Ethanol, energy and profits

President Bush’s recent swing through Central and South America was aimed at bolstering relations in the face of increasing movements for independence from U.S. domination. It has been a period of relative regional neglect with America’s resources directed to the war in Iraq. Interests in the two distant regions of the world have a common intersection: energy. While in Iraq the struggle is for control of the declining supply of world petroleum, to our south the goal is to develop ethanol as an “internationally-traded commodity” for fuel.

Brazil leads the world with “hundreds of miles” of sugarcane plantations, much of it derived by decimation of vast areas of the large Amazon rainforest basin, which ecologists claim are critical for life on the planet. Eight of 10 new Brazilian cars are fueled by ethanol. Brazilian media billed Bush’s meeting with President Lula da Silva as a bid to create a new “OPEC of ethanol.” Last month, a memorandum of agreement was signed by Brazil with Japan’s Mitsui & Co. to construct a pipeline in Brazil to help export ethanol to Japan.

However, analysts point to a major problem for the Brazil-U.S. relationship: a 54 cent U.S. tariff per gallon on Brazilian ethanol. An acre of sugarcane yields 662 gallons of ethanol while an acre of corn yields only 354 gallons. Since corn is the major U.S. plant source for ethanol, the tariff is to protect the U.S. agrichemical industry (free trade indeed).

Ethanol production consumed 20 percent of last year’s U.S. corn crop and will be higher this year. Corn is the main feed for livestock and the Agricultural Department recently reported that demand for corn for ethanol is driving up prices for beef, pork and chicken. Costs to feed chickens have increased 40 percent with the price of corn at $3.20 a bushel up from $2 last year.

As noted earlier (PWW 2/17-23), the 5 percent or so gain in fuel supplies from an even greater diversion of corn to ethanol could be met many times over by any number of alternatives, the most obvious being increasing auto fuel efficiencies by an easily-obtainable 20 percent coupled with restrictions on endless urban sprawl. While the U.S. refuses to take meaningful steps to curb global warming, many other nations are taking vigorous steps.

While Bush was working to craft an ethanol alliance for this hemisphere, the 27-nation bloc in Europe was meeting in Brussels and agreed that by 2020 a fifth of their energy would come from renewable sources, such as wind and solar. This schedule goes far beyond the original 35-nation Kyoto agreement that the U.S. never signed. Although ethanol for fuel was also on their agenda, Europe is leading the world into the age of wind energy with Germany generating the highest yield with 16,600 megawatts generating capacity from wind. Denmark already gets a remarkable 20 percent of its electricity from wind power. Worldwide, wind-generated energy is growing 29 percent per year.

It isn’t simply a matter of profits, as such. A single large advanced wind turbine on a quarter-acre farm in Iowa or Colorado is worth $3,000-$5,000 per year in royalties to the farmer from the local utility company. The same quarter-acre could produce 40 bushels of corn worth only $120 or beef worth about $15. So in our profit-driven economy, why don’t we have a massive wind-to-energy program?

The answer must come from an examination of who makes the profits. The ethanol industry includes the multinational agrichemical companies that produce the seeds, fertilizers, pesticides, farm equipment, distilleries, shippers, etc., as well as feeding into the enormous infrastructure of the oil industry (vehicles, service facilities, highways, etc.). Like Big Oil, which isn’t really threatened by ethanol, they have enormous political power to direct a national economy. This direction will generate handsome corporate profits, but at the same time, increase food shortages for billions of the world’s poor and lead the planet further toward ecological disaster.

Dr. David Kennell is Professor Emeritus, Department of Molecular Microbiology, Washington University School of Medicine.