Ethanol: The Global Poor Will Suffer the Worst

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Richard Moore

Feb 29, 2008, 7:31:00 AM2/29/08

The Global Poor Will Suffer the Worst Ethanol Hangover

The headlong rush in many parts of the world to replace oil with biofuels (ethanol and biodiesel) illustrates how the best of intentions can run afoul of the law of unintended consequences. While positive effects have been elusive -- and, in fact, are unlikely with current policies -- starvation and malnourishment are becoming worse among the poorest of the poor.

The European Union has announced that it wants to replace 10 percent of its oil consumption with biofuels by 2020. President George W. Bush announced last year a goal of replacing 15 percent of domestic gasoline use with biofuels over the next 10 years, which would require almost a five-fold increase in mandatory biofuel use to about 35 billion gallons. In June 2007, the U.S. Senate pushed the target to 36 billion gallons by 2022, of which 15 billion are mandated to come from corn and 21 billion from other more advanced but largely unproven sources. China is aiming for 15 percent conversion to biofuels.

The reality is that with current technology, almost all of this biofuel would have to come from corn because there is no other feasible, proven alternative. But because of the inefficiencies inherent in producing ethanol from corn and the relatively meager amount of energy yielded by burning ethanol, the demands on farmland would be staggering. An analysis by the Paris-based Organization for Economic Cooperation and Development suggested that replacing even 10 percent of America's motor fuel with biofuels would require that about a third of all the nation's cropland be devoted to oilseeds, cereals and sugar crops. Achieving the 15 percent goal would require the entire current U.S. corn crop, which represents a whopping 40 percent of the world's corn supply.

In the short- and medium-term, ethanol can do little to affect oil consumption, but the diversion of grain from food to fuel exerts widespread and profound ripple effects on various commodity markets. It has already has been catastrophic for the poor around the world. The U.N. Food and Agriculture Organization's food price index, which is based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year, following a 14 percent increase in 2006. Protests have erupted in Pakistan and Indonesia over wheat and soybean shortages, respectively, and China has imposed price controls on many staple foods. Keith Bradsher, writing in the New York Times, reveals another outcome of the shortages: "Smugglers have been bidding up prices as they move [palm] oil from more subsidized markets, like Malaysia's, to less subsidized markets, like Singapore's."

The shortages and rise in the prices of edible oils have had a devastating impact on the nutrition of poor families not only in Asia, but also in Latin America, Africa and the Middle East. Any sort of shock to yields, such as drought, unseasonably hot or cold weather, pests or disease in the next few years could send food prices farther into the stratosphere and cause unprecedented social upheavals.

Politicians like to say that ethanol is environmentally friendly, but these claims must be put into perspective. Although corn is a renewable resource, it has a far lower energy yield relative to the energy used to produce it -- what policy wonks call "net energy balance" -- than either biodiesel (such as soybean oil) or ethanol from many other plants.

Moreover, ethanol yields about 30 percent less energy per gallon than gasoline, so mileage per gallon in internal combustion engines drops off significantly, and the addition of ethanol raises the price of blended fuel because it is more expensive to transport and handle. Lower-cost biomass ethanol -- for example, from rice straw (a byproduct of harvesting rice) switchgrass, or other sources -- would make far more economic sense. And also environmental sense: Estimates of greenhouse-gas reductions from the substitution of biofuels for gasoline failed to take into consideration the carbon emissions that occur as farmers worldwide respond to higher prices by converting forest and grassland to new cropland to replace the grain (and cropland) diverted to biofuels. Performing the analysis correctly yields shocking results: Instead of producing savings in carbon emissions, corn-based ethanol "nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years," according to a research article published earlier this month in the journal Science.

Politicians may be drunk with the prospect of corn-derived ethanol, but without policies based on science and sound economics, our problems will only increase, and the poorest of the poor around the world will suffer from the worst hangover.

Henry I. Miller, a physician and fellow at Stanford University's Hoover Institution, was an FDA official from 1979 to 1994; his most recent book is "The Frankenfood Myth."

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