NCPA - National Center for Policy Analysis


June 2, 2009

The Obama Administration is pushing a big expansion in ethanol, including a mandate to increase the share of the corn-based fuel required in gasoline to 15 percent from 10 percent.  Apparently no one in the Administration has read a pair of new studies that expose ethanol as a bad deal for consumers with little environmental benefit, says the Wall Street Journal.

The Congressional Budget Office (CBO) reported last month that Americans pay another surcharge for ethanol in higher food prices:

  • From April 2007 to April 2008, "the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices," because millions of acres of farmland and 3 billion bushels of corn were diverted to ethanol from food production.
  • Americans spend about $1.1 trillion a year on food, so in 2007 the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery bills.

According to the Environmental Protection Agency (EPA), reductions in CO2 emissions from burning ethanol are minimal and negative, while the process of making ethanol requires new land from clearing forest and grasslands that would otherwise sequester carbon emissions.

"As with petroleum based fuels," the report concludes, "greenhouse gas (GHG) emissions are associated with the conversion and combustion of bio-fuels and every year they are produced, GHG emissions could be released through time if new acres are needed to produce corn or other crops for biofuels."

Both CBO and EPA find that in theory ethanol would reduce carbon emissions.  However, as CBO emphasizes, "current technologies for producing cellulosic ethanol are not commercially viable."

The ethanol lobby is attempting a giant bait-and-switch: keep claiming that cellulosic ethanol is just around the corner, even as it knows the only current technology to meet federal mandates is corn ethanol, says the Journal.

Source: Editorial, "Ethanol's Grocery Bill," Wall Street Journal, June 2, 2009.

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