TPPF COMMENTARY: The folly of food as fuel

“Bravo!” to Governor Rick Perry and U.S. Senator Kay Bailey Hutchison for recognizing the damage caused to Texas consumers and businesses by the mandatory federal renewable fuel standard for grain-based ethanol.

A growing mountain of evidence reveals the economic and environmental folly of federal ethanol policy. Gov. Perry’s requested 50% waiver and Sen. Hutchison’s proposed freeze on the renewable fuel standard (RFS) would alleviate the pressure on corn for fuel.

Texas is only beginning to see the rising food prices that federal ethanol policy could generate. Last year’s more than 4% rise in food prices stems from the 2005 Energy Policy Act. New energy law enacted in 2007 significantly enlarged the RFS. Food prices may increase as much as 8% this year. And consider where the largest price increases occurred.

The retail price of eggs increased 29% last year; cereal products, 6.5%; sweetened beverages, 4.5%; beef, 4.4%. All depend on corn-based ingredients or corn feed grains. One-fourth of the 2007 U.S. corn crop was converted to ethanol; the U.S. Department of Agriculture (USDA) projects that 30-35% of this year’s crop will become ethanol.

New energy law will force more corn to become fuel. Meeting the 36-billion-gallon RFS mandate in 2022 will require 115% of last year’s U.S. corn crop.

Texas is the appropriate state to call for a change in federal ethanol mandates. The indirect costs of ethanol hurt Texans in the grocery store as well as key agricultural sectors of the state economy. All animal agriculture – beef cattle, dairy, swine, and poultry – uses corn-based feed grains.

Four years ago – before the RFS – corn cost $2 per bushel; last year, it was $4. As Gov. Perry’s letter to the U.S. Environment Protection Agency highlights, these higher corn prices cost the Texas economy at least $1.17 billion.

A hefty 51-cent-per-gallon tax credit and a 54-cent-per-gallon import tariff also artificially drive the ethanol boom. The tax credit cost the U.S. Treasury $5 billion in 2006; that will rise to $10 billion in 2012.

The U.S. fuel supply may not be able to absorb the mandated volumes of ethanol. Most of the approximately 240 million US vehicles cannot use gasoline with more than a 10% ethanol blend. Perhaps only 6 million are Flexible Fuel Vehicles capable of using 85% ethanol (E85). Only around 1,000 of the 172,000 U.S. gas stations – mostly in the Midwest close to ethanol production – can dispense E85. The Big Three U.S. automakers recently pledged that half of their 2012 vehicles will be flexible-fuel. Yet this amounts to only 2% of total vehicles on the road. It takes decades for a complete fleet turn-over.

Ethanol is an ineffective means of reducing reliance on imported oil. While domestic production of ethanol doubled between 2003 and 2007, imports of oil and refined gasoline increased. A deficit in refining capacity and an approaching surfeit of ethanol production capacity will not increase the security of our gasoline supply or stability of gasoline prices. But what happens to a grain-based fuel supply during the next major drought?

Ethanol has two-thirds the energy value of petroleum-based fuels. A vehicle requires three gallons of ethanol for the mileage of two gallons of gasoline. Would today’s consumers choose fuel 30% more expensive than gasoline?

Producing one gallon of ethanol may well take more energy than the end product contains. With fertilizer, water, an energy-intense fermentation process, and transportation necessarily by rail or truck instead of existing pipeline, ethanol production utilizes much more energy than crude oil to reach the pump.

While combustion of ethanol involves less CO₂ and particulate emissions than petroleum-based fuels, ethanol causes more NO_x emissions – the main ingredient in ozone formation.

And ethanol may increase net CO₂ emissions. A February 2008 article in Science magazine concludes that the CO2 released from converting forest and grasslands to corn crops could amount to a doubling of CO₂ emissions from these lands. Millions of acres long enrolled in the USDA Conservation Reserve Program have now been tilled for corn. Intensive fertilization and irrigation impact water quality and supply.

Perry and Hutchison deserve praise for recommending solutions to the folly of our current federal policy to transform a major foodstuff into a fuel.

Kathleen Hartnett White is Director of the Center for Natural Resources at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin, Texas. She served six years as Chairman and Commissioner of the Texas Commission on Environmental Quality.

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Truth is conveniently missing from global warming debate

On Monday, former Vice President Al Gore brought his "Inconvenient Truth" speaking tour to the Frank Erwin Center at the University of Texas at Austin. But no matter how many times he uttered his claim that "the debate is over" on man-made global warming, a sizable portion of the scientific community would beg to differ. In this week's commentary, Drew Thornley, a policy analyst in the Foundation's Center for Economic Freedom, notes the devastating effects on mankind if we make hasty and far-reaching policy decisions based on political pressure instead of solid science.

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Truth is conveniently missing from global warming debate
By Drew Thornley

If the popular press is your source for climate science, you are probably terrified the end is near—moving as far inland as possible and staying inside to avoid heat stroke. You might be altering your lifestyle to combat the effects of carbon dioxide emissions. But if you look at the facts about “global warming,” the picture is not as bleak as it may seem.

Whenever anyone refuses to debate an issue and repeatedly asserts the “debate is over,” red flags should go up. Al Gore, who brought his man-made global warming message to Austin on October 1st, claims the debate is over. But as MIT Professor Richard Lindzen says, this is “a clear attempt to establish truth not by scientific methods but by perpetual repetition.”

Findings released in September reveal more than 500 scientists have published research findings refuting one or more elements of man-made global warming theory. The climate debate is anything but over.

However, even if human-created global warming were proved, there would still be no need for alarm. Gore and other global warming alarmists insist increased global temperatures are bad. On the contrary, a warmer earth would be a net benefit to us all.

Uninhabitable and inarable land could become suitable for living and farming. More carbon dioxide in the air means healthier plants and trees. Better agriculture raises living standards and reduces poverty.

Warmer temperatures reduce energy bills, as savings on heating costs are estimated to exceed added cooling costs. Additionally, cold causes twice as many deaths as heat, worldwide; seven times as many in Europe. Warming is positive and shouldn’t be feared.

However, even if we ignore all of the evidence and allow that man is causing harmful warming, carbon dioxide-reduction projects are still terrible investments. The European Union (a party to the Kyoto emissions treaty) spends vast amounts of money to curtail emissions, but, since 2000, the EU’s increase in emissions is almost double that of the United States (a non-Kyoto country). Even if all Kyoto-signees curb their emissions, those reductions will be offset by massive increases from non-Kyoto developing countries, like China and India.

At the Copenhagen Consensus Center, top-level economists (including four Nobel laureates) evaluated 17 global priorities, from an investment standpoint. The three climate initiatives claimed the bottom three spots, all categorized as “Bad Opportunities,” meaning “for each dollar spent, we would end up doing much less than a dollar worth of good for the world.”

Pumping vast sums of money into global warming makes no sense, when the same money could lead to actual solutions to genuine global problems, such as malnutrition, dangerous water and unsanitary living conditions, HIV/AIDS, and malaria.

Cutting emissions will negatively impact the reliable, efficient energy supply that has been, and continues to be, crucial to Texas’ economic growth. A booming energy market has opened the floodgates of economic prosperity here, and decreasing the energy supply or artificially raising its costs will harm all sectors of our economy.

Measures proposed by climate scaremongers to reduce carbon dioxide emissions threaten our economic prosperity. That reality, rather than the possibility of melting ice caps and rising sea levels, is a genuine cause for concern.

Drew Thornley is a policy analyst in the Center for Economic Freedom at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

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