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Ethanol industry steamrollers opponents
by Mary Losure, Minnesota Public Radio
November 12, 2002

Nearly all the pumps in Minnesota offer various grades of gasoline and all contain at least 2.7 percent ethanol, because state law requires it. (MPR Photo/Mary Losure)

When the new Congress returns to Washington in January, members are expected to resume work on energy legislation that would be a giant boost for the corn-based fuel, ethanol. The energy bill would more than double the nation's use of ethanol over the next 10 years. Ethanol supporters, such the nation's corn farmers, say it's a way to reduce this country's dependence on foreign oil and benefit the environment at the same time. Ethanol opponents doubt those arguments, but they're fighting a losing battle.

St. Paul, Minn. — Minnesota is in the heart of ethanol country. Nearly all the pumps in Minnesota offer various grades of gasoline and all contain at least 2.7 percent ethanol, because state law requires it. The Minnesota Legislature has approved millions of dollars in subsidies for ethanol producers and farm state politicians are virtually unanimous in their unqualified support of increased use of ethanol.

Ken Pentel, who ran unsuccessfully for governor on the Green Party ticket, swam against the stream when he expressed some reservations. Pentel said that expanding the ethanol program as it's structured now will encourage more factory-scale corn-farming; growing vast fields of corn under conditions that promote soil erosion and require large doses of chemicals and fertilizer.

But Pentel admitted nobody's paying much attention to concerns like these.

"I see too much control by corn-growing interests rather than a more thoughtful discussion of what is the best interest of the general good," Pentel said.

Corn farmers are pushing ethanol because it increases the demand for corn and raises corn prices. They argue that ethanol benefits the public too, because it's an environmentally friendly fuel. But not all environmentalists buy that.

Dan Becker, who directs the Sierra Club's energy program in Washington, D.C., says ethanol is a mixed bag from an environmental and an energy perspective.

"First of all, it increases smog because it makes the mixture of gasoline and ethanol evaporate more readily. But it decreases carbon monoxide, which is another air pollutant," Becker said. "From an energy perspective, it's very energy-intensive to create ethanol. A lot of diesel fuel is used to cultivate the corn; a lot of mostly coal and other fossil fuels are used to distill it into ethanol."

Dueling studies have given conflicting answers on whether it takes more energy to create a gallon of ethanol than you get back when you burn one.

Becker says if the ethanol program really did produce renewable fuel, the Sierra Club would be the first to champion it. He says ethanol can be made from alternative crops like switch grass, which require much less energy to grow. But he says that kind of ethanol is not what's on the table in Washington.

"In this bill, the net effect of all of the ethanol provisions and all the other provisions is bad for the environment. This is an energy bill that should die," Becker said. "You could make ethanol in a way that was more responsible. And unfortunately this bill won't require that."

Environmental concerns aren't the only ones that have failed to make headway. For years, the free-market think tank, Cato Institute has railed against the multibillion-dollar subsidies enjoyed by the ethanol industry. The Institute has called the nation's largest ethanol producer, Archer Daniels Midland, "a poster child for corporate welfare" and blasted ADM's huge political contributions. But the ethanol industry's momentum has been unstoppable.

The Cato Institute's Jerry Taylor says that's because the nation's farm lobby is pushing hard for ethanol and farm interests hold some politically strategic territory.

"Even if Archer Daniels Midland didn't exist, even if we banned them from lobbying, and they couldn't give a dime, it wouldn't matter. We'd still have an ethanol program, it would be just as big," Taylor said. "The main reason is if you want to be president of the United States, you have to go to through the Iowa caucuses, which means if you don't bow down and worship ethanol, you're a dead man politically."

Taylor points out even that such free market, shrink-the-government stalwarts as former Republican Speaker of the House Newt Gingrich have quailed before the ethanol lobby.

"In 1995 there was a serious fear at the time that Republican congressmen looking to cut budgets and cut regulations and increase the scope of free markets would deep-six the ethanol program. At the last minute it was Ginginch of the house Republican leadership who intervened," Taylor said. "And the reason why was there were a lot of Republican congressmen who were elected in that landslide of 1994 who came from farm districts who argued that if Republicans kill the ethanol program, they're dead."

Observers say these days nobody's even trying to stop this latest ethanol legislation. Instead, ethanol's traditional opponents are scrambling to cut the best deal they can. Earlier this year the petroleum industry agreed to support the ethanol mandate in return for more flexibility in the methods the industry uses to meet clean air standards.

Long-time Washington lobbyist Bill Fay says he thinks the petroleum industry signed on with ethanol because, "they were jumping on the train as it was speeding through town." Fay is president of the American Highway Users Alliance, another traditional opponent of the ethanol program. He says the fuel tax breaks Congress has already given the ethanol industry are causing the loss of nearly $2 billion each year that would otherwise go to highways and bridges, losses that could triple if the ethanol mandate goes through.

But Fay is not confronting the bill. He's simply trying to get it altered so ethanol subsidies will be paid for in a way that won't hurt the highway fund.

"My goal here is not to beat up on ethanol, I don't want to get into agricultural or energy policy. Ethanol to the extent that it costs highway investments that can save lives, that's when I get really concerned," Fay said. But Fay and other opponents say they fully expect some form of the ethanol mandate will pass.

John Doggett of the National Corn Growers Association does too. He says the momentum comes not only from political strength, but from public policy considerations.

"I think the fact that we are looking at a possible war with Iraq, from where we import an awful lot of oil, that has certainly driven this debate, and driven it in our favor. I think the alarming statistics that continue to escalate showing our dependency on foreign oil has been the kind of thing that has pushed this in our favor as well," Doggett said.

Ethanol now provides one percent of the nation's fuel supply. The corn growers hope to triple that over the next 10 years.

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