Obama’s Alcohol Problem
Barack Obama doesn’t want to talk about corn ethanol. And it’s no wonder. In early August, his campaign Web site purged several sections of his energy plan that talked about corn ethanol. Before the purge, Obama was touting corn ethanol as a pivotal element in his push for “energy independence.” His site declared that Obama “will require 36 billion gallons of renewable fuels to be included in the fuel supply by 2022 and will increase that to at least 60 billion gallons of advanced biofuels like cellulosic ethanol by 2030.” The site also claims that less than 10 percent of new corn ethanol production is coming from farmerowned distilleries. To address this, “Obama will create a number of incentives for local communities to invest in their biofuels refineries.”
In early August, Obama released a new set of talking points on energy called “New Energy for America” that supplanted his old energy stance. All mentions of corn ethanol were removed. The word “ethanol” only appears once, in reference to the fact that “advances in biofuels, including cellulosic ethanol…offer tremendous potential to break our addiction to oil.”
Sen. Barack Obama, DIll. gestures
while he addresses the Governors” Ethanol
Coalition in Washington D.C., February 2006.
Obama’s campaign has made it clear that it does not want to talk about ethanol. In midJuly I submitted numerous emails to the campaign’s press office seeking comment on two questions regarding ethanol: 1. Given the big increases in food prices, why does Obama continue to support corn ethanol? 2. Would Obama be in favor of freezing the ethanol mandates? I also called the campaign’s press office and left voice mail. No response.
In midAugust, I resubmitted those same questions. And after two days, I got a response from a press aide named Moira Mack, saying “we are unable to grant your request” regarding the questions. She then referred me to the Web site with Obama’s “new” energy plan.
Try as he might, Obama cannot run away from his record on corn ethanol. In 2006, Obama and four other farmstate senators sent a letter to President Bush urging him to ignore calls to reduce the $0.54 pergallon tariff on Brazilian sugarcanebased ethanol. And during his first year in office, Obama twice used corporate jets belonging to the Illinoisbased agribusiness giant, Archer Daniels Midland Co., one of America’s biggest ethanol producers.
In January 2007, Obama and two other senators, Democrat Tom Harkin of Iowa and Republican Richard Lugar of Indiana, introduced legislation called the “American Fuels Act of 2007.” It aimed at promoting the use of ethanol and provided mandates for the use of more biodiesel. It also was to provide tax credits for the production of cellulosic ethanol. Touting the bill, Obama said, “To become truly energy independent, we need not only to increase domestic production of renewable fuels like ethanol, but also make sure that the pumps are widely available to distribute the fuel and that automakers produce more vehicles that can use the fuel….This legislation will greatly reduce our dependence on foreign oil and strengthen farm income by increasing both supply of and demand for biofuels.”
Obama’s national campaign cochair is Tom Daschle, the former Senate majority leader who has long been a key ethanol booster. He serves on the boards of three ethanol companies. He’s a cochair along with former Senator Bob Dole of Kansas of the 21st Century Agriculture Policy Project, a group that lists “expansion of the biofuels market” in the U.S. as one of its top priorities. Daschle has also allied himself with the Set America Free coalition, formed by proIraq war neoconservatives who are among America’s most boisterous – and misinformed – ethanol cheerleaders.
Recently Obama has reportedly said he favors “broadly revisiting” the ethanol mandates. What that means is anyone’s guess.
While the ethanol scam has not yet become a main issue of the 2008 presidential campaign, energy matters have. And thus far on ethanol, McCain has seized the advantage over Obama. Should Obama become president, the key question is how the Harvardeducated lawyer will deal with the growing count of indictments against ethanol. Will he dare buck the powerful agricultural interests in his home state of Illinois, which trails only Iowa and Nebraska in ethanol production capacity?
One of the Obama campaign’s main marketing messages is the line “Change we can believe in.” It remains to be seen if Obama can deliver on that claim when it comes to shutting down the ethanol scam.
The Corn Con
The ethanol scam is making America insane. That’s the only obvious conclusion after the Environmental Protection Agency denied a request from Texas governor Rick Perry in August to allow the Lone Star State to opt out of federal ethanol mandates for automobiles.
The Bush Administration apparently believes that the dangers of foreign oil are so great that nothing should derail the ethanol scam. Higher food prices? Worsening air quality? A massive dead zone in the Gulf of Mexico? None of those crises appear to concern the E.P.A., the agency that in theory is charged with protecting the country’s environmental resources.
In his statement of August 7 denying the Texas request, E.P.A. administrator Stephen L. Johnson said that the ethanol requirements are “strengthening our nation’s energy security and supporting American farming communities.” And that they are not causing “severe harm to the economy or the environment.”
Not causing “severe harm”? Huh? So moderate harm is OK? Indeed, in its own public statements the agency has already admitted that ethanol is worse for air quality than conventional gasoline.
Readers should recall that America’s ethanol insanity is the result of bipartisan corruption. While Republicans in the Bush Administration are enforcing the mandates laid out by Congress, Democrats on Capitol Hill, particularly those from farm states like Iowa and Illinois, are working hard to avoid any discussion of the ethanol scam before the November elections. And this bipartisan insanity continues, even though it is apparent that ethanol is a multifaceted disaster. In the words of Frank O’Donnell, president of Washingtonbased Clean Air Watch, “Cornbased ethanol isn’t just raising food prices. It is causing more smog, adding to global warming, and causing more water pollution.”
Clean Air Watch is one of several environmental groups now opposing the ethanol mandates. Friends of the Earth, the Environmental Working Group, and the Clean Air Task Force have all joined the opposition.
All of this matters, because energy is emerging as a key theme of the 2008 elections. Their positions on ethanol are a major difference between John McCain and Barack Obama.
As is his wont, McCain has staked positions on both sides of the ethanol fence. For years he was an ardent ethanol opponent. In 2003 McCain said, “Plain and simple, the ethanol program is highway robbery perpetrated on the American public by Congress.” McCain’s attacks on ethanol are still easily accessed via his Senate Web site. Then in 2006 he switched sides, declaring that ethanol should be part of our energy mix. This year, McCain switched back to his original antiethanol position. In May, he and 11 other Senate Republicans cosponsored a bill authored by Texas senator Kay Bailey Hutchison to freeze the ethanol mandates.
On his Web site, McCain points to the recent increases in food prices, saying they are “directly related to transportation cost increases and the ethanol mandate.”
In contrast, Obama has consistently been a corn ethanol booster. And that support continues even as the news on ethanol gallops from bad to worse. While the ethanol issue will not loom as large as the war and the economy in the November election, it remains one of the most divisive – and costly – agricultural programs in modern American history.
Of the mandates’ many deleterious impacts, perhaps the most pernicious is their effect on food prices. At least 10 reports show that ethanol production is driving up food prices.
o In May 2007, the Center for Agricultural and Rural Development at Iowa State University released a report saying the ethanol mandates have increased the food bill for every American by about $47 per year due to grain price increases for corn, soybeans, wheat, and others. The Iowa State researchers concluded that American consumers face a “total cost of ethanol of about $14 billion.” And that figure does not include the cost of federal subsidies to corn growers or the $0.51 per gallon tax credit to ethanol producers.
o In September 2007, Corinne Alexander and Chris Hurt, agricultural economists at Purdue University, found that “about twothirds of the increase” in food price increases from 2005 to 2007 was “related to biofuels.” The report also says, “Based on expected 2007 farm level crop prices, that additional food cost is estimated to be $22 billion for U.S. consumers compared to farm prices for the crops produced in 2005. A rough estimate is that about $15 billion of this increase is related to the recent surge in demand to use crops for fuel.”
o In March 2008, a report commissioned by the Coalition for Balanced Food and Fuel Policy a coalition based in Washington, D.C. of eight meat, dairy, and egg producers’ associations, estimated the total cost of the U.S. biofuels mandates at some $32.8 billion this year, or about $108 for every American citizen.
o An April 8 internal report by the World Bank found that grain prices increased by 140 percent between January 2002 and February 2008.
“This increase was caused by a confluence of factors but the most important was the large increase in biofuels production in the U.S. and E.U. Without the increase in biofuels, global wheat and maize [corn] stocks would not have declined appreciably and price increases due to other factors would have been moderate.” Robert Zoellick, president of the Bank, acknowledged those facts, saying that biofuels are “no doubt a significant contributor” to high food costs. And he said that “it is clearly the case that programs in Europe and the United States that have increased biofuel production have contributed to the added demand for food.”
o In May the Congressional Research Service blamed recent increases in global food prices on two factors: increased grain demand for meat production, and the biofuels mandates. The agency said that the recent “rapid, ‘permanent’ increase in corn demand has directly sparked substantially higher corn prices to bid available supplies away from other uses – primarily livestock feed. Higher corn prices, in turn, have forced soybean, wheat, and other grain prices higher in a bidding war for available crop land.”
o Also in May, Mark W. Rosegrant, of the International Food Policy Research Institute, testified before the U.S. Senate on biofuels and grain prices. Rosegrant, said that the ethanol scam has caused the price of corn to increase by 29 percent, rice to increase by 21 percent, and wheat by 22 percent. Rosegrant estimated that if the global biofuels mandates were eliminated altogether, corn prices would drop by 20 percent, while sugar and wheat prices would drop by 11 percent and 8 percent, respectively, by 2010. Rosegrant said, “If the current biofuel expansion continues, calorie availability in developing countries is expected to grow more slowly and the number of malnourished children is projected to increase.” He continued, “It is therefore important to find ways to keep biofuels from worsening the foodprice crisis. In the short run, removal of ethanol blending mandates and subsidies and ethanol import tariffs, and in the United States – together with removal of policies in Europe promoting biofuels – would contribute to lower food prices.”
o In midJune, Kraft Foods Global issued a report by Keith Collins, the former chief economist for the U.S. Department of Agriculture. In his 34page analysis of grain prices, Collins concluded the ethanol scam “could account for 25 to 50 percent of the corn price increase expected from 200607 to 200809.”
o In late June, Oxfam, the nonprofit group that fights global hunger, released a report declaring that biofuels are responsible for about 30 percent of the recent increases in global food prices, and are pushing 30 million people into poverty. Rob Bailey, Oxfam’s biofuel policy adviser, summarized the report: “Rich countries’ demands for more biofuels in their transport fuels are causing spiraling production and food inflation.”
o In early July, Britain’s Renewable Fuels Agency concluded, “Biofuels contribute to rising food prices that adversely affect the poorest.” The report, known as the Gallagher Review, also said that demand for “[biofuels] production must avoid agricultural land that would otherwise be used for food production. This is because the displacement of existing agricultural production, due to biofuel demand, is accelerating landuse change and, if left unchecked, will reduce biodiversity and may even cause greenhouse gas emissions rather than savings. The introduction of biofuels should be significantly slowed.”
o On July 16, the Organization for Economic Cooperation and Development O.E.C.D. issued its report on biofuels that concluded: “Further development and expansion of the biofuels sector will contribute to higher food prices over the medium term and to food insecurity for the most vulnerable population groups in developing countries.”
Increased corn consumption by the ethanol distilleries is showing up as price hikes in American supermarkets. In midJuly, Consumer Price Index data showed that over the previous three months, food prices increased at an annualized 8 percent. The price of cereals and bakery products has increased by 10.4 percent over the past year. And the U.S. Department of Agriculture recently estimated that the price of eggs could jump by 10 percent this year. All of this feeds inflation, showing its biggest annual increase since 1991.
Not only do Americans pay more for their food, thanks to the ethanol insanity, but it’s clear that corn ethanol is worse for the environment than oilbased motor fuel. “The ‘green’ in corn ethanol is gone,” says David Swenson, an Iowa State University economist who specializes in rural economies. Whether the issue is water pollution, greenhouse gases, or water use, ethanol has a number of negative effects.
In midJuly, researchers from the National Oceanic and Atmospheric Administration, Louisiana State University, and the Louisiana Universities Marine Consortium reported that the Gulf of Mexico’s “dead zone,” a patch of algaefilled water with oxygen levels low enough to kill marine life, would reach record proportions this summer. The hypoxic zone will likely expand to more than 8,800 square miles, about the size of New Jersey. Since 1990, the dead zone had averaged 4,800 square miles. One key reason for the huge expansion? Ethanol production and the recent flooding in the Midwest. Planting more corn to meet the soaring demand from ethanol distilleries has meant larger applications of fertilizers like nitrogen and phosphorus, and those nutrients are washing downstream.
Simon Donner of the University of British Columbia and Christopher J. Kucharik of the University of Wisconsin addressed the dead zone issue in a January 2008 article in the Proceedings of the National Academy of Sciences. Their report discusses the water pollution impacts of increased corn ethanol production. The O.E.C.D. authors summarized Donner and Kucharik’s findings: “Meeting the 2022 ethanol targets with homegrown feedstock may increase nitrogen loads carried by the Mississippi by 10 to 34 percent. This risks [rendering] irreversible the dead zone in the Gulf of Mexico.”
Kucharik told me in a recent phone interview that a major problem for corn ethanol producers is that only about “40 to 50 percent of the nitrogen that’s applied [to the fields] is actually taken up by the plant.” Much of the remainder then washes downstream. He said that with the big corn crop this year and the flooding in the Midwest, “there are going to be tradeoffs in terms of water quality and fisheries.” And in this case, he said, the tradeoffs are large “hypoxic dead zones.”
Perhaps the most stunning aspect of the ethanol insanity is that the E.P.A., charged with protecting the environment in the U.S., has stated clearly on at least two occasions that increasing the amount of ethanol in America’s gasoline supply will hurt air quality, because it will lead to major increases in the release of two of the worst air pollutants: volatile organic compounds V.O.C.s and nitrogen oxides NOx.
In a presentation to environmental groups on the effects of the ethanol mandates in October 2006, E.P.A. officials were clear that the fuel additive was going to harm air quality. The 48page PowerPoint presentation includes a slide titled “Emissions Impact of EtOH [Ethanol] Varies Widely.” The first item on the slide is for NOx. Immediately below the NOx heading is this bullet point: “Relatively straightforward: more ethanol, more NOx.”
A few slides later, the agency states that while nationwide increases of V.O.C.s and NOx are “less than 2 percent, the impacts are higher in those areas where ethanol use is projected to increase the most.” The agency also says that the air emissions from ethanol production facilities would be “on the same order of magnitude as that of ethanol use.” In other words, the dozens of ethanol distilleries that have sprung up around the country are contributing to worsening air quality, but the agency doesn’t know by how much.
Frank O’Donnell, president of Clean Air Watch, a nonprofit based in Washington, D.C. that focuses on air quality issues, said that during the 2006 E.P.A. meeting, agency staffers “told us that NOx and V.O.C.s would be higher.” And he adds, “They said, ‘Don’t blame us for this, Congress mandated it.’” As for the distilleries’ impacts, O’Donnell says that the agency “admitted that their air modeling was unsophisticated and they couldn’t account for corollary impacts on air quality from production of ethanol at the distilleries. They’d made no real effort to account for any of that.”
Other E.P.A. documents show that the agency understood the negative effects ethanol would have on air quality. On April 10, 2007, a press release announced the Renewable Fuel Standard – the federal program mandated by Congress when it passed the Energy Policy Act of 2005 requiring U.S. refiners to blend at least 7.5 billion gallons of ethanol per year into America’s motor fuel supply by 2012. In it, administrator Stephen L. Johnson declared that the use of more ethanol “offers the American people a hat trick – it protects the environment, strengthens our energy security, and supports America’s farmers.”
But on that same day, Johnson’s agency issued a fact sheet declaring that the ethanol mandates will mean “an increase in total emissions of volatile organic compounds and nitrogen oxides V.O.C.s + NOx [of] between 41,000 and 83,000 tons.” It goes on: “Areas that experience a substantial increase in ethanol may see an increase in V.O.C. emissions between 4 and 5 percent and an increase in NOx emissions between 6 and 7 percent from gasoline powered vehicles and equipment.”
Shortly after the agency released that data last year I asked Jennifer Wood, an E.P.A. spokesperson, about the expected pollutant increases. She insisted that they were “very minimal increases” and that the agency has other “tools under the Clean Air Act to reduce NOx.”
Wood’s claim that the ethanolrelated increases in pollution are “minimal” leaves clean air advocates like William Becker of the National Association of Clean Air Agencies gasping. He said the E.P.A. is “scoffing at a 4 to 7 percent increase in air emissions at a time when agencies across the country would do anything to achieve that kind of a reduction in V.O.C.s and NOx.” Becker’s group represents air pollution control authorities from 49 states and several territories, as well as local agencies from 165 metro areas around the U.S. He said the 4 to 7 percent increases admitted by the E.P.A. are “a significant amount of emissions in any location in this country. And we can’t just willynilly be giving it away, particularly when states are struggling to meet current ozone standards.”
The negative health effects of ethanolblended gasoline have placed the E.P.A. in the odd position of enforcing rules that run directly counter to its stated goals. On its Web site, the agency says, “Reducing emissions of NOx is a crucial component of E.P.A.’s strategy for cleaner air.” And the site makes clear why it wants to reduce NOx emissions: NOx can cause groundlevel ozone, acid rain, water pollution, and increases in particulate matter, unleash toxic chemicals, reduce visibility, and cause climate change. The agency also clearly explains that V.O.C.s lead to the creation of groundlevel ozone, one of the most dangerous urban pollutants. Ozone is created when NOx and V.O.C.s are mixed in the presence of sunlight.
The EPA’s Web site gives this primer on ozone: Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation, and congestion. It can worsen bronchitis, emphysema, and asthma. Groundlevel ozone can also reduce lung function and inflame the linings of the lungs. Repeated exposure may permanently scar lung tissue. Groundlevel ozone also damages vegetation and ecosystems. In the United States alone, ozone is responsible for an estimated $500 million in reduced crop production each year.
It’s not just the E.P.A. Other regulators and scientists are also finding that ethanol worsens air quality.
California regulators and politicians have been jousting with the E.P.A. over ethanol for nearly a decade due to air quality concerns. Back in March 1999, the state banned the use of another type of gasoline oxygenate, methyl tertiary butyl ether M.T.B.E. due to worries about possible groundwater contamination. About that same time, Governor Gray Davis formally asked the E.P.A. for a waiver from the federal mandate requiring ethanol be added to the state’s gasoline, concerned that it would worsen air quality. But in 2001 the E.P.A. denied the state’s request. Ever since, the state has battled the agency over the ethanol requirement.
In 2004, the California Air Resources Board released a study finding that gasoline containing ethanol caused V.O.C. emissions to increase by 45 percent, compared to gasoline with no oxygenates. In mid2006, the South Coast Air Quality Management District, the agency that handles air quality issues for some 15 million people living in or near Los Angeles County, determined that gasoline containing 5.7 percent ethanol may add as much as 70 tons of V.O.C.s per day into the state’s air. And that’s on a day when the temperature is just 83 degrees. When it’s closer to 100 degrees, the evaporative emissions could be as much as 118 tons of V.O.C.s per day. In a meeting held to discuss the findings, one official from the air district noted that a pollutant increase of that size is gargantuan, particularly since air quality regulators in the Los Angeles region “can become employee of the month by coming up with a way of reducing emissions by onetenth of a ton per day.”
Donald Stedman, a chemistry professor at the University of Denver, has been studying ethanol’s effects on air quality for 17 years. He believes that the E.P.A.’s estimates of the potential increases in V.O.C.s and NOx are too low. Further, Stedman says that any increase in V.O.C.s will hurt air quality. “You increase V.O.C.s, you increase ozone. Period. For everybody, everywhere,” he told me. “It’s a disaster. And I think it [increased use of ethanol in gasoline] will raise V.O.C. emission more than the 5 to 6 percent that the E.P.A. is admitting.”
Stedman’s studies on Denver’s air quality show a correlation between increasing ethanol use and worsening air quality. He found that as ethanol gained market share in the Denver area, ozone levels rose. His explanation: the increased vapor pressure in ethanolblended gasoline allowed more V.O.C.s to get into the air, and those V.O.C.s turned into ozone. The increasingly stringent federal air quality rules should be reducing the amount of ozone in Denver’s air and elsewhere, Stedman told me in early August. “But ozone numbers aren’t going down,” he said. “Why? Because we are adding ethanol to our motor fuel, which is increasing the amount of hydrocarbons in the air and thus increasing ozone.”
The federal mandates on ethanol have left advocates like Becker, of the National Association of Clean Air Agencies, exasperated. He said that Congress “decided to mandate ethanol without first analyzing the air quality impacts,” and that Congress and the E.P.A. have a “‘ready, fire, aim’ attitude toward ethanol” that has resulted in worsening air quality in cities around the country. So what is the bottom line on ethanol? For Becker, the conclusion is crystal clear: “More ethanol means more air pollution. Period.”
Given the problems associated with ethanol, perhaps it’s not surprising that politicians who have backed the ethanol scam are starting to scurry the other way. What is surprising is that Barack Obama, the darling of the Greens/Left, is the one doing the scurrying.