The real cost of ethanol

Across the farmlands of America, there are acres upon acres of corn. Corn planted over roads that used to subdivide cropland. Corn planted on ground once considered too wet for cultivation. Corn planted on ground typically too dry to produce dependable yields but are profitable today because of innovations in drought-tolerant seeds developed by companies such as DuPont Pioneer.

There's now corn planted on 1.3 million acres that until recently was reserved for conservation – an area larger than all of Delaware. Last year, American farmers planted 95 million acres of corn, 10 million acres more than in 2008.

Fourteen percent of Delaware's total land base, 180,000 acres, was last year planted in corn.

This phenomenon is being driven by increased demand for corn-based ethanol, which now consumes more than 40-percent of corn grown nationwide. Researchers at South Dakota State University say it has spawned the most important change in land use in decades.

As envisioned by the 2007 Energy Independence and Security Act – championed and signed into law by President George W. Bush and embraced by candidate and now President Barack Obama – ethanol was supposed to lower gas prices for consumers, reduce America's dependence on foreign oil and improve the environment by helping reduce levels of carbon dioxide – a greenhouse gas – in the atmosphere.

The ethanol industry, and its strong lobbying arm in Washington, say most of those goals have been achieved.

But the growth of ethanol, an alcohol-based additive that makes up 10-percent of each gallon of gas, has had unintended consequences:

• We pay more for foods like bread, snacks and chicken. Between 2007 and 2008, ethanol drove a 10 to 15 percent increase in food prices, according to a Congressional Budget Office report – partly because corn once used for livestock feed is now used to make fuel.

• Our vehicles get fewer miles per gallon of gasoline now that ethanol is included, and we're paying more for that fuel – about 13 cents per gallon because of the lost efficiency.

• Boat engines and lawn care equipment go kaput from engines that weren't designed for fuels that include alcohol, a natural byproduct of the sugars and starches in corn.

• Fiberglass marine fuel tanks in older vessels can't stand up to the alcohol-based fuel additive, causing dangerous leaks.

• Iconic species like monarch butterflies, native bees, pheasants and other grassland birds are declining from lost habitat as more land is converted to corn production.

• Corn planted in marginal habitats threatens one of the most altered ecosystems in the world – the temperate grasslands of the Great Plains, which naturally absorb carbon from the atmosphere.

While corn stalks do absorb carbon when they're green, they do not sop up the greenhouse gases when stalks turn brown in fall, or when they're plowed under during winter and early spring.

In Delaware, the poultry and petroleum industries have been hammered by the ethanol mandate.

Because corn and soybeans are more expensive thanks to the biofuels industry, the cost of livestock feed has gone up.

It creates "a very uneven playing field for chicken companies to compete for necessary feedstuffs," said Tom Super, a spokesman for the National Chicken Council, the poultry industry trade group based in Washington, D.C.

The bottom line: over $44 billion nationally in higher actual chicken feed costs, Super said.

"Adding together the higher cumulative feed costs for chicken, turkey, table eggs and hogs, the total is almost $100 billion in additional feed costs," he said. "Also higher feed costs for other agricultural animal producers, such as dairy and beef cattle, would add measurably to the $100 billion cost."

At least a dozen chicken companies closed, filed for bankruptcy or were sold to another company between 2007 and 2013 because of the higher costs of feed, Super said.

"The chicken industry is only one drought away from another economic crisis, while the mandate continues," he said.

Delaware City's refinery also has felt the pain. It and other refiners are required by federal rules to blend a percentage of their products with renewables like corn-based ethanol. If they don't meet the benchmark, they have to buy renewable credits. In the first quarter of 2014 PBF Energy Inc., which owns the refinery, spent $30 million to buy the credits.

PBF is seeking a partial waiver from the proposed 2014 Renewable Fuels Standards being developed by the federal Environmental Protection Agency.

The real cost

The National Corn Growers Association and a consortium of groups called GrowthEnergy, which describes itself as "America's Ethanol Supporters," argue that ethanol has been a stunning success.

The corn growers say corn-based ethanol has led to more economic independence and energy security and has had a $42.4 billion economic impact. And much of the economic benefit, according to a 2011 report by the Renewable Fuel Association, was in rural communities. Corn-based ethanol offset the need to import 485 million barrels of petroleum, the report says.

GrowthEnergy contends that a series of myths about ethanol have been perpetuated, including loss of acreage and higher food prices. The organization counters the loss of land argument by explaining that once U.S. ramped up domestic ethanol production, there was less deforestation in the Amazon.

As for higher food costs, it maintains that increased transportation costs, speculation on Wall Street and higher costs of manufacturing and packaging had more impact than ethanol production.

For the decade prior to the ethanol mandate in 2006, corn prices stayed around $2 a bushel – going up or down depending on droughts, rainfall and yields by bushel harvested per acre. Corn sold for $2.28 per bushel in 2006. Last year, the average price nationwide was $6.15.

Ed Kee, Delaware's secretary of agriculture, said farmers need the higher prices to make a profit. Even at $4 a bushel, corn is not profitable for farmers, he said.

On non-irrigated land it costs the farmer about $600 to grow an acre of corn. Last year, a farmer in Delaware with an average yield of corn made a profit.

As long as the corn crop is strong in the Midwest, there is enough corn to meet the needs of both ethanol and feed, he said. But in years like 2011 and 2012, when the harvest was off in the Heartland, it had a huge impact on feed prices that hurt poultry producers, he said.

"The story is a series of what-if scenarios," Kee said. "A lot of people say just let the market figure it out."

Jim Newcomb Jr., a Farm Credit loan officer based in Denton, Md., believes "farmers can feed and power the country."

But whether corn-based ethanol is the best answer, Newcomb isn't sure. In Europe, he said, they use canola oil – and get better efficiency.

"Politics is involved" in America, he noted.

When experts and interest groups parse out the costs and benefits of ethanol versus conventional gasoline, Newcomb wishes they would make reasonable comparisons.

No one factors in the military costs of securing petroleum around the globe when they look at the cost of conventional gasoline.

"The real cost of oil isn't in our cost of fuel at the pump," he said.

Nor is the real cost of growing corn for ethanol. Taxpayers for Common Sense, a watch dog organization that tracks Congressional Spending, concluded that ethanol is also supported by an array of tax credit, grant and loan programs – benefits that total in the billions of dollars over the past 30 years.

And that doesn't include routine, federal subsidies for crop insurance or help with losses when there are farming-related disasters.

Other possibilities

There are promising biofuel possibilities beyond ears of corn.

In a field at Michigan State University's W.K. Kellogg Biological Station at Hickory Corners, researchers study sample plots in search of corn-based ethanol alternatives. The end game is a cellulosic biofuel that increases wildlife habitat and sequesters carbon on the soils while producing ethanol from a product that isn't used for food.

In 2022, the Energy Independence Security Act requires that 16 billion of the 36 billion gallons of biofuels created come from cellulosic fibers. Among the most promising new test plots are grasses like the Asian plant Miscanthus and natives such as switchgrass and prairie grasses.

In Delaware, scientists are looking at seashore mallow, a plant that tolerates salty soils, as a possible cellulosic biofuel feedstock.

And DuPont Co. researchers also are looking at cellulosic biofuels from corn stover, the leaves, stalks and husks left after ears of corn are harvested.

"As a vehicle fuel, cellulosic ethanol reduces greenhouse gas emissions by as much as 86 percent relative to gasoline," said Wendy Rosen, a DuPont spokeswoman. "The refining of corn stover into ethanol also creates a byproduct, lignin, a renewable solid fuel that can displace coal in power plants, thus further reducing carbon dioxide emissions."

Rosen said the current policy "has spurred hundreds of millions of dollars in private investment of advanced biofuels and is expediting the transition from a petroleum-based to a bio-based global economy. The development of this new industry has happened quite fast, but that remarkable innovation is under threat if the U.S. Environmental Protection Agency changes its critical policy."

Ethanol industry lobbyists are pushing for ears of corn to make up the majority of feed stock for future biofuels – eliminating the promise of different grasses and even corn stalks and corn leaves. One proposal would cut by 20 percent the amount of biofuel made from grasses and corn stover in standards now in development.

Still, it appears ethanol will to play a role in America's energy future.

The EPA is scheduled to update its Renewable Fuel Standards in September, and one of the key options under consideration is increasing the content of ethanol blended with gasoline to 15 percent from the current 10 percent. The standards update has been delayed twice.

In Texas, James Griffin, director of the Mosbacher Institute at Texas A&M University, questions the effectiveness of corn-based ethanol, noting that the big picture environmental gain is small when examining costs and benefits.

In 2011, use of ethanol saved about 25.2 metric tons of CO2 emissions from going into the atmosphere. That equals about 0.42 percent of total CO2 emissions in the United States and 0.08 percent globally.

"The realized benefits of our ethanol policy has been disappointingly small," he said.

Griffin is urging a repeal of the ethanol mandates in the Energy Independence and Security Act.

Raising concerns

Rep. John Carney, D-Del., was among a group of Congressmen who wrote to EPA in 2012 after a drought in the Midwest caused shortages and higher corn prices. Among Carney's concerns: the impact on the poultry industry, on food supplies and on jobs.

This year, he wrote another letter to EPA raising concerns about the impact of the renewable fuel standards set on small refineries with no or limited abilities to blend gasoline with ethanol.

Carney said the standard sets "an important goal, which is to encourage businesses to develop cleaner-burning fuels and to make America less dependent on oil produced by countries that aren't our friends. But there are certainly challenges associated with it."

He said delays in the updates to the standards are a problem because the economy, weather and other events can have an impact on the market for renewable fuels.

"The problem is, EPA hasn't been doing its job," Carney said.

While the debate on America's energy future moves on, owners of older boats curse the ethanol in fuel used to guide their watercraft up and down Delaware's rivers, bays and ocean shores.

"It destroys everything," said marine mechanic Chris Prince, who works out of Phillips Marine in Lewes.

Adds Chris McCormick, who works with Prince: "It makes your engine run hotter. It makes your engine run leaner. And now they are talking about E-15."

That would be an ethanol fuel blend of up to 15 percent rather than the current 10 percent.

Older marine engines built before federal mandates stall out because ethanol causes water to build up in the fuel. And fiberglass fuel tanks in older boats disintegrate with the addition of ethanol, McCormick said.

The butterfly effect

Then there are monarch butterflies and other species struggling because milkweed, which often lined the edges of fields before the ethanol phenomenon, is disappearing.

Earlier this summer, the U.S. Department of Agriculture Natural Resources Conservation Service sent out an advisory asking people to consider planting milkweed in their backyards – a move that would create habitat for monarch butterflies. The butterflies – orange and black – spend the winter in Mexico but their population has been in a sharp decline.

"The decline is happening up here," said Doug Tallamy, a professor of entomology and wildlife ecology at the University of Delaware. "We're losing the Monarch up here" because of "mono cropping of corn and soybeans and conversion of former federal Conservation Reserve lands to ethanol corn."

Last summer, Tallamy said he saw just two monarchs on his trips to the middle part of the county – the place that was the heartland for monarch habitat. Loss of milkweed and a drought in Texas were part of the equation. The estimate, Tallamy said, is 3.6 percent of the monarch population is left. There are still monarchs and milkweed in Delaware and the East Coast. But, said Tallamy, "the East Coast is not going to be able to rebuild that population."

It's got to happen in the Midwest, he said.

"You have to see it to believe it," said Orley "Chip" Taylor, a professor at the University of Kansas and director of Monarch Watch. From Minnesota to Iowa you can drive for miles without seeing any milkweed – the host plant for the iconic monarch butterfly. "The small towns are going to be the refuges for wildlife."

Taylor, the director of Monarch Watch, hasn't lost hope for the monarch but he said it will take a big response to help the population recover.

It isn't just monarchs at risk.

About 4,000 species of native bees – the insects that pollinate many of the plants across the Midwest – are also at risk as habitat disappears. Milkweed is important to many of these bees, too. Bees don't pollinate milkweed. Instead, they feast on the nectar.

Milkweed was once common in the prairies of the central United States. But farming and use of crops resistant to herbicides have led to a decline. Of the 30 species of milkweed in the region, five are listed as federal or state threatened or endangered species, according to the Xerces Society for Invertebrate Conservation.

Sam Drodge, head of the Bee Inventory and Monitoring Lab at Patuxent Wildlife Research Center in Maryland, said that milkweed "is like a smorgasbord" for many species of bees, wasps and butterflies.

If a landowner clears a field to the edges, those wild, grassy strips of habitat are gone and "then the diversity is gone," he said.

"If you have high quality habitat, you have bees," he said. "That habitat is disappearing."

Contact Molly Murray at 463-3334 or mmurray@delawareonline.com

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