Corn Ethanol Revisited

There are a number of reasons why corn ethanol is looked upon with skepticism if not outright scorn in this country, particularly outside of the Midwest. The fact that corn became a leading source of biofuel feedstock as the result of a large and powerful lobbying effort draws suspicion from the left. The fact that its move into prominence was founded on large government subsidies and mandates draws criticism from the right. And its inherent marriage to large-scale industrial agriculture and the fact that it potentially diverts capital resources away from other renewables is not at all popular with the environmental community. There are also many people across the political spectrum who are concerned about the question of agricultural resources (e.g. land, water, fertilizer) being diverted away from food production, especially at a time of massive droughts and when so many people in the world are going hungry.

These are all true statements, though not necessarily defining ones. They do not tell the whole story. Indeed, there are a number of facts about corn ethanol that are not widely known which could change people’s perceptions.

Untrue, for example, are assertions that corn ethanol is a net energy loser, or that it provides little or no benefit from a climate change perspective. I spoke to Bob Dinneen, President of the Renewable Fuels Association, last week, and he said, “Those who say it’s a net negative are looking at reports from 25 years ago.” Indeed some of the earlier studies did show a negative balance. But much has changed in recent years, and not just in life cycle analysis methodology.

Because of the investments in productivity and modernization that have been made possible as the result of government support, yields have increased both in terms of bushels per acre, and also in gallons per bushel. Dineen says, “Ethanol extraction has increased from 2.2 to 2.8 gallons per bushel, while corn yields have increased from 80 to 160 bushels per acre in one generation.” This has resulted in an energy balance that, according to the USDA, is now 2.3 Btu out for every Btu used for production or a net Energy Return on Energy Invested (EROEI) of 1.3. In cases where biomass is being used to power the mills, that ratio can be as high as 1.8.

Furthermore, because of improved agricultural technology, nitrogen use has decreased by 20 percent since the mid-90s and direct energy use has fallen by 50 percent. Greenhouse gas emissions are 18-22 percent lower than gasoline. The cost of production of ethanol in the U.S. is now so low that we have actually begun exporting ethanol to Brazil, long considered the world’s ethanol leader.

To put this in perspective, consider the fact that the EROEI for gasoline is only 0.84, which is 35 percent less than ethanol. Of course we’d like the EROEI to be higher, especially when we consider the indirect energy expenditures such as building roads and other infrastructure and the carbon emitted when natural land is converted to farmland. On the other hand, the EROEI for cellulosic ethanol is 10, a fact that we will be coming back to later in this series.

But what about this question of corn ethanol competing with food?

There is no question that corn grown for ethanol uses land, water, and other resources that might otherwise be used for food. Dinneen says, the type of corn, #2 Dent, that is grown for ethanol, is generally considered an industrial product. Approximately 40 percent of it is used for ethanol, 35 percent is used for livestock feed, another 13 percent is exported, with the remainder going to a wide variety of uses ranging from food additives (including high fructose corn syrup), to chemicals, plastics and pharmaceuticals, to name a few. “As part of the ethanol production process, about one third of the corn is extracted as distillers dry grain, a high protein mixture that is used directly as an animal feed. This recycling process essentially changes the net balance to 27 percent for ethanol and 48 percent for feed.” So roughly half of the country’s annual corn production, which this year was 96 million acres (an 8 percent increase over last year), went into the food supply as animal feed. As for the question of water consumption, only 10 percent of the corn grown today uses irrigation. The rest relies on natural rainfall.

Since we’re on the subject of water, what about this year’s drought? Clearly the drought was unexpected and serious. But the impact on yield, an 11 percent falloff from last year’s crop, was far less than initially expected. In fact, this year’s corn crop was still the eighth largest in history. The drop-off did lead to an increase in prices, which, in turn, led to increased production in other countries including Canada, Mexico, and Argentina, among others. The net result: the global corn crop was off less than 2 percent compared to last year. This could be considered a classic example of the hidden hand of the global economy at work.

Says Dinneen, “Here you have an industry that has been successful. It has created 400,000 jobs, added 64 billion dollars to GDP, it has reduced the amount of imported oil and improved our balance of trade. And it has done so in a way that has helped improve air quality in the nation’s cities and all the rest. It has been a remarkable success.”

As for the question of subsidies, the corn ethanol subsidy, which had been around since 1978, expired last January. There is the Renewable Fuels Standard (RFS), which mandates that 36 billion gallons of alternative fuels be incorporated into our fuel supply by 2022. But only 15 billion gallons of that can be derived from corn, out of concern for the impact on the food supply. Since the U.S. is already capable of producing 15 billion gallons of corn ethanol, we should not expect significant additional growth in the acreage required. As for the question of people going hungry, it is a well established fact that the problem is not one of adequate production, but rather one of poverty, food distribution and poor crop yields in the regions where hunger occurs.

None of this is to suggest that corn ethanol is a perfect solution. As we said in our energy series, there is no perfect energy source. Most of the sustainability issues associated with corn ethanol, including land use, soil erosion, depletion of nitrogen and phosphorus, and chemical runoff, as well the centralized nature of its production, arise from its dependence on the industrial agriculture model. Indeed, when I asked Bob Dinneen about these issues, he said, “Those issues are associated with growing corn, not with making ethanol.” True enough, though it’s pretty difficult to separate the two. This is the area where most of the opportunities lie for improved sustainability. As some of the new technology, such as cellulosic ethanol becomes incorporated, we should expect to see improvements, since higher yields per acre will ultimately require less cultivation.

In the meantime, it’s good to keep in mind that it is easy to be critical of new energy sources, especially if there are political overtones that are not to our liking. But the fact is that our way of life depends on massive amounts of energy, which creates a huge challenge for us in light of the climate situation. Therefore, it is really not in our best interest to be dismissive of a source that has as much going for it as ethanol does.

Triple Pundit