TCS Daily

Ethanol's Dirty Little Secrets

By Tim Carney - July 12, 2006 12:00 AM

Today's politicians try to justify ethanol's upward pressure on gasoline prices by touting it as a "clean fuel," but that claim is dubious. In fact, ethanol was on the verge of being outlawed by clean air laws in October, 1992, when President George Bush called for exempting ethanol from the Clean Air Act.

In the summer of 1991 an eclectic group from the petroleum industry, the ethanol industry, government agencies, and environmental groups all sat down to hammer out new regulations required by the 1990 amendments to the Clean Air Act, setting stricter standards for automobile emissions of Carbon Monoxide and two types of emissions that cause smog: nitrogen oxide (NOx) and hydrocarbons. When the EPA implemented it in April of 1992, the ethanol industry, which had signed on to the agreement, immediately raised a cry -- the clean air rules might outlaw ethanol.

It turns out that, despite all the claims that ethanol is good for the environment, ethanol may be a net polluter in many ways. Ethanol does reduce carbon monoxide emissions because it is an "oxygenate," which means it adds oxygen to the fuel, converting the CO into CO2, carbon dioxide. (Seeing how CO is not greenhouse gas, our ethanol policies result in making more CO2; what would Al Gore say?) But on the question of hydrocarbons, ethanol appears to make things worse.

Alcohol's hydrogen bonds are weaker than those of water or even gasoline, making alcohol more likely to evaporate, both under high heat, and under normal temperatures. In scientific terms, this means ethanol and other alcohols have greater "volatility" than gasoline.

More volatile fuels send more hydrocarbons into the air, because less of the hydrocarbons will be burnt up in combustion, and more will simply evaporate and float into the air. Adding 10 percent of ethanol to a fuel mixture increases the volatility, sending more smog-causing hydrocarbons into the air.

The 1991 rules had a strict cap on volatility, and ethanol didn't meet the cap. This sent ethanol's supporters into a frenzy. As President Bush sagged in the polls, including in the corn-belt, he knew he had to act. In August, Bush went to the Illinois State Fair ready to propose an increase in the already generous subsidy for ethanol. The Republican Governor, Jim Edgar, convinced him that would not go far enough, and so the president ripped that proposal out of his speech until he could craft a more appealing promise.[i]

Earlier that year, Dwayne Andreas, CEO of Archer Daniels Midland (the country's top ethanol producer), had co-chaired a fundraiser for the Republican Party, himself contributing $400,000 to the cause of reelecting George Bush.[ii] On October 1st, Bush announced that he would grant the special exemption the ethanol industry hoped for: ethanol would be held to lower pollution standards than gasoline.

After Bush lost reelection, his proposed exemption entered limbo. A less skilled businessman than Dwayne Andreas might have been left out in the cold. But two months after the election, Andreas was at President Clinton's inauguration. Andreas contributed heavily to the inauguration, but he told reporters that although his business was directly affected by the government in many ways, his contributions or his closeness to the Clintons had nothing to do with ADM. "I'm here because I was invited," he told one reporter. "It has nothing to do with business. My business isn't affected."[iii]

But his business was affected. Clinton ended up not following Bush's proposal to exempt ethanol from volatility standards, but instead, in the name of reducing carbon monoxide, mandated increased use of ethanol rather than other oxygenate fuels. Clinton issued this rule not long after Andreas made a $100,000 contribution to the Democratic Party. A federal court later ruled that mandate was improper.[iv]

The ethanol subsidies may harm the ground as well as the air. Subsidizing ethanol in myriad ways creates incentives for farmers to plant far more corn than can be consumed by humans and cattle. This encourages farmers to rely solely on one crop -- corn, because the government is propping up its demand and supporting its price.

Farmers have long known that rotating crops -- planting something different in a given field from year to year -- is crucial to maintaining the health of soils. Planting corn year after year exacerbates erosion and depletes soil nutrients. David Pimentel, the Cornell scientist, maintains that corn is particularly destructive to soil health when it is planted exclusively.

If cars burning gasohol pollute the air, and farms growing only corn ruin the soil, it is only fitting that the middle stage -- converting the corn into ethanol -- would damage the environment, as well.

It turns out that ethanol distilleries can be criminal polluters. In 2002, 12 ethanol plants entered into a settlement with the Department of Justice, the Environmental Protection Agency, and the State of Minnesota. The plants lacked pollution controls mandated by the Clean Air Act, and so had to pay small civil penalties and install the controls immediately.[v] Two days earlier, the Sierra Club had sued two Midwestern ethanol plants for emitting illegal amounts of hydrocarbons.[vi]

While some scientists find that making ethanol uses more energy than it yields, scientist Marcelo Dias de Oliveira, disagrees. But looking at the full "ecological footprint," taking into account cropland used, water consumed, and other secondary factors to the ethanol process, Oliveira found that ethanol is a net drag on the planet. "The use of ethanol as a substitute for gasoline proved to be neither a sustainable nor an environmentally friendly option," he wrote "considering ecological footprint values, and both net energy and CO2 offset considerations seemed relatively unimportant compared to the ecological footprint."[vii]

On all these scores -- its contribution to smog and soil erosion, and its "ecological footprint" -- ethanol is almost as costly to the environment as it is to American drivers and taxpayers.

Tim Carney is the author of The Big Ripoff: How Big Business and Big Government Steal Your Money, from John J. Wiley & Sons, from which this is excerpted. He is also the Warren T. Brookes Journalism Fellow at the Competitive Enterprise Institute.

Michael Arndt, "Bush Wrestles with Ethanol Issue; His Dilemma: Farm Vote vs. Clean Air Rule," Chicago Tribune, September 9, 1992.

[ii] Arndt.

[iii] "An Avalanche of Faith, Hope and Sincerity; Dinners Fit for a Republican: What's a Few Furs Among Friends?" Washington Post, January 19, 1993.

[iv] Maureen Lorenzetti, "U.S. Appeals Court Rejects EPA Ethanol Mandate," Platts Oilgram Price Report, May 1, 1995.

[v] "Ethanol Firms to Reduce Pollution," Energy Conservation News, October, 2002.

[vi] Gerald Karey, "Sierra Club to Sue Two U.S. Midwest Ethanol Plants," Platts Oilgram News, September 30, 2002.

[vii] Dias de Oliveira and others, 2005.


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