A Flawed (Five-Year-Old) Argument Against Ethanol
The biofuel industry is one defined by dynamism, creativity and constant innovation. Unfortunately, the same cannot be said about the arguments put forth by the some of industry’s critics.
Since the implementation of the first Renewable Fuels Standard (RFS) in 2007, which mandates what percentage of U.S. fuel is to be derived from renewable sources, the biofuel industry has evolved at a rapid pace, with commercial-scale advanced biofuels plants (plants that produce biofuels from non-food sources) slated to come online starting next year.
Even ethanol, the granddaddy of biofuel technologies and the most heavily criticized biofuel, has made great strides in production techniques, improving process efficiencies and yields while reducing its carbon carbon footprint.
During this same period of technological innovation, however, arguments put forth by the biofuel industry’s most vocal critics have remained stagnant and repetitive, failing to account for advancements made within the industry and in ethanol production. Corn ethanol, which accounts for a significant majority of the renewable fuels produced in the United States today, is an especially easy target because it uses a major U.S. staple food crop.
On July 31, the New York Times ran an Op-Ed entitled “Corn for Food, Not Fuel,” authored by two frequent disparagers of ethanol and biofuel mandates – professor Colin A. Carter from the University of California, Davis and Henry I. Miller, a public policy fellow at Stanford University’s Hoover Institution. Carter and Miller posited an argument that has long been pushed by industry opponents – corn ethanol is a wasteful use of resources and it stands for everything that is wrong with government’s support for renewable fuels.
But despite the abundance of studies and figures refuting critics’ arguments, opponents are not swayed. And trust me, they really will not budge. Take a look at other pieces authored by Carter and Miller appearing in Forbes (2011), World Politics Review (2008) and the Washington Times (2007), and you’ll notice their rhetoric has changed barely at all in five years.
All of these pieces push the same core criticisms: corn ethanol policy raises the price of corn, exacerbating global problems of hunger, food security and slow economic growth; ethanol does not lower the price of gasoline or make the United States any less dependent on fossil fuels; and ethanol does not benefit the environment in any major way.
Despite the authors’ insistence to the contrary, all of the above statements represent extreme exaggerations of the facts or are simply untrue. Bob Dinneen, CEO of the Renewable Fuels Association, promptly responded to these claims in his own letter-to-the-editor sent to the New York Times, where he presents a strong counterargument.
But what is most disconcerting is that these criticisms also assume a fundamental fallacy – that corn ethanol is not competitive enough without subsidies to survive in the free market, and that they are being “pushed” onto consumers and energy companies by federal authorities.
Ethanol production is an important industry in the United States, especially in regions like the Midwest, and even if the RFS were to go away tomorrow, it is likely that ethanol production would continue at a comparative volume. Statistics compiled by the National Corn Growers Association support this claim (granted, corn growers would be in favor of continued biofuels mandates, but facts are facts).
Over the past five years, ethanol production volumes have exceeded RFS requirements by 14 percent on average, and in 2011, production volume exceeded the requirement by 11 percent. Why would the industry be producing more than necessary if there was no demand? Ethanol is also selling for $1 per gallon less than gasoline, even after an ethanol tax credit expired at the end of last year, so there is a clear financial incentive to blend ethanol with gasoline.
Additionally, U.S. ethanol exports run close to 10 percent of total production. In 2011, the United States exported 1.2 billion gallons of ethanol, some of which went to countries with no biofuel requirements at all, meaning that there is a huge foreign market for the fuel that does not rely on any sort of mandate or subsidy. And finally, ethanol is a powerful octane booster that can turn sub-octane gasoline into pump-quality fuel, a serious asset for energy companies.
More importantly, however, the benefits of corn ethanol go beyond the ethanol industry itself. As more advanced biofuel technologies come online, they can piggyback off the success of the ethanol industry, and in some cases they can adapt existing ethanol production facilities into advanced biofuel production facilities. Corn ethanol has paved the way for the rest of the industry, and by spurring the federal government into action it has stimulated an entire industry, which will one day play an important role in our national energy strategy.
Ethanol is not a perfect solution to a petroleum-based economy, and I’ll admit that it does seem to have certain limitations, but it certainly is playing an important role in our energy future. Furthermore, government support for the industry has proven vital in stimulating the initial ethanol boom, which has led to our current situation, in which the industry is no longer wholly reliant on the government to survive. Feel free to disagree, but if you do, please don’t continue to recycle a five-year-old Op-Ed.
– Tomi Maxted is a Senior Account Executive at Antenna Group. Follow Tomi on Twitter @TMaxted.