The Issues with Corn Ethanol

Brian Westenhaus, over at New Energy and Fuel, has been telling me what a good product corn ethanol is. He is very familiar with raising corn for ethanol, and can see how the process has been improved in recent years. Now it takes hardly any petroleum and chemical inputs from the farmer in order to grow a crop of corn for ethanol. The process is very mechanized, so it does not take much labor either.

He has been having some discussions with Robert Rapier, who sees corn ethanol as being a problem, primarily because of its low energy return. I see some other issues with corn ethanol, relating primarily to its competition with food, and because of this, its tendency to raise the price of food. This is a problem for poor people around the world who cannot afford high-priced food. Another concern is that the amount of corn ethanol produced will tend to decline over time, rather than being a real help when we need it.

Let me explain the issues as I see them.

1. Not a good enough energy return.

This is the summary exhibit of a big corn ethanol study done at Berkeley in 2006 that expresses its results in several ways:

According to the Berkeley study, "Ethanol today" is a very efficient user of petroleum. Even back when this study was done, it used .04 mega joules (MJ) of petroleum for each MJ of ethanol produced. From what Brian is telling me, advances are working to make this ratio even better. So from this point of view, ethanol is very helpful.

The objection that is raised by Robert Rapier and others relates more to the total fossil fuels used in making ethanol. This is shown in two ways on the chart-as the ratio of fossil fuels to each MJ of ethanol produced (amounting to .774 for Ethanol Today), and as the reciprocal of this amount. This is the "Net Fossil Ratio" amounting to 1.30 for Ethanol Today. This latter ratio corresponds to what one sometimes sees referred to as Energy Return on Energy Invested, abbreviated as EROEI or EROI.

The objection that is made is that society needs, on average, a fairly high EROEI to operate, because the energy inputs measured in making this calculation are direct inputs (for example, energy of natural gas in running the ethanol plant, energy of natural gas in making fertilizer). Society as a whole needs a lot of indirect inputs as well, such as roads to take the ethanol to the plant, schools for the children of the ethanol workers, and clothing for the workers. We don't know exactly how high an EROEI is needed on average to run society, but a reasonable approximation is about 5.0. If ethanol was only at 1.3 at the time of this study, even if it has improved somewhat, it is still almost certainly far below the 5.0.

The question is whether this comparison is fair-and different people would come to different conclusions. When we make electricity, we lose much of the energy value of the coal or natural gas in the conversion process. Similarly, if we build a gas-to-liquids plant for converting natural gas to liquid products, we use a fair amount of the energy from the gas in the process. A liquid fuel is more valuable than the gas, so this makes sense economically. Perhaps we should view making ethanol as partly a way of converting natural gas to a liquid. In this case, the relatively low ratio is not as much of an issue, especially if we have plenty of natural gas. If we don't have plenty of natural gas, then shortages of natural gas get to be an issue as well.

We might also compare the EROEI of ethanol to the EROEI of alternative sources of additional liquid fuels for our vehicles. In this case, alternatives would most likely involve ramping up production from Canada's oil sands. This would involve huge capital investment in plant and most likely considerable addition to pipeline capacity. The EROEI of this would also be low, perhaps 3.0 or less, when all of the pieces that need to be added to the system plus the expected operational inputs are considered. So it is not as if we have many good alternatives for ramping up liquid fuel production with EROEIs better than 5.0. What we have is a choice between less-than-perfect fuel sources.

2. Ethanol production uses resources that could be used for food production, and tends to raise food prices.

I think this is the big issue with ethanol production. When poor people around the world are spending 50% or more of their income on food to begin with, they really cannot afford higher prices for food, so higher food prices tend to cause hunger.

The real issue here is the fact that we live in a finite world, and are reaching limits in many different ways-including petroleum supplies, fresh water, arable land, food supply, and CO2 in the atmosphere. Using corn ethanol instead of petroleum for part of our fuel supply can help us substitute something that is not in short supply for something that is, and temporarily postpone a crisis that we might be reaching.

The catch is that what seems to be plentiful at one point in time doesn't always stay plentiful. At the time the decision was made to expand corn ethanol production, we seemed to have an excess of arable land, and corn prices were low. Using some corn for ethanol looked like it would help farmers, and also help increase fuel for our vehicles. There was also a belief that cellulosic ethanol production might be right around the corner, and could substitute, so there would not be as much pressure on food supplies.

Now the situation has changed. Food prices are much higher, and the number of people around the world with inadequate food supply is increasing. The ethanol we are using for our cars is much more in direct competition with the food people around the world are using, and the situation may very well get worse, if there are crop failures. Cellulosic ethanol is working much less well than hoped, and there are not any other approaches that look close to being commercial, although theoretically, in a few years, this could change.

If oil supply declines in the future, it is likely that the amount of food that can be produced around the world will decline, because the shorter petroleum supplies will interfere with mechanical planting and harvesting of crops, and with irrigation and herbicide and pesticide application. So as oil supplies drop, the conflict between food and fuel use of corn and of cropland can be expected to increase.

3. Concern about damage to the environment.

A closely related issue to (2) is the concern that the growing of corn in large quantities will cause damage to the environment and may make some of our shortages worse. For example, when corn is grown is grown "fencepost to fencepost," there is concern that it may be planted in areas which are easily subject to erosion. We are already losing topsoil. This would tend to cause us to lose topsoil more quickly.

Also, water levels are dropping in quite a few aquifers, as a result of excessive water use. The Ogallala Aquifer in particular is dropping. If corn is grown where it needs to be irrigated, there is concern that it will make this situation worse.

As more and more of the earth's surface is used for crops, less and less land is available for wild areas. This has an adverse effect on biodiversity. For example, bees and other pollinators may be adversely affected by not having a variety of food sources.

4. Requires subsidies or mandates to be salable in reasonable quantities.

At this point in time, corn ethanol is subject to both subsidies and mandates. Of course, oil gets its own forms of subsidies as well, so it is not easy to tell exactly how different costs are, when making a comparison.

Going forward, the assumption that has always been made is that petroleum costs would rise considerably, making alternatives more competitive. We really don't know whether this will be the case. Food is a less discretionary item than fuel. If there are shortages of both food and fuel, people will buy food before fuel. So it may be that food prices will rise even more than fuel prices.

Natural gas prices are very low right now. The expectation is that these will need to rise, if shale gas producers are to make an adequate return on their investment. If natural gas becomes more expensive, this will put even more price pressure on corn ethanol.

5. The amount of ethanol produced may decrease, rather than increase, over time.

I mentioned above that the amount of food produced is likely to decrease over time, as the amount of petroleum available declines, because of the use of petroleum in the whole system. It seems to me that some of the same issues may spill over to ethanol production-governments will not be able to plan well enough to protect farmers from shortages. Also, there will be more pressure to move land from ethanol production into food production. Prices for food and ethanol will tend to rise, making it harder and harder for people to afford both fuel and food, so demand for fuel may decline.

As the amount of oil produced declines, the amount of ethanol that can be blended into gasoline as E-10 or E-15 decreases. So that portion of the ethanol market is likely to get smaller over time. E-85 has not caught on, in part because it tends to be expensive, and in part because there are not enough service stations selling it to make it reasonable for flex-fuel cars to be tuned to use E-85 in a more efficient manner. If there is pressure to use more and more land for food, I doubt the E-85 service station situation will get much better, so cars are likely to remain tuned to optimize mileage for gasoline, rather than ethanol. So I expect the proportion of E-85 sold will remain low, although we can debate this.

I also have a worry that many will think odd. Our financial system is very much tied in with all of our petroleum problems. I am afraid credit problems will become more and more of an issue, and ripple through the system. For example, farmers may not be able to get credit to buy new machinery, or even to buy seed for putting in the new crop. Because of this, production of corn, both for food and ethanol, may drop. Or your local electric utility may run into financial difficulties, and not be able to pay creditors or buy fuel. If there are electrical interruptions, this could affect ethanol production, even if the farmers are able to grow the corn.

Other

One issue that has come up recently is the fact that the US is now producing more corn ethanol than it can easily blend into its own supply, so we are exporting some of the corn ethanol. With this approach, the subsidy for corn ethanol is acting to keep the price down for countries importing the ethanol. We don't know whether the corn ethanol would have been competitive with local products without the subsidy-presumably it would not have been, and local farmers would have been able to sell their ethanol instead. Our subsidy helps to put European producers of corn ethanol (to the extent any is produced in Europe) out of business.

I would imagine the dollar amounts involved are at this point relatively small. I suppose the issue is that "our" subsidy is going to help someone else. The theory is that if we are going to subsidize something, we should be subsidizing our own ethanol use, not someone else's (although, in the end, it all goes to augment oil use), and both act to reduce our balance of trade problems. If Europe is really unhappy about this outcome, they will add a tariff, or otherwise restrict trade.

I am sure that there are other issues, for example, with corn ethanol's impact on CO2 emissions and air quality, but I have not researched them adequately to address them. The points I have listed give at least a flavor of the objections I see.

By. Gail Tverberg

Gail Tverberg is a writer and speaker about energy issues. She is especially known for her work with financial issues associated with peak oil. Prior to getting involved with energy issues, Ms. Tverberg worked as an actuarial consultant. This work involved performing insurance-related analyses and forecasts. Her personal blog is ourfiniteworld.com. She is also an editor of The Oil Drum.