With fuel demand returning as individuals emerge from lockdowns to enjoy the fresh spring air and a new national focus on the climate crisis, the folly of corn-based ethanol gasoline must be addressed. Historically, scientists viewed biofuels as inherently carbon-neutral but new studies performed over the past decade suggest that once all the emissions associated with growing feedstock crops and manufacturing biofuel are factored in, biofuels actually increase carbon dioxide emissions rather than reduce them. While renewable fuels are important to America’s clean energy future, growing corn for fuel instead of food never has been an environmental or economic solution.
- Ethanol is produced by fermenting natural sugars with yeasts or petrochemical processes and can be used as an alternative fuel source. The U.S. produces 94% of its ethanol from the starch in corn grain and is considered a “biomass” renewable fuel source. It was used during World War II to reduce fuel shortages and the nation’s reliance on imported oil.
- Historically, ethanol for fuel has been used as an octane booster, with more than 98% of today’s gasoline containing ethanol. The Federal Renewable Fuel Standard requires the use of ethanol to improve vehicle performance and is the major market driver for the additive. Although the ethanol production method does not require more energy than the fuel itself, it contains less energy per gallon than gasoline.
- Current U.S. gasoline sales have exceeded levels from the start of the pandemic in March 2020. As cars return to the road, increased demand for gasoline blended with ethanol is bullish for corn farmers. Corn prices have hit their highest levels in nearly 8 years. This is mainly attributed to increased demand from China to restock grain reserves and feedstock for hogs as well as a recovery in ethanol production for fuel additives, or about 40% of the U.S. corn crop.
- The U.S. Department of Agriculture projects farmers will plant about 92 million acres of corn in this year’s growing season, starting in April, which would be the highest level since 2016. The USDA National Agricultural Statistics Service also predicts an estimated 91.1 million acres of corn crops for the 2021-22 marketing year. As pandemic restrictions are lifted and vaccines are distributed, ethanol demand associated with gasoline is expected to rise for the summer driving season.
- Corn ethanol has been subsidized at the federal and state levels since the 1970s, but additional government oversight was implemented to reduce oil imports following the September 11th terrorist attacks. The Renewable Fuel Standard (RFS) enacted in 2005 required 7.5 billion gallons of ethanol to be blended into gasoline by 2012, but amendments in 2007 tripled the U.S. renewable fuel consumption and required 15.4 billion gallons to be blended in 2015 and targeted 36 billion gallons in 2022.
- One major problem with the RFS legislation is the maximum ethanol blending allowed that will not damage engines or vehicle fuel systems higher than 10% ethanol, known as the E10 blend wall. The RFS assumed gasoline consumption would grow large enough to remain below this blending threshold, but COVID demand destruction and a continued mandate for oil refiners to quadruple the amount of biofuels blended into transportation fuels by 2022 has exposed several issues with the ethanol market managed by the federal government. Much like the shale revolution reduced the U.S. reliance on foreign oil, the push for “green” electric vehicles will also play a role in reducing future gasoline and ethanol consumption.
- As the government mandates continue to ramp up the demand for corn used in ethanol blending, some small refineries are struggling with the high compliance costs associated with the RFS mandate. The EPA has granted hardship waivers for refineries producing fewer than 75,000 barrels per day, but some policy makers are discouraging the approval of such waivers. Other states like Iowa and Nebraska rely on ethanol blending to provide revenue during difficult economic times with 3.5% of Iowa’s GDP, or $4.6 billion, coming from renewable fuels.
- While deemed a renewable fuel source, ethanol production does have some environmental issues to take into account. More farmland will be needed as additional ethanol is created for blending into fuel stocks. This can be done by either replacing food crops with fuel crops or clearing previously undisturbed lands for farmland. Increasing farm acreage adds to emissions from industrial machinery and increased fertilizer runoff that has been linked to a dead zone in the Gulf of Mexico.
- Biofuels have typically been viewed as carbon neutral, with the assumption that the amount of carbon dioxide emitted when biofuels are burned is offset by the CO2 absorbed during the growing cycle. New studies have shown that if all the emissions associated with growing feedstock crops and manufacturing biofuels are included, the development and combustion of biofuels increases CO2 emissions rather than reduces them. A study from 2005-2013 determined the carbon uptake for crop growth in biofuels only offset 37% of biofuel related CO2 emissions.
Ever since the 1973 oil embargo, U.S. Energy Policy has sought to replace petroleum-based transportation fuels with alternatives. In the mid-2000s, one prominent option was using biofuels, such as ethanol, in place of gasoline and biodiesel instead of ordinary diesel. Now with President Joe Biden promoting his ambitious plan to tackle climate change with a clean energy revolution, the United States faces a difficult question: is ethanol from corn a viable option? The consensus among climate experts is that to slash carbon emissions quickly enough, as much pollution inducing combustion as possible must be eliminated while expanding wind and solar energy to power the electric grid. The problem is, a key aspect of Biden’s agenda contradicts this push. He has vowed to “promote ethanol and the next generation of biofuels,” declaring them “vital to the future of rural America—and the climate” . With fuel demand returning as individuals emerge from lockdowns to enjoy the fresh spring air, corn prices are surging to meet ethanol demand and farmers are planning to plant historic amounts of corn this upcoming growing season. If President Biden truly wishes “the Federal Government [to] be guided by the best science” in order to “protect our public health and the environment,” the role of corn in the United States must be re-addressed . While renewable fuels are important to America’s clean energy future, growing corn for fuel instead of food never has been an environmental or economic solution.
Basics of Ethanol
In order to investigate the role of corn in the United States, the use of corn as a biofuel must be understood. Ethanol, also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol, is an organic chemical compound known to be a volatile, flammable, colorless liquid with a slight characteristic odor . It is naturally produced from the fermentation of sugars by yeasts or via petrochemical processes and can be used as an alternative fuel source. In the United States, 94% of ethanol is produced from the starch in corn grain and is considered a renewable fuel since it is made from various plant materials collectively known as “biomass” . In the 1850’s ethanol was used as a lighting fuel, but its use curtailed when it was taxed as liquor to help pay for the Civil War. Ethanol as a fuel continued after the tax was repealed and fueled Henry Ford’s Model T in 1908, but the first ethanol blended with gasoline for use as an octane booster occurred in the 1920s and 1930s spurred high demand during World War II because of fuel shortages . Today, more than 98% of U.S. gasoline contains ethanol, typically E10 (10% ethanol, 90% gasoline), to oxygenate the fuel which reduces air pollution . By using ethanol in fuel, it reduces national petroleum consumption, thereby reducing the amount of oil we import. This was the initial proposition for its use – an alternative to seemingly dwindling fossil fuel production. Now, ethanol’s primary market drivers are the Federal Renewable Fuel Standard requiring its use and its ability to enhance octane. Gasoline and gasoline blend stocks shipped via pipelines need ethanol or another enhancer to bring octane levels up and meet consumer demand for higher octane fuel to improve vehicle performance . After biomass feedstocks like corn are grown, collected, and transported to an ethanol production facility, feedstocks are then converted to ethanol and transported to a fuel terminal or end-user by rail, truck, or barge . Finally ethanol is blended with gasoline at the fuel terminal to make E10, E15, or E85 and distributed by truck to fueling stations. While ethanol produced from corn demonstrates a positive energy balance, meaning that the process of producing ethanol fuel does not require more energy than the amount of energy contained in the fuel itself, it still contains less energy per gallon than gasoline depending on the volume percentage of ethanol in the blend.
Good News For Corn Prices
With more and more cars returning to the road, U.S. gasoline sales for 2021 have exceeded prior-year levels for the first time since March 2020, when officials first started to widely impose coronavirus lockdowns. Considering the fact that more than 98% of U.S. gasoline contains ethanol, more drivers returning to the road spells good news for corn farmers. In fact, corn prices have hit their highest levels in almost eight years, and analysts say they are likely to get a further boost from motorists . The recent explosion in price is no surprise for two key reasons. First and foremost, increased demand for corn has been largely attributed to increased demand from China buying more row crops in an attempt to restock grain reserves and grow their feedstock for hog consumption that was wiped out from the African swine fever. In addition, Chinese corn imports in the first two months of 2021 were more than five times higher than a year earlier because China needs to meet targets set in its recent trade agreement with the U.S. .
The second price driver, and focus of this piece, is attributed to the production of ethanol. About 40% of the U.S. corn crop goes to producing the gasoline additive, and consumption plunged amid the pandemic . Now ethanol producers predict a significant rebound powered by economic reopenings and a potential wave of bioenergy-friendly regulations from the Biden Administration. As seen in Figure 1, ethanol production was recovering quickly from pandemic-induced demand destruction until the Texas deep freeze altered its trajectory. Now ethanol producers cannot keep up with increasing demand. This offset between fuel ethanol supplied to the market versus what is currently being demanded has helped corn prices rise nearly 50% over the past six months . As a result, ethanol recovery provides an additional source of demand for farmers who will then grow more corn to take advantage of higher prices. In fact, the U.S. Agriculture Department projected that farmers would plant roughly 92 million acres of corn in the coming growing season, which starts in April, and would be the most corn planted in the U.S. since 2016 . In contrast, the USDA National Agricultural Statistics Service estimates U.S. corn acreage for the 2021-22 marketing year (September-August) will be 91.1 million acres, up less than 1% since last year but their highest levels since 2018 . With exploding gasoline demand, and by association ethanol demand, many are predicting demand will return to pre-pandemic levels in the next few months due to vaccine rollouts and the summer driving season. As a result, corn prices look to remain elevated for the foreseeable future.
Federal and state policies have subsidized corn ethanol since the 1970s, but its use as a biofuel gained support as a tool for promoting energy independence and reducing oil imports following the September 11, 2001 terrorist attacks. In 2005 Congress enacted the Renewable Fuel Standard (RFS), which required fuel refiners to blend 7.5 billion gallons of ethanol into gasoline by 2012 . Since the United States consumed 133 billion gallons of gasoline that year, the requirement was meant to bring the biofuel blend percentage up to 5%. But, in 2007 Congress dramatically expanded the RFS program with support from some major environmental groups. The new standard more than tripled annual U.S. renewable fuel consumption, which rose from 4.1 billion gallons in 2005 to 15.4 billion gallons in 2015 and targeted to reach a level of 36 billion gallons by 2022 . But on December 19, 2019, the EPA finalized volume requirements under the 2020 RFS program for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel as well as biomass-based diesel for 2021 that are significantly shy of those lofty goals . The new RFS targets were based on the assumption that U.S. gasoline consumption will increase over time so more ethanol can be blended with gasoline without hitting the E10 blend wall. This blend wall is the maximum ethanol blend that will not damage the engines and fuel systems of vehicles that can’t use a gasoline-ethanol blend higher than E10 .
Bad news arrives slowly to some U.S. political circles, and the failure of the Federal Renewable Fuel Standard program to achieve its policy goals over the past decade is one of the slowest. To wean the United States off their “addiction to oil,” the RFS mandated oil refiners quadruple the amount of biofuels (primarily ethanol) into transportation fuels by 2022 . But the security of U.S. fuel supplies is no longer a pressing problem, and now the federal government is continuing to manage what is already a broken ethanol market. This creates a major problem where huge amounts of Midwest corn are used for ethanol production to mix with vehicle gasoline and all the extra corn needed has raised the cost of food inside and outside of America. Despite these concerning problems with the RFS, proponents of the law are now trying to implicitly expand its scope by discouraging the EPA from exercising its authority to issue hardship waivers to the small refineries that are struggling with the high compliance costs associated with the troubled mandate . In accordance with the Energy Policy Act of 2005 — the law that created the RFS — the EPA has for years granted hardship waivers to small institutions producing no more than 75,000 barrels a day that the EPA determines face “disproportionate economic hardship” from the ethanol mandate .
Both sides of this debate should agree that there is nothing competitive about small refineries that employ thousands of blue-collar workers entering bankruptcy because of an inability to comply with the program’s mandate. Unfortunately, limiting market options is precisely what will occur should the EPA stop issuing hardship waivers to the companies that need relief. On the flip side of the coin, governors from the major corn and ethanol producing states of Iowa and Nebraska promote ethanol blending as a way to prop up their states’ economies during economic slowdowns while downplaying the original national-security arguments that no longer apply. In Iowa’s case, 3.5% percent of its gross domestic product — about $4.6 billion a year — can be tied directly to its renewable-fuels industry . Is it any surprise that a centralized industrial program designed in direct opposition to free-market principles would falter, especially when the problem of fuel scarcity has been solved by other means? It’s not just the shale revolution bypassing the biofuels industry; the growth of electric-powered automobiles will only serve to further depress demand for the industry’s products leaving RFS as nothing more than a subsidy program for ethanol makers, corn farmers, and the multinational oil companies that own ethanol-blending facilities.
The economic shortfalls of a corn-based biofuel are certainly foreboding, but the real detraction lies in ethanol’s environmental issues. For starters, about 40% of the United State’s corn crop is used to create ethanol which means millions of acres of once untouched lands have been plowed to accommodate corn ethanol demand . In addition, fuel crops like corn tend to displace food crops, resulting in a pulse of emissions as displaced farmers clear forests and cultivate previously undisturbed land to meet food demand. Now, instead of expanding wildlife habitats, a pillar in Joe Biden’s “Plan to Restore Wildlife Habitat and Better Manage Public Lands” the ethanol mandate is steadily reducing it . Furthermore, because growing corn is hard on the soil, farmers have been forced to use more and more fertilizer. Runoff from that fertilizer is adding to a growing dead zone in the Gulf of Mexico that is so low in oxygen that it kills significant fish and wildlife populations in the region . The most significant and troubling environmental issue with ethanol being utilized as a biofuel to add to gasoline is its contribution to greenhouse gasses, namely carbon dioxide.
Historically, many scientists viewed biofuels as inherently carbon-neutral: making the assumption the carbon dioxide (CO2) plants absorb from the air as they grow completely offsets, or “neutralizes,” the CO2 emitted when plant biofuels are burned. Many years of computer modeling based on this assumption, including work supported by the U.S. Department of Energy, concluded that using biofuels to replace gasoline significantly reduced CO2 emissions from transportation . Now new studies that examined crop data to evaluate whether enough CO2 was absorbed on farmland to balance out the CO2 emitted when biofuels are burned show once all the emissions associated with growing feedstock crops and manufacturing biofuel are factored in, biofuels actually increase CO2 emissions rather than reduce them . While conducting and repeating the studies, researchers explicitly compared the amount of CO2 absorbed on cropland to the quantity emitted during biofuel production and consumption rather than assuming production and use of biofuels was carbon-neutral. Existing crop growth already takes large amounts of CO2 out of the atmosphere, so the empirical question is whether biofuel production increases the rate of CO2 uptake enough to fully offset the emissions produced from corn fermentation into ethanol and biofuel combustion .
Most of the crops used for biofuels during the period of study from 2005 to 2013 were already being cultivated. The main change was that farmers sold more of their harvest to biofuel makers and less for food and animal feed. So as long as growing conditions remain constant, corn crops take CO2 out of the atmosphere at the same rate regardless of its end use. Therefore, to properly evaluate biofuels, one must evaluate CO2 uptake on all cropland since crop growth is the mechanism that takes carbon out of the atmosphere . When this analysis was conducted, researchers found that during the eight year period, cumulative carbon uptake on U.S. corn farmland increased by 49 teragrams, or 49 million metric tons, while planted areas of most other field crops declined during this period . This increased CO2 uptake can be largely attributed to crops grown for biofuels . Over the same period, however, CO2 emissions from fermenting and burning biofuels increased by 132 teragrams. Therefore, the greater carbon uptake associated with crop growth only offset 37% of biofuel-related CO2 emissions from 2005-2013 . In other words, biofuels are far from inherently carbon-neutral.
Moreover, the study does not even include the environmental impacts to offset other greenhouse gas emissions during biofuel production from sources including fertilizer use, farm operations and fuel refining . But environmental impacts do not stop there because as farmers convert grasslands, wetlands and other habitats that store large quantities of carbon into cropland, very large CO2 releases from the soil occur. In the end, University of Michigan Energy Institute scientists estimated that powering an American vehicle solely with ethanol made from corn would have caused more carbon pollution than using gasoline during the eight years studied . Energy crops were responsible for additional plant growth that absorbed a mere 37% of biofuel pollution, leaving most of it in the atmosphere, where it can trap heat and further the climate crisis.
From 2005 to 2007 when the United States imported roughly 60% of its oil, crude prices were rising dramatically and the country’s oil production was believed to be in permanent decline . Out of desperation, the federal government picked biofuels as a savior using economic and scientific assumptions that have since been proven woefully inaccurate. Studies have proven that biofuel crops are not inherently carbon neutral and the Renewable Fuel Standard is simply supporting a broken system. With plentiful hydrocarbon resources domestically that can provide the energy we need with lower environmental impacts, it is time to shed some light on the folly of corn-based ethanol gasoline. The fact of the matter is: today’s conventional corn ethanol carries risks to the climate, wildlife, waterways, and even food security. Mitigation of CO2 from hydrocarbon combustion, the largest source of anthropogenic CO2 emissions in the United States and the second-largest globally after coal, is necessary, but as a cure for climate change: biofuels are worse than the disease. Luckily, science points to climate protection mechanisms that are far more effective and less costly than biofuels. Since ethanol is utilized in transportation, emissions can be reduced by improving vehicle efficiency, limiting miles traveled, or even substituting low or carbon-free fuels such as hydrogen. It may even be possible to remove CO2 from the atmosphere more rapidly than current ecosystems are absorbing it through the use of carbon capture or by re-carbonizing the biosphere. This would include tactics like reforestation and afforestation, rebuilding soil carbon, and restoring other carbon-rich ecosystems such as wetlands and grasslands . These approaches will help to protect the environment and biodiversity instead of threatening it while shifting government spending away from antiquated programs like the RFS and continued biofuel production.