• Hilary Clinton is being called a flip-flopper for voting against repeated ethanol bills through 2005 and in 2006 coming out as a supporter. Just this January she made the unequivocal statement in a web chat, “I support all kinds of ethanol.”
• Renowned ethanol opponent, John McCain, has gone from his 2003 statement that “Ethanol does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality” to his recent comment that “We need energy independence. We need it for a whole variety of reasons, and obviously ethanol is a big part of that equation.”

Running on Subsidies

Along with all the praise, ethanol has helped an already highly subsidized corn market gain even more government handouts. Despite the fact that its production requires high pesticide use and contributes to soil erosion, corn is now the most subsidized crop in America.

The US ethanol subsidy is now equivalent to 51¢ per gallon, creating an artificial market for a relatively inefficient biofuel. According to a recent report by the International Institute for Sustainable Development (IISD), the government subsidies are poorly coordinated and targeted.

The report’s author, Doug Koplow, calculates that ethanol subsidies are a misguided method for reducing greenhouse gas emissions. “Under optimistic projections, it costs some $500 in federal and state subsidies to reduce one metric ton of CO2-equivalent through the production and use of corn-based ethanol. That could purchase more than 30 metric tons of CO2-equivalent offsets on the European Climate Exchange, or nearly 140 metric tons on the Chicago Climate Exchange”.

The wrong kind of ethanol

Brazil began using ethanol in the 1920s and it gained popularity during the oil crisis of 1973. Today, 80% of new cars are capable of running on ethanol, without any help from government subsidies (though in 2005 the government began to invest in sugar mills and distilleries). The secret to their ethanol success: it’s made from sugar.

The difference in efficiency between the two crops helps Brazil to produce their ethanol, subsidy-free, at 60¢ per gallon while it costs the US, with the 51¢ per gallon subsidy, $1.40 gallon.

As elaborated by Lester Brown in his book “Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble”, Brazil’s sugarcane-based ethanol beats the US corn-based ethanol in both of the key indicators of efficiency. When comparing fuel yield per acre, Brazil’s version derived from sugarcane produces 662 gallons per acre while that from US corn yields slightly over half with 354 gallons per acre.

When it comes to the other key indicator- net energy yield- that for US corn-based ethanol is 1.5 units of energy for each energy unit used in production, while ethanol from sugarcane in Brazil is “in a class all by itself, yielding over 8 units of energy for each unit invested in cane production and ethanol distillation.”

Clearly, Brazil’s choice of sugar as a biofuel crop puts them in their own elevated class for efficiency, but it can’t compete in the US not just because of corn subsidies.

The US government has also imposed a 54¢ per gallon tariff on imports of sugar-cane based ethanol from Brazil, something Brazilian PresidentLuiz Inácio “Lula” da Silva denounced in a recent radio address.

“The high tariff that the United States imposes on ethanol makes no sense. We are asking the United States to remove the subsidies…. They talk a lot about free trade but they like to protect their own products.”

A polluting “green fuel”?

These subsidies aren’t going to fund a truly clean energy like solar or wind power. Given that 90% of US ethanol is produced from corn, it is worthwhile taking a look at just how clean is its production.

According to environmental watchdog group Friends of the Earth:

• The U.S. Department of Agriculture reported that corn farming required more chemicals – fertilizers, insecticides and herbicides – than other comparable crops, such as soybeans.
• The ethanol conversion process has negative impacts on both water and air.
• Overall improvement of air quality from ethanol production and use is uncertain. While an ethanol and gasoline mixture has lower sulfuric oxide (SOx) and carbon dioxide (CO2) emissions, it has higher nitrogen oxide (NOx) and VOC emissions, which causes ozone depletion.

In 2006, National Academy of Sciences researchers issued a report questioning ethanol’s environmental benefits. When compared with soy-basedbiodiesel , ethanol has “greater environmental and human health impacts because of increased release of five air pollutants and nitrate, nitrite and pesticides.”

Going one step farther, UC Berkeley professor Tad Patzek, speaking at an event sponsored by the National Corn Growers Association, denounced the use of ethanol as a gas additive as “one of the most misguided public policy decisions to be made in recent history”. He claims that there is a net energy loss from every gallon of ethanol produced from corn, given that it takes more fossil fuel to produce ethanol than the energy derived from its use.

It only takes a simple comparison with another green energy source, he claims, to recognize that instead of focusing on ethanol the US should be investing in efficient manufacturing technologies for photovoltaic cells. “A mediocre photovoltaic cell is about 100 times more efficient in delivering work than corn ethanol.”

An inefficient fuel benefiting not the public, but big business

Before Senator McCain experienced his ethanol conversion, he wasn’t afraid to speak out against government ethanol subsidies and the powerful corporate interests reaping the profits.

Despite ADM’s (Archer Daniels Midland Co.) rank as the tenth worst corporate air polluter on the “Toxic 100 list“, their political contributions have helped keep the subsidies flowing. Since the 2000 election cycle, ADM has given both Republicans and Democrats a total of more than $3 million in political contributions, according to the Center for Responsive Politics.

ADM has a long history profiting from government corn and ethanol subsidies. In 1995, analysts for the libertarian think tank the Cato Institute called them “the most prominent recipient of corporate welfare in recent U.S. history”, citing that at least 43% of their profits come from products subsidized by the taxpayers and most of that from ethanol.

The subsidies were so misplaced that Cato analyst James Bovard estimated that every $1 of profits earned by ADM with its ethanol operation costs taxpayers $30.

Today, ADM continues to be the biggest US ethanol producer by far and the biggest beneficiary of more than $2 billion in government subsidies earmarked for the ethanol industry every year. According to estimates Citigroup food manufacturing analyst David Driscoll provided the New York Times, “ADM will earn an estimated $1.3 billion from ethanol alone in the 2007 fiscal year, up from $556 million this year.”

Is it too late?

With all the money invested in the production of corn ethanol and the high price of sugar production in the US, it is unlikely that US ethanol producers will ever make the switch to the more efficient sugar crop, but there is another alternative.

The 2005 Energy Policy Act didn’t just provide funding for corn ethanol, but also for cellulosic, ethanol produced from almost any type of plant, like the fast growing switchgrass or from biomass waste like wheat straw, corn stalks, and wood chips.

The fast-growing nature of many cellulosic crops it a very efficient alternative. While the net energy yield for switchgrass is roughly 4- below the 8 for sugarcane and above the 1.5 for corn- the ethanol yield per acre is 1,150 gallons, higher than both corn and sugarcane.

While its production costs are still too high to be currently practical, investors like Richard Branson, Bill Gates and venture capitalist Vinod Khosla and corporate giants like DuPont and Chevron are betting on this more efficient and environmentally-friendly source of ethanol.

As author Lester Brown writes, “If switchgrass turns out to be an economic source of ethanol, as some analysts think it may, it will be a major breakthrough, since it can be grown on land that is highly erodible or otherwise not suitable for annual crops. In a competitive world market for crop-based ethanol, the future belongs to sugarcane and switchgrass.”