Seven Questions: The Ethanol Effect

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Food prices on the moove: We may not eat much corn, but the cows whose milk we drink certainly do.

FOREIGN POLICY: Youve written a lot in the past about what would happen if the United States converted to an ethanol-based fuel system for cars. Have your predictions come true?

Lester Brown: Most people know ethanol production in this country is growing, but they dont know how fast. About a year and a half ago, right after Katrina, a trend that had been near horizontal became almost vertical. The capacity of plants now under construction is equal to the capacity of all the plants built in the last 26 years. If the pace of new starts continues from now to the end of June, roughly 140 million tons of corn will be going into ethanol. Thats over a third of the U.S. grain harvest, so its not trivial. And just to give you a sense of how big the U.S. corn harvest is, the corn harvest of Iowa exceeds the entire grain harvest of Canada.

FP: What are the implications of so much corn being used for fuel?

LB: The ethanol advocates like to say we dont eat much corn, which is true. But in Mexico and some Central American countries, it is the food staple. Its even more important as a source of feed. Our refrigerators are stuffed with corn: milk, eggs, cheese, chicken, pork, beef, yogurt, ice creamthese are all corn products. The risk is that by converting so much of our grain into fuel for cars, we will drive up the price of grain and create chaos in the world grain markets. This could mean urban food riots in scores of low- and middle-income countries around the world. Were already seeing this in Mexico with the tortilla demonstrations.

Whats actually happening in the world now is that the price of grain is moving up towards its oil equivalent value. That means that the price of grain is now being set by the price of oil. If at any time the food value of a commodity is less than the fuel value, the market will move it into the fuel economythats what the market does. So if the price of oil jumps from $60 to $80, the price of food will also jump. I dont think most people realize yet that the price of oil is going to dictate the price of food.

FP: How is the U.S. government handling this issue?

LB: An industry that was once solely dependent on the ethanol subsidy had to go through the fiscal process each year, so someone controlled that. But its gasoline prices being around $3 that has really sparked this investment frenzy in corn-based ethanol. So no ones in charge anymore. The licensing of distilleries is done at the state level, and the governors in all the Corn Belt states want as many distilleries as they can get. And theres a very strong lobby here in Washington because every Corn Belt state has two senators. Theyll trade off all sorts of things to get what they want in this particular area because its so big for them. And just as theres nobody in charge at the national level, theres no one responsible at the international level either. Theres no U.N. agency or office to mediate the competition between two groups that are competing for the same resources: the 2 billion poorest people in the world, many of whom already spend half or more of their income on food, and the 800 million people in the world who own automobiles.

FP: How do you read the proposed deal between Brazil and the United States following Presidents Bushs recent visit?

LB: Theyre talking about cooperating and trying to reduce the Western Hemispheres dependence on imported oil. Theyve basically shaken hands and said this is a good idea; lets see what we can do, but I havent heard anything very tangible. I dont think were going to let very much Brazilian ethanol into this country. Its interesting that the corn growers say we want to reduce our dependence on oil. Importing ethanol from Brazil will do just that, but theyre not so keen.

FP: Some experts argue that corn-based ethanol is just an interim political solution in order to build the infrastructure to switch to a more viable fuel like cellulosic ethanol. What do you think?

LB: I think cellulosic ethanol from switch grass is where we ultimately want to be. The problem right now is that we dont have any technology to produce cellulosic ethanol at a competitive level. We can produce itthat technologys been around a long timebut the price ratio is about 2 to 1, cellulosic ethanol to corn-based ethanol. The difficulty with arguing that the corn-based distilleries are stepping stones to the future is that those distilleries are being built where the corn is, not where the switch grass is or where it will be. Once that capitals committed, theres going to be enormous pressure to keep those distilleries going regardless of what happens to grain prices in the world market.

FP: So what are some other alternatives to corn-based ethanol, if cellulosic ethanol isnt ready for prime time?

LB: One thats gaining quite a bit of momentumas its being supported by environmentalists on one hand and neocons on the otheris plug-in hybrids. The neocons are concerned that were losing our political independence because were so dependent on Middle Eastern oil. Environmentalists are worried about climate change and a whole range of issues. But the exciting thing for me is that we have the technologies now to build an entirely new automotive fuel economy.

Take a Toyota Prius and add a second storage battery and a plug-in capacity so you can plug it in at night and recharge the batteries while youre sleeping. You could then do most of your short-distance driving almost entirely with electricity. If, while were shifting to plug-in hybrids, were also investing not in hundreds, but in thousands of wind farms across the country, then well be able to run our cars on wind-generated electricity equivalent to less than dollar-a-gallon gasoline. I mean, what are we waiting for?

FP: If wind-generated electricity is so great, whats holding it back?

LB: Certainly not supply: We have enough wind energy to run the whole economy and not even come close to striking the full potential. In 1991, the Department of Energy did a national wind resource inventory that showed that three of our 50 states, North Dakota, Kansas, and Texas, have enough harnessable wind energy to satisfy national electricity needs. We know that was a gross underestimate because it was based on wind turbine technology in 1991. Advances since then enable larger turbines to operate at lower wind speeds and convert wind to electricity more efficiently, so theyre harnessing a much larger, stronger, more reliable wind regime. And I havent even mentioned offshore yet. We have plenty of wind.

Lester R. Brown is president of the Earth Policy Institute and author of Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble (New York: W.W. Norton, 2006).