For Ethanol, the Future Is NowAlcohol-based fuels such as ethanol have been the underdog rivals of the oil industry for more than a century. A look at the history of ethanol and the current frenzy over its potential to kick U.S. oil dependence.
In many parts of the country, when you fill up at the pump, the fuel is 10 percent ethanol, which is alcohol made from corn. In 2005, Congress mandated that refiners increase the ethanol content in gasoline. It also declined to protect refiners against lawsuits filed when the additive MTBE leached into water supplies. That gasoline additive can cause cancer.
So in much of the country, it was out with MTBE and in with ethanol. Almost 80 new ethanol plants are under construction.
Politicians from California to New York protested that their motorists would spend more than necessary on fuel to bolster farmers' incomes.
Of about 140 billion gallons of gasoline that we pump every year, overall only about 2 percent to 3 percent is ethanol. But 20 percent of America's corn crop is made into ethanol.
Ethanol Boom Raises Corn Prices
By Christopher Joyce
For farmers who raise corn, the ethanol boom has been a long time coming.
The Delmarva Peninsula lies just inland from the swanky beach hotels along the Maryland coast. It's green and pool-table flat, and its soil has fed Americans for more than 300 years.
For about 120 of those years, the Hutchison family has farmed here. They've raised soybeans, hogs and even a crop called kenaf, used to make paper.
Right now, corn is the hot crop, and Robert Hutchison's silos are bursting with shelled corn that's drying.
"We start selling January, February, March, and we'll empty our tanks by June," he said.
Corn farmers such as Hutchison are getting about $4 a bushel.
He says these high corn prices — pushed up in part by the demand for ethanol fuel — have farmers eager to buy seed.
"I sell seed corn as part of my other business," he said. "Every farmer I go to is planting additional acres of corn."
President Bush set the goal that in 10 years, Americans would replace one-fifth of the gasoline they use with ethanol.
That goal could also reshape the farm economy in unexpected ways.
Hutchison's a big fan of ethanol — but it also worries him and other farmers in the Delmarva Peninsula. They don't sell much corn to ethanol distilleries; their most important customers are hog and poultry producers.
"They are our No. 1 user of grain. We need to be concerned about that, and they need to remain viable," he said. "This whole thing will have to shake out to readjustment of prices and uses of grain."
Farmers here are happy to get record prices for corn, but they don't want to alienate the livestock producers, who are unhappy about the way ethanol is pushing up corn prices. And if those prices go too high, the livestock growers will switch to another kind of feed.
The challenge, he says, is find a way to keep feeding the new ethanol market without losing his old customers.
The ripple effects of higher demand for corn could reach far and wide. Pricier corn could mean pricier bacon, pricier steak, pricier Coke – because it uses corn syrup.
And an ethanol boom could have environmental costs, too. Elizabeth Marshall, an energy economist with the World Resources Institute in Washington, D.C., notes that corn uses a lot of fertilizer and a lot of herbicides. These have damaged rivers, lakes and especially the Chesapeake Bay along the Delmarva Peninsula. She says if the country wants more ethanol, it should help farmers find friendlier ways to grow corn and other crops in less harmful ways.
"A lot of people are looking for alternatives, including corn growers, but it's a very risky field," Marshall said. "You can't experiment with new technologies year-to-year and expect to stay in business if you hit a really bad year."
Delmarva farmer Robert Hutchison is already taking that risk, however.
Hutchison is growing a new kind of crop for the ethanol market — barley.
Most barley has a tough seed-hull that ethanol distilleries can't handle. So Hutchison is growing an experimental hull-less barley — the hull drops off during harvest. On a bumpy ride out to his test field, Hutchison says his first job is to persuade farmers to grow it.
"Part of the challenge of doing this ethanol plan is making sure we could pay the farmer enough additional that he would still net out the same, or more, as he would growing conventional barley," Hutchison says.
The idea is that farmers could grow winter barley for the ethanol market and summer corn to keep the chickens and hogs fat and happy. Moreover, barley keeps soil from blowing away in the winter, and sucks up excess fertilizer that might otherwise run into local waterways.
Hutchison says his hull-less barley is a gamble, but the ethanol boom has helped him make more from his corn crop than he has in decades.
"It's been since the '70s since I've been able to say farming is really profitable beyond just barely making a living and squeaking by."
Ethanol, Once Bypassed, Now Surging Ahead
By Robert Siegel
Bill Kovarik wrote a history of alcohol fuel, which he says was a popular lamp fuel as early as 1840.
During the Civil War, alcohol was taxed.
The target was whiskey — but alcohol fuel got caught in the crossfire.
"By taxing industrial alcohol along with beverage alcohol, they basically put a bunch of distilleries out of business in the 1860s and the 1870s, and opened the door for the Pennsylvania oil boom," Kovarik said.
The Civil War tax wasn't repealed until 1906 when Theodore Roosevelt was president, and no friend of the oil industry.
In the early 20th century, road tests showed that alcohol was a competitive fuel.
As an additive, it boosted the octane of gasoline. Alcohol mixes were used in many countries.
Henry Ford called alcohol the fuel of the future. His critics added, "And it always will be."
"Ford said at some point in the future, we'll run out of oil, but before that time, oil will become so expensive that we'll be looking for some alternatives," said Bob Casey, who works at The Henry Ford Museum in Dearborn, Mich. "He was 80 years, perhaps, too early, but he was looking into the future."
Charles Kettering of General Motors was also an alcohol booster. But his engineers figured it would take a new process using cellulose to make enough fuel.
Just a few years after the crippling tax was removed, Prohibition became the law of the land and the peddler of alcohol motor fuel was maligned as the colleague of moonshiners and bootleggers.
And — as Bill Kovarik tells it — alcohol was dealt out of the auto fuel business, in favor of another additive that boosted octane. He said General Motors made a deal with Standard Oil, which is now Exxon, to go with leaded gasoline, with an additive called tetraethyl lead.
There were already complaints of the toxic effects of lead, but alcohol was still on the sidelines. And, as new oil fields were being discovered around the world, alcohol looked even more expensive.
In the 1970s, Midwestern politicians came back to ethanol. And by the 1980s, with a jumpstart from politicians and subsidies, motorists in the Farm Belt were filling their pumps with a mix of oil and corn byproduct. Back then, they were calling it gasohol.
Loran Schmit, an early backer of ethanol in Nebraska's state senate, said more than 30 years ago that it should be used to replace lead in gasoline, and by doing so, it would reduce reliance on foreign oil and create a new market for farmers.
The last two reasons for promoting ethanol are still cited today.
But do they really check out? Tetra ethyl lead is gone; its successor additive, MTBE, is on the way out.
But is it a net environmental gain?
Ken Cook of the Environmental Working Group says it's a close call.
"It helps us with climate change. We're producing less CO2 from ethanol than with gasoline. It definitely helps us with respect to cleaner air in some circumstances. But it has some environmental drawbacks, too," he said. "More soil erosion, more runoff from farm fields growing corn for ethanol plants, pretty heavy use of nitrogen fertilizer."
Does it reduce America's dependence on foreign oil?
John Felmy is chief economist for the American Petroleum Institute. The API speaks for the oil industry, which now welcomes the role of ethanol. Given the federal mandate to use it, the oil industry doesn't really have a choice.
"Ultimately, (ethanol) is limited by the size of the corn crop," Felmy said. "We've already seen corn prices go up sharply over the last couple of years, as the amount of ethanol has increased in the fuel supply."
Felmy, like the president, alludes to a new technology, such as cellulosic ethanol, as a more significant solution to oil imports.
But as for Schmidt's third aim, to help farmers find a new market for their grain, the benefit is unmistakable.
Environmentalist Ken Cook says the enthusiasm for ethanol in the rural Midwest is remarkable.
"This is the No. 1 hope for their future," he said. "They used to be excited about getting the next women's prison located in the county. Now, they're excited about the ethanol plant.... Really the political momentum behind it is incredible."
It is heavily subsidized, federally mandated, and wildly popular on the farm. For Henry Ford's Fuel of the Future, the future never appeared so near.
During last month's State of the Union address, President Bush made it a federal goal to reduce the United States' gasoline usage by 20 percent during the next 10 years. It seems an environmentally friendly goal: Vehicle emissions are responsible for one-third of carbon emissions in the United States.
But some environmentalists are lukewarm about the replacement fuel Bush is backing: ethanol. They question the practicality and sustainability of the corn-based fuel.
Dan Becker, director of the Sierra Club's Global Warming and Energy Program, and Elizabeth Marshall, senior economist at the World Resources Institute, share their concerns:
Corn Vs. Cellulosic
Corn ethanol is presently the only commercially viable means of ethanol fuel production. It's made by distilling fermented simple sugars derived from corn. The problem is, it's still an environmentally taxing process.
"With ethanol, the devil is in the details," says Dan Becker. "There are ways of making it that are quite clean, but that's not the way we're doing it."
Becker backs cellulosic ethanol. If researchers can streamline what's still an experimental process, then ethanol could be made from a variety of plant materials.
The benefit of that, Elizabeth Marshall says, is that cellulosic ethanol production would allow farmers to grow crops that work in their area, rather than forcing corn on lands that are not well-suited to support it.
A Decrease in Greenhouse Gases?
Some environmentalists also question whether corn ethanol will ultimately help combat global warming. Dan Becker says it's necessary to take into account the energy expended to produce the fuel.
"The way we make ethanol now," Becker says, involves "seven passes over the field with a diesel tractor, heating the corn to convert it into ethanol, and transporting the fuel in diesel-guzzling trucks."
Marshall estimates that producing 15 billion gallons of corn ethanol – less than half of Bush's projected goal for 2017 – would increase greenhouse gas emissions from agricultural production by almost 8 percent.
Furthermore, Becker states, ethanol has a lower energy content than gasoline, so to meet the same energy demands, more gallons of ethanol would have to be produced.
A problem often cited with ethanol is that, when the production process is taken into account, it will ultimately release more greenhouse gas than gasoline. Becker says more recent studies show that's not the case. Overall, he says, corn ethanol isn't a loser but, "it's not a big winner, either. The best thing that we can say about ethanol is that it is not gasoline – and that is damning with faint praise."
The Environmental Footprint
Elizabeth Marshall worries that attempting to curb greenhouse gases with increased corn ethanol production will ultimately come at the cost of the country's water and soil.
"Soil erosion, nutrient runoff, and pulling new land into corn production are all concerns," she says.
To meet the increased demand for ethanol, many farmers want to bring into use lands that are currently protected. Marshall also predicts that higher corn prices will give farmers incentive to revert to environmentally unfriendly practices.
Farming's environmental footprint has always been a concern, says Marshall. "Increased demand for ethanol will only exacerbate existing problems."
President Bush has seen into our energy future and named it ethanol. In his State of the Union speech last month, he called for alternative fuels to make up 20 percent of the U.S. fuel supply by 2017, and asked for $1.6 billion in a farm bill request to support alternative-fuel research. The fuel that currently shows the most potential is ethanol, which is mostly made from corn in the United States. Here, a look at what someday soon you may be asking for when you say at the pump, "Fill 'er up."
What's the benefit of ethanol over gasoline?
There's a lot of debate on this point. From all quarters of the United States, there's an increasing call to reduce dependence on fossil fuels. When burned, carbon-based fuels such as oil and coal release air pollutants, including the notorious greenhouse gases. Moreover, President Bush has made it a mandate to reduce America's reliance on foreign countries for its energy supply. One way to cut down on oil is to turn to alternative fuels, such as ethanol.
Can ethanol reduce greenhouse emissions?
A 2007 Congressional Research Service report says ethanol may slightly reduce greenhouse gases as an alternative to gasoline. But ethanol is a cleaner-burning fuel, but emissions released in the production of ethanol — manufacturing fertilizer for the corn and powering farm equipment and distilleries — have to be factored into the equation.
Can ethanol reduce dependence on foreign oil?
The CRS says ethanol does have that potential – by replacing gas in vehicles and in part because right now a lot of ethanol production is powered by natural gas or electricity from coal-fired power plants.
How much ethanol is currently being used?
Right now, about 5 billion gallons of ethanol was pumped into vehicles in 2006, a threefold increase since the turn of the century. But it's also a drop in the bucket compared with the amount of gasoline used — about 140 billion gallons in 2006. And only 1 percent of the ethanol used is the E85 blend — 85 percent ethanol, 15 percent gasoline. The other 99 percent contains only 10 percent ethanol, which offers significantly fewer environmental and energy benefits.
How many cars on the road can use ethanol?
The National Ethanol Vehicle Coalition estimates 6 million cars capable of running on E85 are on the road, compared with 230 million gasoline and diesel vehicles. But as of 2004, only 146,000 vehicles were actually using E85.
Why are so few cars using ethanol?
Not enough gas stations carry ethanol. Most stations that do are located in big corn-producing states, which cuts down on shipping costs. Out of the 556 stations nationwide that carry E85, only 118 are located along the East and West coasts. More stations are picking up ethanol, but shipping remains an issue. Ethanol can't be sent through gas pipelines; it has to be transported by truck, rail or barge.
So the benefits of ethanol aren't clear-cut yet. Why is there such a focus on it?
Environmentalists and Bush administration officials agree that corn-based ethanol is not the solution to our energy needs. For one, there isn't enough corn in the United States to make ethanol a significant replacement fuel. When Bush promotes ethanol, what he is banking on is the development of a still-experimental production process that would allow ethanol to be made from a variety of plants. Called "cellulosic ethanol," the process would cut down on the consumer cost of ethanol and use fewer carbon-based fuels to make it, thus reducing greenhouse-gas emissions even more. For instance, fields of prairie grass need much less help from fertilizers and farm equipment to grow.