prices in the US will not be seen until next year, when the cost of beef, chicken, pork, and milk are expected to rise by approximately five percent.

No place has suffered more than Africa. More than 18 million people across the Sahel region of Western and Central Africa are facing a food shortage of crisis proportions due to erratic rains in that part of the world. In a region where people spend as much as 80 percent of their income on food, they simply can’t absorb a doubling of food prices which is what they are seeing. This is made even worse by widespread unrest in the region, fueled by a flood of arms in the aftermath of Gadaffi’s downfall, a longstanding ethnic conflict among the Tuaregs, and the growing presence of Al Qaida-linked insurgence movements. The violence has forced many families to flee their villages and crowd into other already-crowded regions seeking refuge. And these places, such as Niger and Burkina Faso, were already struggling to feed their own people. According to Action Against Hunger, one in five of the fleeing families has one or more children suffering from severe acute malnutrition.

The push for biofuels
The biofuel “mandate,” which was instituted after the USDA estimated that as much as 30 percent of our current fuel usda UN Food and Agriculture Organization Tom Vilsack Marlo Lewis José Graziano da Silva Gadaffi epa drought corn ethanol biofuel mandate biofuel Al Qaida consumption could be met by plant-based fuels, has diverted a significant portion of domestically grown corn.

Last year, some 40 percent of the U.S. corn crop went into ethanol production. The mandate, otherwise known as the Renewable Fuel Standard, is overseen by the EPA. It initially required, under the Energy Policy Act of 2005, that 7.5 billion gallons of renewable fuel be blended into gasoline stocks by 2012. That target was raised in the Energy Independence and Security Act of 2007, to the point that by 2022, a total of 36 billion gallons will be incorporated at a rate of up to 15 percent of the fuel by volume. EISA also placed a cap of 15 billion gallons on the amount of corn ethanol that could be produced, in order to not interfere with food production. Last year, some 40 percent of U.S. the corn crop went into ethanol.

Much of the difference is expected to come from cellulosic biofuel, which consists of wood scraps and forest trimming and are not seen as competing directly with food. However, cellulosic ethanol production has been slow coming on line and this year is expecting to contribute 10.45 million gallons, well short of the 250 million gallons originally proposed. Biodiesel and unspecified advanced biofuels are expected to make up the rest.

Actual production of corn ethanol last year was around 14 billion gallons, boosted by a federal subsidy of 45 cents per gallon, which ended at the end of last year. The subsidy contributed to a drop in corn prices which, among other things, led to a flood of high fructose corn syrup, which challenged waistlines all around the country. What a difference a year can make. Take away the subsidies and add a record drought, and suddenly corn prices are soaring

What does this have to do with the price of gas?
Just to put this in perspective, back in 2008, the National Renewable Energy lab (NREL) estimated that the impact of ethanol on fuel prices was a reduction of roughly approximately 17 cents per gallon. Another, more recent study conducted in the corn-friendly state of Iowa, shows cost savings of as much as $1.09 a gallon at the point in time when gas prices were peaking. The same study said that the average savings over the period from 2009-2011 was 29 cents per gallon. However, as Marlo Lewis points out on globalwarming.org, this does not take into account the fact that due to the lower energy content of ethanol, the cost per mile of 15% ethanol-blended fuel can actually be higher than straight gasoline.

So what do we do?
Price of gas notwithstanding, this is not a simple question to answer. Of course, no one wants to say no to starving children. Compassion urges us to follow the UN director-general’s advice. But if we divert corn production away from ethanol, that means we will be burning more gasoline, which will increase our carbon footprint and very likely lead to even more severe droughts in the future. This is the kind of difficult, short-term vs. long-term choice that we can expect to see more of going forward as we deal with the unintended consequences of the 20th century way of life.

If we don’t take the longer term option much, if not most of the time, then we will likely not improve our sustainability quickly enough to make a difference. My inclination would be to temporarily relax the ethanol quota, while at the same time making enough additional investments in cellulosic ethanol, advanced biofuels and other renewables to offset the long term impact on our carbon footprint. This would help to create jobs and stimulate the economy Since we already know that corn ethanol is far from optimal as a biofuel, this decision could help to accelerate us into more productive directions.

source: triplepundit