Environmental Outlook: Declining Political Support for Ethanol

Environmental Outlook: Declining Political Support for Ethanol

The U.S. produces more than half the world’s ethanol. Yet, the once strong political support for the bio-fuel is, for the first time, showing signs of waning. As part of the Environmental Outlook series we discuss why an industry that was once the darling of the renewable energy sector seems to be falling out of favor.

America’s ethanol industry is booming. The U.S. is projected to become the world’s biggest ethanol exporter by the end of the year. In the past, Congress has strongly supported the industry. Now it seems to be losing its enthusiasm. The catalyst is not long-standing doubts about its green credentials, or concerns that government intervention is distorting the market. Instead, as farming communities prosper while the rest of the country tries to stave off a recession, subsidies for the industry seem increasingly hard to defend. As part of our Environmental Outlook series we ask whether ethanol can retain the broad political support it has enjoyed for so long.

Guests

Bob Dinneen

president, Renewable Fuels Association

Sheila Karpf

legislative and policy analyst, Environmental Working Group

Chuck Abbott

commodities reporter, Reuters

Program Highlights

The U.S. produces more than half of the world's ethanol, yet the once strong political support for this bio-fuel is, for the first time, showing signs of waning. why does an industry that was once the darling of the renewal energy sector seems to be falling out of favor?

What Could Replace Ehtanol?

With technological and economic problems adding up for ethanol production, our guests discussed what alternatives to ethanol we should be considering. "We need to invest more in public transportation. We need to look at how to reduce gasoline consumption overall and increase energy efficiency. And we've also talked about putting money towards investment and research in truly advanced bio-fuels that reduce greenhouse gases, don't compete with the food supply, etc," said Sheila Karpf from Environmental Working Group.

The Political Climate Surrounding Ethanol

Chuck Abbott, Reuters News: "Probably the most consequential day for ethanol policy this year was June 16. That was the day the senate voted 73 to 27 to cut off the excise tax credit for ethanol. And on the same day the House was voting on the agriculture appropriations bill and it voted 283 to 128 to prohibit the agriculture department from using any of its money to install blender pumps." (Blender pumps are fuel pumps that can dispense mixtures of ethanol and gasoline up to 85 percent ethanol).

Concern About Ethanol Subsidies in an Era of Deficit Problems

The ethanol industry came forward earlier this year to say that they don't feel they need the federal subsidy in the form of tax credits. Bob Dineen, Renewable Fuels Association: "We said, you know, let the tax incentive expire. We do think that there are other things that the government ought to do in terms of encouraging investment in infrastructure and allowing investments in new technologies, new feed stocks to go, allowing the evolution of the industry to continue."

Ethanol and Food Supplies

According to Dineen, the corn that is used to produce ethanol is not suitable for food consumption. "We are only using the starch from that corn. What is left behind is a very high value, high protein feed that is then used to feed cattle, feed poultry, feed hogs and is adding to the feed supply." But Karpf disagreed: "We are currently using 40 percent of our corn crop for ethanol production...here in the U.S. we only spend about 10 percent of our income on food, but in developing countries that can be anywhere from 50 to 70 percent of their income being spent on food. And so even a small price increase for corn, wheat or other crops can make or break whether families are feeding themselves."

You can read the full transcript here.

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