Schadenfreude and a they told you so moment – AP Investigation: Corn-Based Ethanol Causes Environment Damage

Anthony,
For us in the industry, Corn-based ethanol was never a primer for cellulosic. Our driver was that corn production had far out-stripped demand and we were searching for methods, outside of a disastrous and expensive government -owned reserve and other well intentioned but ill conceived policies, that would bring some demand elasticity to the marketplace. That was it—all of the other talking points, however true, were subservient to the overriding need to ramp up demand to meet the increases in production we knew were coming.
If you remember the mid-8o’s, most of the news coming from the Midwest was farm foreclosures, suicides, and good ole’ Willie Nelson starting FarmAid. (something that still embarrassingly continues) The government policies affecting agriculture — from USDA Sec. Earl Butz promoting fencerow to fencerow plantings to Jimmy Carter’s grain embargo against the USSR helped create the perfect storm that erupted over corn\soybean country. Those of us that survived knew that we needed less Willie and more demand for our products. It was an all-hands effort over 2 decades that culminated in the original Renewable Fuels Standards of 2005. Cargill, ADM and “Big Agriculture” seem to always get the credit (blame) for its passage but it was thousands and thousands of farmers, myself included, walking the halls of Congress, testifying before committees, working with USDA and the Dept. of Energy (including Dr. Wang at Argonne) that got it done.
Cellulosic, in my mind at least, was a means to an end. Cellulosic was and still is perceived by some to be “greener” than corn and captured support from those folks that otherwise would have been opposed to the RFS. When I started to lobby in DC during the mid-90’s, cost efficient cellulosic ethanol was thought to be 5-10 years away. Now, 20 years later, cost efficient cellulosic ethanol is still being promoted as being 5-10 years away. Strides have been made–and I am not totally up to speed on where we are today, but even when production hurdles are crossed, the complex logistic issues of getting such huge volumes of bulk material to processors are no where near to being solved. An overall minor point–but one of particular interest to producers–is that there is virtually no consistent price discovery mechanism for switchgrass, corn stover, wheat straw, or whatever bio-mass material will be used in a particular area.
To your point about GHG emissions, corn-based ethanol, originally, was never intended to be a GHG savior. We knew that corn helped with non-attainment areas such as LA, and when the widespread use of MTBE as an oxygenate was discovered to have negative effects on groundwater and be downright nasty and poisonous, we knew corn could step in and be a much better answer to that market. GHG emissions, in my view, is a nebulous and nefarious standard. I say that having watched my industry’s treatment before California’s CARB and the idiotic methodology of “scoring” the different sources of ethanol and what is a “preferred” renewable fuel. You and JC referred to Dr. Wang, and he is someone I trust, but even his effort is subject to assumptions that are fixed in a point in time and do not reflect what we know today.
Your final point in your reply illustrates exactly why I initiated my criticism to begin with. You and other corn critics continue to say that we are “burning food pointlessly”. Wake up Anthony! The commercial corn I produce is not “food”. It is a raw material that can be processed into multiple thousands of products some of which do enter our food supply. The picture at the top is a bad joke and perpetuates a myth. That ear of “corn” being pushed into a gas tank is not what I produce, and is not what is processed into ethanol. That is an ear of sweetcorn, a highly protected niche market of a specific variety of corn that does go directly into our food chain and represents a tiny fraction of the overall market of corn-based products. The commercial corn I produce cannot even go into a bag of Doritos (another specific variety) or corn tortillas in Mexico (yet another specific variety) Prior to the RFS, the rule of thumb for commercial corn usage was 2/3 animal feed, 1/5 exports (mostly for animal feed), and the balance for industrial uses including food processors. Since the RFS, we have increased the efficiency of the system by removing some starch (which some animals did not process well anyway) for ethanol and diversified the available feed inputs for animal producers. Far from “burning food”, we created a new product whilst maintaining and improving our obligations to the overall food chain.
During my time of leadership in 2 state farm organizations, I took great interest in the developing issue of “global warming”. I knew, as did many of my colleagues, that a disproportionate share of government regulation fighting CAGW would fall on agriculture with severely negative impacts. I worried about the impact a cap & trade scheme would have on my farm’s bottom line and I started to educate myself about the issue and try to understand, as best a non-scientist could, where the science stood and where it was leading us. I started with Gavin and RealClimate and immediately recognized the fingerprints of radical environmentalism (same type of language, same tactics, same religious zeal, same trashing of opponents) that I had encountered during my brief visits to Washington lobbying against egregious aspects of the Clean Water and Clean Air Act and lobbying for improvements in our transportation system (WRDA). Luckily, I came across WUWT and have become a dedicated reader and student. I greatly value this blog and your efforts.

A.Scott says (November 18, 2013 at 4:32 pm): “Sorry GARY – That is just a silly position.”
Sorry, A. Scott, but your blatherings are just the same old pious justifications of every con man looking for a taxpayer handout.
“You do know fossil fuel gets considerable subsidy as well right?”
You mean how government subsidizes “alternative energy” so we’ll use less fossil fuel?
“Government support is typical for those things the government believes has a public benefit or purpose.”
Politicians spend our money for one purpose and one purpose only: staying in power. Do you “deny” that a major goal of the ethanol mandate was appeasing the farm lobby, whatever “public good” argument the politicians used to justify it?
“With ethanol it was first, to replace a highly toxic pollutant, MTBE, with a clean alternative – ethanol.”
Um, the actual “toxicity” of MTBE is questionable. In any case its introduction was in response to a government requirement to “oxygenate” gasoline.
http://www.forbes.com/forbes/2004/1115/173.html
“Most important it is a renewable fuel – and one that reduces reliance on foreign oil and fossil fuel use.”
Great! Take away the mandates, grants, and subsidies, and let this “renewable” fuel compete with horrendously expensive and dwindling fossil fuel. Should be a slam dunk, right? 🙂
“No technology can survive without demand. The government stepped in and…”
bought votes with the money of the citizens it’s supposed to protect but instead exploits. There, fixed that for you.
“The subsidies, blender credits etc., are gone”
So is the money we spent on them. Wait, do we get our money back now? That’s gr– No? Bummer.
I also notice that, no doubt due to an honest oversight, you forgot to mention that the ethanol mandate is still in place (and growing), ethanol plants still get government grants, and they still get a premium price for their product:
http://www.forbes.com/sites/christopherhelman/2013/09/04/same-moonshine-different-name-welcome-to-the-age-of-cellulosic-ethanol/
“Ethanol also has the benefit to everyone of reducing gas prices at the pump…”
So why in @ur momisugly#$% does it need government help??? People should be trampling each other to buy this miracle fuel, right? Hey, it’s the greatest thing since sliced bread! 🙂

Sorry, A. Scott, but your blatherings are just the same old pious justifications of every con man looking for a taxpayer handout.

No point in arguing with someone who refuses to engage in intelligent discourse and debate. Who refuses to provide fact or data to support their positions and claims … and who, all too typically, resort to mindless ad hominem attack.
You go ahead and refute ANY of my points – with documented, supportable facts, and I’ll be happy to engage … I won’t hold my breath …

Gary,
I will object to your assertion that because something is mandated and/or subsidized disqualifies it from being wonderful. The wearing of seatbelts in a car is a wonderful thing, demonstrably saving lives and reducing injuries, but it is mandated by state law. Eating food is one of my favorite pastimes, and is a wonderful thing. As a nation however, we subsidize eating for close to 50 million of our citizens–not a statistic I’m very proud of by the way.
You are also mistaken that the ethanol mandate/giveaway was to “buy” the farm lobby. I am afraid you have it exactly backwards. The farm lobby convinced Congress to “buy” access to the fuel market through the use of the Ethanol Blender’s Credit (VEETC) that expired at the end of 2011 and was used to compensate the petroleum industry for the imposition of the mandate.

James D. Schielein says (November 18, 2013 at 11:25 pm): “I will object to your assertion that because something is mandated and/or subsidized disqualifies it from being wonderful. The wearing of seatbelts in a car is a wonderful thing, demonstrably saving lives and reducing injuries, but it is mandated by state law.”
Being mandatory doesn’t automatically “disqualify” something from being “wonderful”. It does raise suspicion and put the burden of proof on the advocates. Corn ethanol, however, is mandatory and subsidized. Note also that a satisfactory substitute (gasoline) was already in place. Furthermore, the health benefits of seat belts are unequivocal, whereas the many competing studies on gasohol are, at best, ambiguous. So please spare us the phony seat belt analogy, OK?
“Eating food is one of my favorite pastimes, and is a wonderful thing.”
Are you a Vegan? Politicians who can force us to wear seatbelts, burn gasohol, and buy health insurance we don’t want can conceivably force us to become Vegan “for our own good”. Mayor Bloomberg tried to tell his his constituents what size soda they could buy. We’re way beyond seat belts now, aren’t we?
“As a nation however, we subsidize eating for close to 50 million of our citizens–not a statistic I’m very proud of by the way.”
Neither am I. Much of poverty in America is the result of government policies “for our own good” (see minimum wage, AFDC, etc.)
‘You are also mistaken that the ethanol mandate/giveaway was to “buy” the farm lobby.’
Recognize this? “Our driver was that corn production had far out-stripped demand and we were searching for methods, outside of a disastrous and expensive government -owned reserve and other well intentioned but ill conceived policies, that would bring some demand elasticity to the marketplace. That was it—all of the other talking points, however true, were subservient to the overriding need to ramp up demand to meet the increases in production we knew were coming.”
Your own words, and thanks for being so candid. It really warms my heart to see someone so concerned for the welfare of agribusiness at the expense of the public.
“…and was used to compensate the petroleum industry for the imposition of the mandate.”
Did it ever occur to you that the taxpayers wouldn’t have to “compensate the petroleum industry” if the corn ethanol program hadn’t been imposed by the politicians “for our own good?”

Corn ethanol is “subsidized” … really? I’m sure you can support that claim correct?

A.Scott says (November 19, 2013 at 6:54 pm): “Gary — that is your answer? Your proof for your claim “corn ethanol is subsidized” is a story about a cellulosic ethanol plant?”
“Cellulosic” ethanol made from corn. Dang, are you really this dumb, or are you deliberately being obtuse? The supposed advantage of the Liberty plant is that it uses more of the corn plants already grown for starch-based ethanol. Oh, and BTW, corn “waste” is stilll corn. It makes sense to use corn stalks & leaves as feedstock to the cellulosic process, otherwise Liberty would have to gets its feedstock elsewhere, and the stalks are just lying around. Hope they leave something behind to plow back into the soil…
“Again I have to ask really? Oversupplied?…They actually produced 13.3 billion gallons in 2012, down from 13.93 billion gals in 2011.”
Do you even read what you write???
In addition to your own evidence of oversupply (thanks), the article itself mentions, “As the economics of ethanol have deteriorated, more than a dozen distillers have gone bankrupt.” I guess even a guaranteed market can become saturated.
Here’s another ethanol production article that includes imports and exports:
http://farmdocdaily.illinois.edu/2013/11/corn-used-ethanol-production.html
Excerpts: “Much has been made of the recent surge in domestic ethanol production and the re-opening of some ethanol plants.” See? Overcapacity.
“Based on weekly estimates from the EIA, ethanol production in the first two months of the 2013-14 corn marketing year of 2.226 billion gallons was about 7.5 percent larger than production during the first two months of the 2012-13 marketing year.” Yay!
“The increase, however, may not imply any substantial increase in domestic ethanol consumption, but instead may reflect changes in net trade and stock levels.” Boo!
“Importantly, estimated ethanol production during the first two months of the 2013-14 marketing year was 3.2 percent less than during the first two months of the 2011-12 marketing year.” Oh, bummer. Looks like 2011-2012 may have been “peak” ethanol, at least for awhile. 🙂
A. Scott also writes: “Contrary to your claim – I think its great the subsidies were ended.”
Except, as I’ve shown, they weren’t. Ethanol from corn “waste” is still subsidized. You really shouldn’t go around accusing people of “falsehoods” when they’re only pointing out the truth.
As for previous subsidies, so far we’ve been discussing the 2007 law here, but we should remember that subsidies for corn ethanol go all the way back to 1978.
http://www.gpreinc.com/Ethanol-Timeline
Dang, 35 years of taxpayer subsidies “for our own good”, and gasohol still can’t make it on its own! “Wonder fuel” indeed!
BTW, looking earlier in the timeline, I see my speculation upthread is probably correct, i.e. that a niche market for corn ethanol would probably survive the end of government support. That’s good news for “wonder fuel” enthusiasts. 🙂

James D. Schielein says (November 20, 2013 at 12:59 am): “Friedman talked many times about how one person’s greed is another’s self-interest.”
Milton & Rose Friedman, Free to Choose, 1980, Chapter 2: ‘We rail against “special interests” except when the “special interest” happens to be our own.’ That’s why we should view with the greatest suspicion anyone requesting special treatment “for the public good”.
“How else was I to act? I was elected by my peers to work for their interests.”
Ethically, one must do the job one was hired to do, or resign.
“And do you think me and my fellows were the only people roaming the halls of Congress promoting laws and government policies that was at the expense of the public?”
Of course not. You’ll be happy to know that I consider you guys no worse than any other lobbyist.
“There is another aspect to the ethanol story that goes way OT. That aspect gets into the history of the Farm Bill and governmental policies going back to 1938…”
I’m no expert, but I have some knowledge of the subject, thanks partly to Dr. Friedman. I know, for instance, that the primary beneficiaries of the measures supposedly helping “the little guy” were/are politicians and big business.
“I despised it, hated the dependency of my industry, and especially disliked having to go hat in hand to DC asking for support of a Farm Bill that –most of the time– violated the free market principles I fervently believe in.”
It’s probably just as well that I never had to sell my soul to keep my job, because I very well might have. 🙁
“The RFS changed the game. We both may not approve of a Fed mandate for ethanol–but it is a much lesser of two evils compared to Federal price supports–and is much, much cheaper for the taxpayer.”
Hard to prove, since we can’t perform a controlled experiment. All we do know is that the best choice–for the country as a whole–was “none of the above”.
“The recent rollback of the RFS mandate couldn’t come at a worse time.”
OK, let’s recap. To solve the problem of overproduction, the farm lobby got the government, at great expense to taxpayers and consumers, to subsidize and guarantee a market for this overproduction, thus encouraging even more production dependent on “unsustainable” government largesse, creating a situation 6 years later that may be even worse than the original. Is that about right?
Somewhere, Milton Friedman must be laughing his head off. I’d be laughing, too, except that I fear this “unsustainable” ethanol problem is a mini-version of US fiscal non-policy–and nobody on Earth can bail out the whole USA.
“Ethanol and the RFS has very little to do with a national energy policy (because the US really has never had one)…”
I would say, rather, that the US had/has many energy policies, most of which actually had little to do with energy, but everything to do with politics.
Thanks for your continuing candor.

Gary,
You catch on pretty quick :)—but now try to figure it out! When you have your solution, let me know and I’ll get it to [Stockholm] and if it works it’ll be you and not Gore/Obama flying across the water to pick up a prize.
“All we do know is that the best choice- for the country as a whole-was “none of the above”.
Nope, can’t go along with that. “none of the above” has never been an option—will never be an option. And is not in the best interest of our society. I have been very critical of Ag Policy for a lot of years, but ours has been a homerun compared to Europe and their CAP policy. Look up food costs as a % of income—and then look at the historical budget of Ag support costs Europe vs US.
You have to understand Gary, that the boom/bust cycles of agriculture stem partly from the fact that we are in high gear production mode year after year. Normal price signals that in any other industry would signal contraction has no effect for us–in fact- spurs production even more.
I am very proud of my industry. We feed more people with less land, and at less cost year over year. We have been the Malthusian’s nightmare for the past 2 centuries and I have no doubt we are up to the challenge for the next 200 years—and that is something fun to be around!

James D. Schielein says (November 20, 2013 at 7:23 am): “When you have your solution, let me know and I’ll get it to [Stockholm] and if it works it’ll be you and not Gore/Obama flying across the water to pick up a prize.”
Too late. Adam Smith and Milton Friedman already figured it out, and one of them got my Nobel Prize (Dang, missed it by that much!). 🙂
If you don’t already know the solution, I’ll give you a hint: politicians aren’t part of it. One advantage of the solution is that “the big guy”, the crony capitalist with access to politicians, no longer has an unfair advantage over “the little guy” who doesn’t.
BTW, there are few if any aspects of life in the US that wouldn’t also benefit from “the solution”, but in this thread we’ve been concentrating on agriculture.