The Ethanol Con

The pitch to reduce American gasoline consumption by 20 percent over the next 10 years was one of the highlights (or, make that, lowlights) of the president’s State of the Union Address last Tuesday night. The president hopes that three quarters of that goal will be met by that old political standby — corn.

Yesterday, the Orange County Register ran an op-ed I wrote that debunks the claims that:

  • ethanol will lead to energy independence;
  • ethanol is economically competitive now;
  • ethanol reduces gasoline prices;
  • ethanol is a renewable fuel;
  • ethanol reduces air pollution;
  • ethanol reduces greenhouse gas emissions;
  • ethanol subsidies are necessary to “level the playing field”; and
  • cellulosic ethanol is a promising economic bet.

Since I wrote that, however, even more devastating research has come to light. On the issue of global warming, a PhD student at MIT just issued a paper through MIT’s Laboratory for Energy and the Environment demonstrating that, on a life-cycle basis, ethanol and gasoline emit about the same amount of greenhouse gases. Increasing ethanol production, however, will tilt the greenhouse gas balance against ethanol because the only way to get more corn production is to seed more land with corn. That new cropland will be, on balance, less productive than the land already being used for corn, so land harnessed at the margin would require more fertilizer and/or irrigation (read, more energy inputs) to produce commercially optimal yields. The increased energy inputs required for the new cropland will be so great that the author believes that the president’s plan for wildly expanding ethanol production would actually make greenhouse gas emissions higher than they are at present.

For a more robust discussion of this automotive snake oil, see the cover story I co-authored — titled, “The Ethanol Illusion” — in the most recent issue of the Milken Review. An even more comprehensive beating, in the form of a full Policy Analysis, will soon be published by Cato.

By the way, I live to debate this topic. If anyone wants to sponsor an event featuring me and the ethanol shyster of your choice, just drop me a line. Any time, any place, any where.