Op-Eds :: July 16, 2008

Is the ethanol mandate raising food prices? [Gordon]

By. Rep. Bart Gordon (D-TN)

The prices of basic necessities—fuel and food—are through the roof. 

Corn was $2 a bushel when many ethanol plants were built two years ago.  It hit a recent high of $7. 

Over a fifth of the corn produced in this country last year went to create seven billion gallons of ethanol, but the U.S. was still able to meet our domestic needs for corn, increase exports, and stockpile a surplus.  This year, over a third of the U.S. corn crop will be converted to ethanol.

We now find ourselves trying to balance access to affordable food and sustainable energy.  Concerns have been raised about further expansion of corn-based ethanol to meet the targets set for biofuel production, and many have questioned if the ethanol mandate is raising food prices.

It is a law of economics that high demand drives up prices.    

However, other factors besides ethanol production may have a bigger effect on food prices: the increased demand from developing nations; stocks at generational lows; prediction of a low supply of corn this year, due to the cold, wet spring and the Midwest flooding; and the skyrocketing price of the gasoline used move the crops to the market and petroleum-based fertilizers and pesticides. 

So while it’s impossible to say if—or how much—ethanol is raising food prices, we can say without a doubt that our dependence on foreign oil—and the unchecked increase in the price of it—is absolutely sending shockwaves from our cars to our grocery carts.

The best solution is to move forwards, not backwards.  Instead of backsliding to a deeper dependence on foreign oil, we need to expand biofuels to nonfood materials, like cellulosics.

Corn-based ethanol is a stepping stone.  Current use of ethanol is a positive first step—it’s creating infrastructure and a willingness in the market to accept biofuels, paving the way for the next generation of sustainable biofuels—but it is not a feasable long-term strategy.

Creating ethanol from corn is a relatively simple two-step process—corn starch is broken down into sugar, which is fermented into alcohol, or ethanol—but growing the corn has a high price, in terms of land, nutrients and water.  Also, there is a limit to how much corn-based ethanol we can produce.  Even if you planted the whole country with corn, coast to coast, you wouldn’t have enough ethanol to replace fossil fuels.

Beyond the primary goal of avoiding competition with food and feed supply, expanding ethanol production to cellulosic materials, such as grasses, wood, and waste materials, would allow us to use a wide variety of raw material that are highly abundant, grow quickly, do not have the same high needs for water and nutrient as corn, and would avoid the potential greenhouse gas impact of plowing forests and prairies to farm crops.

Switchgrass, for example, has nine-foot deep roots, and thrived in test plots in the southeast last summer, despite a historic drought.  With local, regional, or statewide droughts predicted in 36 states in the next five years, this is no small factor. 

Creating cellulosic ethanol is the same process as creating ethanol from corn, with the additional first step of converting cellulose into starch.  The resulting ethanol is identical to corn-based product, so there is no need to change technologies that use corn ethanol to allow them cellulosic ethanol, and the possibility exists of retrofitting corn ethanol production factories to incorporate this first step.

However, current technologies for the development of fuel from these sources continue to be expensive and not cost-competitive with corn-based ethanol, so more research is needed.

In 2006, the Government Accountability Office found that Department of Energy’s total budget authority for energy R&D dropped by more 85 percent in real terms from 1978 to 2005.  During that time, crude oil imports grew from 40 percent of the U.S. supply in 1980 to 65 percent of the U.S. supply in 2005.

To reverse this trend, last year the Science and Technology Committee moved eight bills to spur the development of new energy technologies.  These were ultimately included in HR 6, the Energy Independence and Security Act (PL 110-140).  In addition to research in technologies to harness the energy from the sun, geothermal heat, and ocean waves, carbon capture and storage technologies, energy storage technologies, and energy efficiency research, the act included the Biofuels Research and Development Enhancement Act (H.R. 2773), which will develop the next generation of biofuels using cellulosic materials rather than food-based crops.

I am also encouraged that the House FY09 appropriations bill provides $15 million for start-up costs for the Advanced Research Projects Agency-Energy.  ARPA-E will apply to energy research the highly successful DARPA model, which gave the Department of Defense breakthroughs like stealth technology, GPS and the internet.  It will bring together the best and the brightest from industry, national labs and academia to pursue high-risk, high-reward research in a non-bureaucratic agency.  I am optimistic that the next President will make this research a priority and fully fund the agency at $300 million. 

ARPA-E could be the technological bridge to, for example, new microorganisms that quickly and cheaply break cellulose into starch, or even straight into fuel.  Or maybe the future is energy storage devices for electric cars that reduce the need for liquid fuels altogether.

In the midst of all these questions, the clear thing is that the solutions to the major challenges facing the U.S. right now will come from science and technology.  We need technological breakthroughs, not just incremental change. 

And the right breakthrough—or breakthroughs—could meet all of our needs:  preventing and reversing climate change; meeting our growing energy needs; and fostering a vibrant new sector of the U.S. economy.

We just need the will to see it through.