The Senate is expected to vote this week on a much-anticipated energy bill that would raise vehicle mileage standards for the first time in 32 years. The bill would also expand the nation's renewable fuel standards, or RFS, by requiring U.S. consumers to use 36 billion gallons of renewable fuel annually by 2022.  More than half of those 36 billion gallons would be required to come from advanced biofuels such as cellulosic ethanol.

While oil provides more than 97 percent of the fuel for our vehicles today, ethanol advocates assert that it is an environmentally friendly energy source that could provide the United States a bridge to energy independence.  And support for ethanol has been growing steadily among U.S. lawmakers, in Congress and on the campaign trail.  With the Iowa caucus only weeks away, ethanol’s political popularity has extended beyond farm-state politicians to presidential candidates, who are keenly aware that the nation’s top 10 corn-growing states hold nearly 40 percent of electoral college votes. Candidates from both major parties have already been asked to take ethanol pledges .

But despite the corn-based fuel's popularity, ethanol won’t be widely available at a competitive price until its supporters overcome a handful of operational, environmental, and political concerns.  Even if America is “ addicted to oil ,” ethanol should be considered only one part of the solution—not the solution.

What are the drawbacks of corn-based ethanol?

As of June this year, only about 1,133 out of 170,000 gasoline stations around the country offer E85, and there are several significant operational obstacles to expanding that number. Although E85 ethanol is a good option, it’s not used prominently enough to make a real difference.  This is primarily because ethanol is difficult and expensive to transport.  Because of its tendency to pick up water in gasoline pipelines, ethanol is primarily transported by ship and rail. The buy-in for gas stations sets a high barrier because of stiff blending regulations. And then there's the price. Installing an E85 pump is incredibly expensive—Business Week puts the cost at roughly $200,000.

Corn-based ethanol also faces many environmental concerns.  Corn is among the most energy- and water-intensive crops to grow, and harvesting land to prepare it releases a significant amount of carbon into the air.  This only increases global warming, the phenomenon our use of ethanol is trying to combat in the first place.

A report by the Organization for Economic Cooperation and Development entitled “ Biofuels: Is the Cure Worse Than the Disease? ” argued that the “overall environmental impacts of ethanol and biodiesel can very easily exceed petrol and mineral diesel.”  With our present technology, the environmental improvement of ethanol biofuel over petrol is modest at best.  According to a fuel-cycle study (see figure 10) by the Argonne National Laboratory, using E10 ethanol (10% ethanol, 90% gas mixture) leads to a three percent reduction in fossil energy use per mile, while using E85 ethanol (85% ethanol, 15% gas mix) leads roughly to a 40 percent reduction.

How did corn-based ethanol become politicians' favorite renewable fuel?

Agriculture companies like Archer Daniels Midland, the biggest ethanol producer in the country, have spent decades lobbying Congress and the White House to warm up to ethanol as an alternative to fossil fuels.  Their efforts have paid off: The Energy Policy Act of 2005 established a renewable fuel standard requiring the United States to use 7.5 billon gallons of renewable fuels by 2012.

The corn industry has poised itself to benefit from this requirement.  The number of corn ethanol plants in our country jumped from 81 in January 2005 to 129 in 2007.  Moreover, the industry relies heavily on government subsidies.  Ethanol producers receive a federal tax credit of 51 cents per gallon and economic protection from cheaper sources of ethanol.  Brazil’s sugarcane ethanol, for example, is subject to a 54-cents-per-gallon tariff, despite the fact that it yields more crop per acre than corn and is takes much less energy to turn into fuel.  Moreover, Brazilian distillers are able to produce ethanol for 22 cents per liter ($1 per gallon), compared with the 30 cents per liter ($1.36 per gallon) for corn-based ethanol.

What does the future of biofuels look like?

There is an emerging consensus that the federal government should invest in advanced biofuel, fuel from renewable non-starch biomass, such as cellulosic ethanol.  Cellulosic ethanol, derived from switch grass and agricultural waste, is a more environmentally friendly and mobile source for biofuel because it does not require as many fossil-fuel inputs and can be produced outside of the Corn Belt.  Proponents of cellulosic ethanol say the fuel would provide a 50 to 60 percent improvement over corn-based ethanol in terms of greenhouse gas emissions.  The drawback is that cellulosic ethanol is more expensive to produce.

The Organization for Economic Cooperation and Development report recommends that national governments stop creating new mandates for biofuels, investigate ways to phase them out, and replace them with technology-neutral policies such as a carbon tax.  Energy expert David Sandalow argues that beyond ethanol, our government should support plug-in hybrid vehicles and create an “oil addiction index” to stimulate and track our progress.  Many energy experts believe that the right way to look at our fuel problem is to find ways to reduce our consumption of energy. Lisa Margnoelli at the New America Foundation maintains that the focus should be on creating an energy efficient trading system which ultimately reduces our consumption of energy.

Anyway you look at it, it’s clear that much more research needs to go into our search for an alternative fuel source.  Corn-based ethanol will be a part of the solution, but there is a need for additional options that are more efficient and eco-friendly.

By Eliza Krigman
Courtesy of the Center for American Progress