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Biofuel Furor

Will power plants get caught in ethanol’s food fight?

Fortnightly Magazine - August 2008

a letter to Secretary of Energy Samuel Bodman and Secretary of Agriculture Ed Schafer expressing concern over recent suggestions that biofuel policies might be responsible for global increases in food prices. He specifically asked for answers as to whether there is a link between food prices and the RFS, while pointing to the required increase in EISA to 9 billion gallons of renewable fuels being blended in the U.S. fuel supply in 2008.

Texas, meanwhile, has become a hotbed and even microcosm of the furor over biofuels. In April, Texas Governor Rick Perry petitioned the Environmental Protection Agency (EPA) to waive temporarily the requirement to increase the amount of renewable fuels used for motor vehicles. He cited the diversion of corn for fuel as driving up food prices. Perry has the backing of Sen. Kay Bailey Hutchison (R-Texas), who wants to challenge the EISA ethanol mandate of 15 billion gallons produced from corn and 1 billion gallons from biodiesel by 2015. Bailey asked EPA to waive all or a portion of that 2007 ethanol mandate, citing the World Bank’s findings that global food prices increased by 83 percent in the last three years, and the United Nation’s findings that food costs will increase another 10 to 15 percent due to biofuels production, assuming scheduled mandates remain in effect.

A potential major blow to the industry came when Texas officials proposed banning biodiesel fuels in the state last year. But in December 2007 officials voted to study issues surrounding biodiesel emissions for another year. Apparently, while biodiesel generally is considered more environmentally friendly because it produces almost 50 percent less CO 2 and particulates than does standard fuel, competing studies on nitrogen oxide (NO x) emissions raise concerns NOx emissions are above state-allowed levels. Texas is the second-largest consumer of biodiesel in the nation behind Iowa, and a ban could have dire consequences for the industry in that state.

Congress continues paying attention. Republican Sen. Chuck Grassley, from corn-producing Iowa, recently accused food manufacturers of a smear campaign against ethanol, and sent a letter to 13 companies such as ConAgra and Archer Daniels Midland asking them to repudiate that movement by the Grocery Manufacturers Association. He noted that “biofuels are a small factor in rising grocery costs and just 19 cents of every food dollar spent by consumers goes to farmers.”

At a May 6 House Energy & Commerce Committee hearing, Bob Dinneen, president and CEO of the Renewables Fuels Association, said the 147 ethanol plants nationwide have enough “capacity to turn more than 2 billion bushels of grain into 8.5 billion gallons of high octane, clean burning motor fuel, and more than 14 million metric tons of livestock and poultry feed.” With 55 more ethanol plants under construction and six being expanded, Dinneen said emissions are being reduced, energy security is increasing and rural America is gaining jobs. Also, he pointed to a host of factors contributing to the rise in food prices, such as record oil prices, soaring global demand for commodities from oil to grains, poor weather conditions, the