Monday, March 16, 2020

Dr. Silvia Secchi wrote most of this; I added a dash of bitters here and there. The post expands on the interview Dr. Secchi gave to National Public Radio’s All Things Considered, which can be found here:

Silvia Secchi

The Iowa congressional delegation and many agricultural economists have been arguing over the small refineries exemption, which reduces the amount of ethanol that gets blended into our gasoline, and its impacts on the industry and corn farmers. In the meantime, there is a push from ethanol proponents to increase the blend rate from 10 to 15%.

Much less discussion has been devoted to the long term viability of ethanol as an energy source in the face of the recent closure of the POET plant in Emmetsburg, the last of the commercial-size cellulosic ethanol plants, and the overall lack of progress in the commercialization of cellulosic biofuels (despite the massive amounts of R&D subsidies and grants being deployed by the federal government). If you don’t know, almost all fuel ethanol is made from the corn grain; ethanol derived from the rest of the plant (stalks and cobs, primarily) is cellulosic. The latter is much more challenging to produce for a variety of reasons that we won’t get into here.

The EPA has had to waive the mandate on cellulosic ethanol every year since we have had one in place. Predictions about production volumes have not been borne out due to a variety of technological and economic challenges. This year, we were supposed to produce 10.5 billion gallons, and the mandate has been revised down to 0.5 billion.

While cellulosic ethanol has failed to deliver in the 13 years since the second Renewable Fuel Standard (RFS) was enacted, the technology behind electric cars has not. In the same period, the broader US energy landscape has also changed. Many argued that ethanol would help the US become energy independent, but we are on the verge of achieving energy independence – largely because of fracking – without cellulosic ethanol.

In the run up to the 2007 energy bill, which included the RFS, one of the arguments to promote corn ethanol production was that it is a bridge technology towards more efficient and environmentally friendly biofuels. I do not need to remind readers of this blog about how leaky corn production is and the water quality problems it causes, but perhaps I should remind you that corn production is a very energy-intensive process, and often that energy is fossil-fuel based, from applying artificial fertilizer, whose production relies heavily on natural gas (thanks Haber-Bosch), to planting and drying corn. The climate change benefits from using corn ethanol instead of gasoline are not very high.

By the way, how do you feel when climate change deniers tout ethanol as a solution to climate change? Dr. Secchi used to get dizzy trying to understand the (lack of) logic in ag policy discussions, so she had to swear that off.

Gas Pump

In short, corn ethanol does little to help us address climate change and causes water pollution. We were promoting its production on a limited basis because its use as an oxygenate helps gasoline burn cleaner, while we awaited the day we could guzzle cellulosic from the holy grail. We held out hope that cellulosic biofuels, which can be produced from not only crop residues but also grasses, trees and timber production byproducts, would require lower energy inputs and be better for both air and water. This is why the RFS has a ceiling for corn production (15 billion gallons) and a floor for cellulosic ethanol (16 billion gallons in 2022).

As cellulosic ethanol still tries to find the highway entrance ramp, electric cars are pulling into the passing lane, poised to blow by their gasoline-fueled counterparts.  And while China is saying ‘no thanks’ to tariff-tainted crops, we need to find someone or something willing to scarf up a bunch of corn. To top it off, the price of crude oil is plunging with the Corona-driven demand reduction.

Corn usage graph

So as demand for corn goes up in flames, we argue over the small potatoes of small refinery exemptions and blend walls while continuing to zealously worship our golden idol, Zea mays.

The policy conversations on this topic are incredibly myopic. The asked-for expansion of the corn ethanol mandate will buzz taxpayers in many ways. Right now, we use about 40% of our corn production for ethanol. Yes, we do know that about 1/3 of that corn ends up as feed in the form of dried distiller's grain with solubles (DDGS). Has anyone checked if the livestock market has the capacity to absorb a large increase in DDGS production?  High-DDGS diets can cause health and growth problems in both hogs and cattle.

Even if the feed market can absorb more DDGS, long lasting hangovers for the public are in store if we require an increase in the amount of corn that is used for ethanol. Higher corn prices can drive up the price of land and drive down conservation acres, as well as increase the tax-payer borne burden of crop insurance.

So yes, climate change deniers are having a ‘hair of the dog’ moment by touting ethanol as a solution to climate change. We will bet you a beer at George’s (Dr. Jones’ favorite watering hole) that the industry will use the argument again to promote an increase of the blend wall. Since the passing of 2007 Energy Bill, it has become more apparent that we need to urgently address climate change.  Mandating the increased use of an already-fading technology such as corn ethanol is a dubious strategy to reduce greenhouse gas emissions.  And not only that, it further pigeon-holes our farmers into a monoculture system that degrades both our water and the resilience of our rural areas, while doing nothing to help aspiring new farmers enter the profession.

More broadly, the US needs to have a serious discussion about its long-term energy, food and environmental trajectories, and how taxpayer money, regulations and other policies should be implemented to promote a more resilient and sustainable future. Drunkenly asking for a refill without considering the consequences for the rural economy, the overall energy system and the environment is self-serving and not much else. Iowa and America deserve better from an industry that disingenuously dismisses science and rural decline with the one hand, while opportunistically exploiting those things with the other.

It’s painfully obvious today that economic recovery from the coronavirus epidemic will require a large fiscal stimulus package. We should rise up to the challenge and spend taxpayers’ money to make our agriculture and energy system more resilient. A sustainable American agriculture able to support healthy rural communities will have to combine diversification, local foods, on-farm value added, and carbon farming with incentives for young farmers, serious regulation of pollution, and enforcement and enactment of antitrust laws. There is no scenario where more corn ethanol takes us closer to that future.