The Ethanol Scam

AT FIRST glance, it seems like common sense.

Unless you're delusional or in the pay of the energy industry, you know that the burning of fossil fuels is the primary cause of global warming and destructive climate change that is already wreaking havoc around the globe. Not to mention that fossil fuels are a limited resource, costly to extract and refine, and increasingly sought-after by competing nations.

So if a more environmentally friendly fuel could be derived from renewable plant-based sources, wouldn't it be logical to make the switch?

This is the justification for the recent boom in biofuel production in the U.S. and around the globe. Since biofuels (which can be made from corn, sugar cane, soybeans or other organic sources) are produced from "renewable resources," goes the argument, they can go a long way to helping break America from its 21-million-barrels-a-day oil habit and provide a more environmentally friendly alternative to fossil fuels.

Biofuels--especially, in the U.S., corn-derived ethanol--are being promoted as the savior of both the planet and humankind.

Think that's an exaggeration? Check out the National Corn Growers Association's online comic book adventures of "Captain Cornelius," who uses his corn superpowers to "protect the environment." Or the association's online promotional video, a Star Wars parody in which "ethanol" is depicted as a wise Yoda-like figure, and "gasoline" is Darth Vader.

Rolling Stone quoted Sen. Chuck Grassley of Iowa--"the king of ethanol hype," the magazine pointed out--as saying "Everything about ethanol is good, good, good." But if you scratch a bit beneath the surface, ethanol stops looking quite so "good, good, good."

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FOR ONE thing, although biofuels are promoted as a cure-all for an ailing environment, many scientists say that they aren't necessarily any better than traditional fossil fuels. As National Geographic reported in October:

Biofuels as currently rendered in the U.S. are doing great things for some farmers and for agricultural giants like Archer Daniels Midland and Cargill, but little for the environment.

Corn requires large doses of herbicide and nitrogen fertilizer and can cause more soil erosion than any other crop. And producing corn ethanol consumes just about as much fossil fuel as the ethanol itself replaces. Biodiesel from soybeans fares only slightly better. Environmentalists also fear that rising prices for both crops will push farmers to plow up some 35 million acres...of marginal farmland now set aside for soil and wildlife conservation, potentially releasing even more carbon bound in the fallow fields."

According to research reported last year by a team led by Nobel Prize-winning chemist Paul Crutzen, ethanol derived from corn may generate up to 50 percent more greenhouse gases than gasoline, because up to twice as much nitrous oxide may be released by the production process due to increased use of nitrogen fertilizers on corn (one of the most fertilizer-heavy crops).

In addition, in the U.S. and across the globe, forests, grasslands and other fragile ecosystems are being cleared to make way for production of corn, soybeans or other biofuel crops, causing further environmental harm.

According to one study published earlier this year in the journal Science, using a worldwide agricultural model to estimate emissions from land-use changes, researchers found that corn-based ethanol, "instead of producing a 20 percent savings in greenhouse gases, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years."

As Nature Conservancy researcher Joe Fargione told Science Daily, "If you're trying to mitigate global warming, it simply does not make sense to convert land for biofuels production. All the biofuels we use now cause habitat destruction, either directly or indirectly."

In the Midwest "Corn Belt," for example, increased corn production for ethanol has now pushed out nearly 20 million acres of soybean production. Until recently, soybeans were regularly rotated with corn crops, but many farmers are now abandoning them in order to chase the big government subsidies that now come with corn.

Brazilian farmers, driven to plant more or the world's soybeans as a result (not to mention sugar cane for Brazil's own biofuel production), have in turn increased the conversion of the Brazilian Amazon and Cerrado--some of the richest areas in the world in terms of biodiversity--into croplands and cattle pastures. Overall, the effect has been to push soybean prices higher, while encouraging intensive use of nitrogen and phosphorus fertilizers for corn crops.

This increase in fertilizer use is already causing environmental harm. Fertilizer runoff from Midwestern farms into the Gulf of Mexico has created an algae bloom that suffocates the ocean life underneath it.

In the 1970s, the bloom used to occur just once every two to three years. Intense factory farming has made the bloom a yearly phenomenon since the 1980s. And last year, when Midwestern farmers devoted a tract of land nearly the size of California to corn cultivation--a 15 percent increase over the previous year--the "dead zone" grew to the third-largest size ever observed. Reports suggest that the dead zone this year will expand to more than 10,000 square miles, the largest size on record and nearly 20 percent larger than the previous record.

It's also worth noting that ethanol production is often bad for the health of those who live in the communities surrounding the distilleries. Reports of fires, toxic spills and air pollution are common. The Environmental Protection Agency (EPA) concluded this year that "ozone levels generally increase with increased ethanol use."

A 2005 report by the Des Moines Register--when Iowa had a total of 17 ethanol plants--found that these facilities "emitted so much [cancer-causing] formaldehyde and toluene into the air that the U.S. Environmental Protection Agency forced several large companies to install new equipment"; that several plants were built without construction permits; and that some released bad batches of ethanol and sewage into streams, threatening fish and wildlife.

Yet last year, the EPA relaxed regulations for the ethanol industry, allowing fuel-producing ethanol plants to raise their emissions of pollutants like carbon monoxide, nitrous oxide and sulfur dioxide from 100 tons per year to 250 tons per year.

In the years since the Register completed its investigation, the number of ethanol distilleries in the U.S. has skyrocketed--particularly since 2005, when the Energy Policy Act was passed, tripling the U.S. government mandate of biofuel production to 7.5 billion gallons of ethanol per year by 2012.

In early 2006, the U.S. had just 95 ethanol plants in operation. Today, according to the Renewable Fuels Association, there are a total of 161 ethanol distilleries in the U.S.--with another 42 plants under construction and seven undergoing expansion. Iowa alone now has 41 ethanol refineries.

And will this boom in ethanol production have an impact on U.S. oil dependence? Not likely. As the Energy Justice Network noted:

Meeting the lifetime fuel requirements of just one year's worth of U.S. population growth with straight ethanol (assuming each baby lived 70 years), would cost 52,000 tons of insecticides, 735,000 tons of herbicides, 93 million tons of fertilizer, and the loss of 2 inches of soil from the 12.3 billion acres on which the corn was grown. The U.S. only has 2.263 billion acres of land, and soil depletion is already a critical issue. Soil is being lost from corn plantations about 12 times faster than it is being rebuilt.

As the U.S. General Accounting Office concluded in 1997, "ethanol's potential for substituting for petroleum is so small that it is unlikely to significantly affect overall energy security."

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ONE OF the biggest negative impacts of the ethanol boom has been the human cost for the world's poor.

As Foreign Affairs reported in May, "The current biofuels craze...has disrupted food and commodities markets and inflicted heavy penalties on poor consumers. These developments have occurred despite record global grain harvests in 2007."

Rising demand over the past several years has helped lead to a global spike in the price of corn--one of the most important staple crops for the world's poor. Between May 2007 and today, the average price of corn increased by some 60 percent (soybeans, also used for biofuel, went up by more than 75 percent).

According to the USDA's annual Food Security Assessment, the soaring cost of food increased the number of hungry people in the world by 122 million in 2007 to some 982 million (and poverty groups say the real number is likely much higher). The number of new hungry people--roughly equal to the population of Japan--is the biggest increase since the USDA started producing the report 16 years ago.

As Time magazine reported:

The grain it takes to fill an SUV tank with ethanol could feed a person for a year. Harvests are being plucked to fuel our cars instead of ourselves. The UN's World Food Program says it needs $500 million in additional funding and supplies, calling the rising costs for food nothing less than a global emergency. Soaring corn prices have sparked tortilla riots in Mexico City, and skyrocketing flour prices have destabilized Pakistan, which wasn't exactly tranquil when flour was affordable.

Though some portion of these price increases can be attributed to natural (and man-made) phenomenon like drought and floods, the skyrocketing costs of gasoline (which adds to the price of almost every stage of agriculture, from petroleum-based chemical fertilizers to harvesting and shipping costs) and market speculation due to a declining dollar, biofuels have also played a critical role.

As Foreign Affairs noted, "Although controversy remains over how much of the food price increase since 2006 can be attributed to biofuels, their effects cannot be overlooked. In 2008, 30 percent of the U.S. corn crop will be used for ethanol." That percentage is expected to rise through 2015, especially since Congress approved a law in December that mandates the use of at least 36 billion gallons of biofuels by 2020.

As ethanol distilleries suddenly multiplied in the Midwest, as much as 50 percent of some states' corn crop has been diverted to ethanol--taking up land and corn that was once used to feed livestock, which in turn pushes up prices on meat as well. By next year, the U.S. ethanol industry will need 4 billion bushels of corn--1 billion bushels more than this year and nearly double 2007 levels--to meet anticipated production.

In the same period, however, U.S. corn production is projected to grow by only 11 percent. "The USDA has said that if the ethanol industry gets 1 billion more bushels of corn, it means that the domestic livestock industry will have to cut back 16 percent in feeding corn," said Purdue University Extension agricultural economist Chris Hurt, "And then our foreign buyers [i.e. countries that import U.S. corn] will have to cut back 18 percent."

Given that U.S. trade policies--particularly NAFTA--have decimated the ability of countries like Mexico to feed themselves (pushing farmers out of business by opening markets to imports of U.S. grain), the consequences of a further spike in corn prices will be felt not only on the tables of U.S. consumers, but even more keenly among the world's poor. According to Le Monde Diplomatique, since 1994, Mexico has been forced to triple its imports of all cereals, and now must import nearly 25 percent of its corn. But since a portion of Mexico's population is now dependent on U.S. corn, any further spike in corn prices will cause further misery for masses of poor Mexicans.

U.S. officials and business, meanwhile, deny any responsibility. Agriculture Secretary Edward Schafer, for example, recently claimed that biofuel production pushed up global food prices by only 2 or 3 percent. But even USDA chief economist Joseph Glauber admitted in testimony to Congress in June that biofuels account for at least ten percent of global food price rises.

A recent World Bank report leaked to Britain's Guardian newspaper suggested that biofuels may be responsible for as much as 75 percent of global food price increases. World Bank officials say the report isn't finalized, and the number seems inflated.

But other studies show the same direction. The Gallagher report, a British study released last week, found that the "negative impacts from biofuels are real and significant." The study stated that, among other things, current biofuel policies could drive 10.7 million people in India into poverty and force grain prices up in the European Union by 15 percent.

Yet at the recent Group of Eight (G8) summit in Japan, leaders of the world's richest nations--who dined on an elaborate six-course lunch, followed by an eight-course dinner banquet--had little in the way of solutions for the current energy or food crises plunging millions into misery, except to encourage more of the same policies that created the problems in the first place.

As the global women's organization MADRE noted in a statement:

The root cause of the food crisis is not scarcity, but the failed economic policies long championed by the G8, namely, trade liberalization and industrial agriculture...Yet in the search for solutions, the G8 is considering expanded support for the very measures that caused this web of problems. Calls for more tariff reductions, biofuel plantations, genetically modified crops and wider use of petroleum-based fertilizers and chemical pesticides are at the forefront of discussions in Japan.

These measures cannot resolve the global food crisis. They may, however, further boost this year's record profits for agricultural corporations. There are viable solutions to the food crisis, but they will not emerge from a narrow pursuit of the financial interests of multinational corporations.

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THE AGRIBUSINESSES cashing in on the twin bonanzas of spiking food prices and biofuels couldn't get away with it without a little help from their friends in Washington--and not only the Republican variety.

Barack Obama, for example, is a senator from Illinois, where Archer Daniels Midland, the leading producer of ethanol, is a major political force. ADM has spent years lobbying for ethanol, and it's paid off with politicians like Obama.

"Since entering the Senate in 2005," reported the Washington Post, "Obama has been a staunch supporter of ethanol--he justified his vote for the Bush administration's 2005 energy bill, which was favorable to the oil industry, on the grounds that it also contained subsidies for ethanol and other forms of alternative energy, and he has sought earmarks for research projects on ethanol and other biofuels in his home state of Illinois, the second-highest corn-producing state after Iowa."

More than anything, the ethanol scam shows that corporate, market-based "solutions" to global warming and oil dependence are no solution at all.

The sane and rational creation of biofuels--using, for example, non-food plants and wise land-use--could be one part of working toward solutions to the environmental crisis.

But that would only succeed if it were combined with other measures: real improvements in fuel efficiency in cars; massive government investment in public transit and alternative energy sources such as solar and wind power; restructuring of industrial manufacturing and agriculture away from oil dependence; and a reordering of urban areas so that people were not forced out of economic necessity to drive long distances from home to and from work, to name a few.

However, as Phil Gasper recently noted in the International Socialist Review, such measures "would require wresting control of large quantities of economic resources from corporate control and radically democratizing the entire political process. At the very least, this would require the emergence of social movements on a scale that has not been seen in the U.S. since the 1930s, capable of forcing capital to concede significant concessions.

"But to push the process through to completion would require breaking entirely with the logic of the profit system."