Battle over ethanol benefits

Opposing groups release dueling reports on whether the U.S. should proceed with its corn ethanol programs.

By Jeff Cox, CNNMoney.com contributing writer

NEW YORK (CNNMoney.com) -- Focusing on corn-based ethanol without looking at other alternatives to oil will doom U.S. energy policy, a consortium of environmental groups charged Wednesday.

The groups' report, "The Rush to Ethanol: Not all Biofuels are Created Equal," harshly criticizes U.S. focus on corn-based ethanol, saying it's the least sustainable biofuel of all candidates due to supply limitations. Environmental damage and food shortages are but two of its several hazards, the report says.

The group is demanding more stringent fuel standards, improvements in transportation infrastructure and a focus on alternative fuels other than corn-based ethanol to improve the U.S. energy picture.

"What we're calling for is really a richer and deeper debate about what we need to do in the long term to reduce emissions and to create a more sustainable energy policy," said Wenonah Hauter, executive director of Food & Water Watch.

Hauter's group joined leaders from New Energy Choices and the Institute for Energy and the Environment at Vermont Law School to release the detailed report.

The study examines the current literature available on corn ethanol and concludes that even at its peak use, it will only reduce Americans' reliance on gasoline by 15 percent. It also questions the environmental efficiency of the blend, saying that plant-based, or cellulosic, ethanol is three times more efficient at reducing greenhouse gases.

But the group says cellulosic ethanol is not a solution in the short term, as no plants are currently on line and not likely to get there for several years.

"It's better than corn. You could also call it less bad than corn," said Michael Dworkin, director of the Vermont institute. "It has a higher energy content in the material and that's good. It, however, has a couple pieces that are needed. The conversion process is still expensive."

The study comes the same day as Ethanol Across America, a government/industry partnership, released a brief that says fears about rising food prices related to corn ethanol demand are unfounded.

Ethanol Across America agrees with many of the points raised in the "Rush to Ethanol" report, said its director Douglas A. Durante. However, he faults the environmental groups for discarding corn ethanol's importance simply because it won't meet all the nation's energy demands.

"Everyone knows that and acknowledges that. Corn clearly is a bridge technology to using cellulose and other things," Durante said. But the criticisms, he said, are "like beating up a little kid because he's not done growing yet."

Durante said Ethanol Across America has heard many of the same concerns before - primarily from groups fronting for the oil industry.

His organization's report pointed out that the latest consumer price figures show food costs rising 2 percent, below their historical average of 2.9 percent per year. That's despite a near doubling of corn prices over the past two years amid fears that a steep rise would trigger price hikes for all of corn's byproducts - particularly milk, beef and corn syrup.

Milk prices have risen dramatically, but ethanol supporters blame the trend more on a rise in fuel prices than corn costs.

"Rush to Ethanol's" authors further worry about what pressure the sharply increased demand for corn will have on family farms. Huge agribusiness operations threaten to rout small farms because of their inability to keep up with biofuel demand, they charge.

But Sen. Ben Nelson, a Nebraska Democrat who chairs the Ethanol Across America education program, said farms are up to the task.

"America's farmers are the most efficient and productive in the world," he said in a statement, adding that the organization is working hard to develop other sources to be used in ethanol production besides corn.

The Senate version of the energy bill making its way through the House calls for a Renewable Fuels Standard of 36 billion gallons of ethanol production by 2002. Of that total, 21 billion gallons must be cellulosic.

The "Rush to Ethanol" authors are encouraging the government to avoid subsidies for corn ethanol and coal-fired ethanol facilities. They're also urging Congress to implement a loan guarantee program for locally owned ethanol facilities. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.