Politics & Policy

Demon Alcohol

Americans who don’t try competing for the votes of Iowans every four years have long known that federal support for making ethanol fuel from corn is a costly and inefficient way to help the environment. It may not even be a way to do so at all.

A new investigative report by the Associated Press reveals the extent to which government support for ethanol has driven American farmers to expand their corn production massively across the plains, with huge, unnecessary environmental costs. Ethanol burns slightly cleaner than normal gasoline, but experts have long questioned just how great its overall benefit is, because producing it has so many other environmental costs. Estimates of ethanol’s benefits have grown less and less generous over the years, and now the AP reveals that its costs in the form of pollution and unnecessary land use have been seriously underestimated.

Subsidies for ethanol have been a longstanding feature of U.S. environmental policy (which should tell you something about the quality of U.S. environmental policy). America has had a tariff on ethanol for decades, to prop up domestic production and protect the heartland from competing biofuels, mostly Brazilian. But the favoritism really ramped up in the 2000s: The Bush administration’s attempt at a green industrial policy, motivated by high gasoline prices, national-security concerns, and the demands of rural constituencies, led to a huge tax credit for companies that blend ethanol into transportation fuel. That credit expired in 2012, when conservatives and honest environmentalists pressured Congress to reduce direct support for the industry.

In 2006, a more tortuous and destructive subsidy was created: a mandate that a certain percentage of the transportation fuel produced in the U.S. had to contain ethanol. The Obama administration updated these standards in 2010, and the mandate now steeply increases each year. Just three years after writing the new regulations, the White House is being forced to consider whether to ease the mandate in 2014 because it may not be possible to produce enough ethanol to meet it.

This policy has two obvious effects: The price of ethanol’s key ingredient, corn, will explode, and the price of automotive fuel, which now must contain it, will rise. Forty percent of corn production in the United States now goes to ethanol, making food for people all over the world more expensive. The costs to American consumers alone have amounted to tens of billions of dollars per year.

But the secondary effects of these distortions have not been as obvious or well examined. The AP report explains that in writing the 2010 regulations, the EPA essentially pretended that corn prices would remain constant. The agency’s rules require that biofuels be 20 percent more efficient, measured by carbon emissions, than standard fuels in order to qualify for favorable regulatory treatment. To hit this metric, the Obama administration assumed that a straitjacket mandate would hardly affect corn prices, meaning little more land development. In reality, prices have almost doubled since the 2010 mandate was written.

And higher corn prices have meant much greater demand for farmland in the Midwest — including conservation land, which higher crop yields have allowed farmers to leave fallow, as well as virgin, undeveloped land. A 2008 study in Science concluded that no ethanol policy would reduce carbon emissions if it caused farmers to carve up such land. Since President Obama took office, more than 5 million acres of conservation land have been lost. Meanwhile, nitrogen-based fertilizers have flowed from the overworked Great Plains into the Gulf of Mexico, creating a “dead zone” the size of Connecticut on the sea floor.

Public policy inevitably will not be guided by science, but by political interests. That’s part of the reason those concerned with greenhouse gases and pollution ignore solutions less georgic than corn farming, such as nuclear power and fracking. Obama’s secretary of agriculture, Tom Vilsack, more or less admitted that to the AP: “I don’t know whether I can make the environmental argument, or the economic argument. To me, it’s an opportunity argument.” There are better ways, we are sure, to provide opportunity to the inhabitants of the Great Plains than demanding that vast swathes of their land be devoted to producing an unnecessary fuel.

Some conservatives have spoken out against our decades-old, destructive ethanol policies. Senator Tom Coburn of Oklahoma has criticized the programs for years; Richard Mourdock, in his 2012 primary campaign against Indiana senator Dick Lugar, railed against the system and Lugar’s support for it.

With more exposure of the environmental effects of the program, perhaps politicians who claim to prize the environment will recognize that a lot of green — in more sense than one — is being wasted on ethanol.


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