A Brief Look at Corn Ethanol

May 9, 2007 -- By Brad Ewing

From the moment we entered this world, many of us have lived in societies powered almost entirely by fossil fuels. We are at the cusp of changing this, but the tradeoffs we face provide no perfect solution. The world supply of fossil fuels such as petroleum cannot sustain projected consumption levels for the rest of this century. The U.S. Government Accountability Office recently observed that world oil production will peak sometime between now and 2040, and that U.S. production peaked in 1970. Weaning Americans from petroleum will require diversification of supply and conservation to reduce demand.

One potential solution to diversify supply of passenger vehicle fuel is ethanol made from cornstarch. Investment in fuel ethanol has risen rapidly since the 2005 oil price hikes, the passage of the Energy Policy Act and replacing the fuel additive MTBE with ethanol. Most studies show that corn ethanol greenhouse gas emissions are slightly lower in comparison to gasoline. In addition, corn ethanol is not a total loss to the food economy because 30 percent of the corn is recovered in a protein rich livestock feed called distillers dried grains. Farmers will also benefit from increased value of their land and crops. The corn ethanol industry stands the best chance to prosper throughout the Corn Belt.

The benefits of corn ethanol are accompanied by difficult problems for both Midwestern and coastal Americans. The use of corn makes ethanol a Midwest issue as the U.S. lacks the infrastructure to efficiently transport the fuel through current pipelines. Complicating the issue further, smog-causing pollutants are higher when consuming corn ethanol rather than gasoline. In fact, the largest producer of corn ethanol in the U.S., Archers Daniel Midland, was ranked the tenth worst corporate air polluter on the University of Massachusetts Toxic 100 list. What is more, some researchers question whether corn ethanol can even provide a net energy gain.

Beyond logistical concerns, corn ethanol is ethically worrisome. Converting the entire U.S. corn harvest to ethanol would satisfy approximately 12.3 percent of the U.S. household vehicle needs or feed 100 million people. In smaller terms, the corn required to produce 25-gallons of ethanol is enough to feed one person for an entire year. In a world of 6.59 billion people with 18,000 children dying every day from hunger and malnutrition, food used as fuel seems unethical--especially when there are other options.

Corn ethanol production will come at a very high price in comparison to energy conservation. The Congressional Budget Office estimates that reducing gasoline consumption 10 percent through fuel economy standards would cost nearly $3.6 billion a year. Achieving the same result by expanding ethanol production would cost taxpayers at least $10 billion a year. As we transition towards a diversified energy portfolio, all forms of energy should face market prices that reflect the costs they impose on society. And with these real costs, we must also recognize the inherent struggles that exist when food and energy markets intertwine.