Yale e360 - In light of
the strong evidence that growing corn, soybeans, and other food
crops to produce ethanol takes a heavy toll on the environment and
is hurting the world’s poor through higher food prices, consider
this astonishing fact: This year, more than a third of the U.S.’s
record corn harvest of 335 million metric tons will be used to
produce corn ethanol. What’s more, within five years fully 50
percent of the U.S. corn crop is expected to wind up as
biofuels.



Here’s another sobering fact. Despite the record deficits facing
the U.S., and notwithstanding President Obama’s embrace of some
truly sustainable renewable energy policies, the president and his
administration have wholeheartedly embraced corn ethanol and the
tangle of government subsidies, price supports, and tariffs that
underpin the entire dubious enterprise of using corn to power our
cars. In early February, the president threw his weight behind new
and existing initiatives to boost ethanol production from both food
and nonfood sources, including supporting Congressional mandates
that would triple biofuel production to 36 billion gallons by
2022.



Congress and the Obama administration are paying billions of
dollars to producers of biofuels, with expenditures scheduled to
increase steadily through 2022 and possibly 2030. The fuels are
touted by these producers as a “green” solution to reliance on
imported petroleum, and a boost for farmers seeking higher
prices.



Yet a close look at their impact on food security and the
environment - with profound effects on water, the eutrophication of
our coastal zones from fertilizers, land use, and greenhouse gas
emissions - suggests that the biofuel bandwagon is anything but
green. Congress and the administration need to reconsider whether
they are throwing good money after bad. If the biofuel saga
illustrates anything, it is that thinking ecologically will require
thinking more logically, as well.



Investments in biofuels have grown rapidly in the last decade,
accelerating especially in developed countries and Brazil after
2003, when oil prices began to climb above $25 per barrel, reaching
a peak of $120 per barrel in 2008. Between 2001 and 2008, world
production of ethanol tripled from 4.9 billion gallons to 17
billion gallons, while biodiesel output rose from 264 million
gallons to 2.9 billion gallons. Together, the U.S. and Brazil
account for most of the world’s ethanol production. Biodiesel, the
other major biofuel, is produced mainly in the European Union,
which makes roughly five times more than the U.S. In the EU,
ethanol and biodiesel are projected to increase oilseed, wheat, and
corn usage from negligible levels in 2004 to roughly 21, 17, and 5
million tons, respectively, in 2016, according to the Organization
for Economic Cooperation and Development.



In the U.S., once a reliable supplier of exported
grain and oilseeds for food, biofuel production is soaring even as
food crop export demand remains strong, driving prices further
upward. Government support undergirding the biofuels industry has
also grown rapidly and now forms a massive federal program that may
be good for farm states, but is very bad for U.S. taxpayers.



These subsidy supports are a testament to the power of the farm
lobby and its sway over the U.S. Congress. In addition to
longstanding crop price supports that encourage production of corn
and soybeans as feedstocks, biofuels are propped up by several
other forms of government largesse. The first of these are
mandates, known as “renewable fuels standards”: In the U.S. in
2007, energy legislation raised mandated production of biofuels to
36 billion gallons by 2022. These mandates shelter biofuels
investments by guaranteeing that the demand will be there, thus
encouraging oversupply.



Then there are direct biofuel production subsidies, which raise
feedstock prices for farmers by increasing the price of corn. In
the U.S., blenders are paid a 45 cent-per-gallon “blender’s tax
credit” for ethanol - the equivalent of more than $200 per acre to
divert scarce corn from the food supply into fuel tanks. The
federal government also pays a $1 credit for plant-based biodiesel
and “cellulosic” ethanol.



Finally, there is a 54 cent-per-gallon tariff on imported biofuel
to protect domestic production from competition, especially to
prevent Brazilian sugarcane-based ethanol (which can be produced at
less than half the cost of U.S. ethanol from corn) from entering
U.S. markets. These subsidies allow ethanol producers to pay higher
and higher prices for feedstocks, illustrated by the record 2008
levels of corn, soybean, and wheat prices. Projections suggest they
will remain higher, assuming normal weather and yields.



The rapid increase in grain and oilseed prices due to biofuels
expansion has been a shock to consumers worldwide, especially
during 2008 and early 2009. From 2005 to January 2008, the global
price of wheat increased 143 percent, corn by 105 percent, rice by
154 percent, sugar by 118 percent, and oilseeds by 197 percent. In
2006-2007, this rate of increase accelerated, according to the U.S.
Department of Agriculture, “due to continued demand for biofuels
and drought in major producing countries.” The price increases have
since moderated, but many believe only temporarily, given tight
stocks-to-use ratios.



It is in poor countries that these price increases pose direct
threats to disposable income and food security. There, the run-up
in food prices has been ominous for the more than one billion of
the world’s poor who are chronically food-insecure. Poor farmers in
countries such as Bangladesh can barely support a household on a
subsistence basis, and have little if any surplus production to
sell, which means they do not benefit from higher prices for corn
or wheat. And poor slum-dwellers in Lagos, Calcutta, Manila, or
Mexico City produce no food at all, and spend as much as 90 percent
of their meager household incomes just to eat.



But the most worrisome of recent criticisms of biofuels relate to
their impacts on the natural environment. In the U.S., water
shortages due to the huge volumes necessary to process grains or
sugar into ethanol are not uncommon, and are amplified if these
crops are irrigated. Growing corn to produce ethanol, according to
a 2007 study by the U.S. National Academy of Sciences, consumes 200
times more water than the water used to process corn into
ethanol.



In the cornbelt of the Upper Midwest, even more serious problem
arise. Corn acreage, which expanded by over 15 percent in 2007 in
response to ethanol demands, requires extensive fertilization,
adding to nitrogen and phosphorus that run off into lakes and
streams and eventually enter the Mississippi River watershed. This
is aggravated by systems of subterranean tiles and drains - 98
percent of Iowa’s arable fields are tiled - that accelerate field
drainage into ditches and local watersheds. As a result, loadings
of nitrogen and phosphorus into the Mississippi and the Gulf of
Mexico encourage algae growth, starving water bodies of oxygen
needed by aquatic life and enlarging the hypoxic “dead zone” in the
gulf.



Next is simply the crop acreage needed to feed the biofuels beast.
A 2007 study in Science noted that to replace just 10 percent of
the gasoline in the U.S. with ethanol and biodiesel would require
43 percent of current U.S. cropland for biofuel feedstocks. The EU
would need to commit 38 percent of its cropland base. Otherwise,
new lands will need to be brought into cultivation, drawn
disproportionately from those more vulnerable to environmental
damage, such as forests.



A pair of 2008 studies, again in Science, focused on the question
of greenhouse gas emissions due to land-use shifts resulting from
biofuels. One study said that if land is converted from
rainforests, peatlands, savannas, or grasslands to produce
biofuels, it causes a large net increase in greenhouse gas
emissions for decades. A second study said that growing corn for
ethanol in the U.S., for example, can lead to the clearing of
forests and other wild lands in the developing world for food corn,
which also causes a surge in greenhouse gas emissions.



A third study, by Nobel-Prize winning chemist Paul Crutzen in 2007,
emphasized the impact from the heavy applications of nitrogen
needed to grow expanded feedstocks of corn and rapeseed. The
nitrogen necessary to grow these crops releases nitrous oxide into
the atmosphere - a greenhouse gas 296 times more damaging than CO2
- and contributes more to global warming than biofuels save through
fossil fuel reductions.



Thus have biofuels made the slow fade from green to brown. It is a
sad irony of the biofuels experience that resource alternatives
that seemed farmer-friendly and green have turned out so
badly.



What’s needed are a freeze on further mandates to slow
overinvestment, reductions in the blenders’ tax credit - especially
when corn prices are high - and cuts in tariff protection to
encourage cost-reduction strategies by U.S. producers. And the high
environmental and human costs of using corn, soybeans, and other
food crops to produce biofuels should spur government initiatives
to develop more sustainable forms of renewable energy, such as wind
power, solar power, and - one day, perhaps - algal biofuels grown
at waste treatment plants.



Yet sadly, as in so many areas of policy, Congress and the
administration prefer to reward inefficiency and political
influence more than pursuing cost-effective - and sustainable -
energy strategies.

C. Ford Runge is the McKnight University Professor of
Applied Economics and Law at the University of Minnesota, where he
also holds appointments in the Hubert H. Humphrey Institute of
Public Affairs and the Department of Forest Resources.