Ethanol: The Global Poor Will Suffer the Worst


Richard Moore

The Global Poor Will Suffer the Worst Ethanol Hangover

The headlong rush in many parts of the world to replace oil with biofuels 
(ethanol and biodiesel) illustrates how the best of intentions can run afoul of 
the law of unintended consequences. While positive effects have been elusive -- 
and, in fact, are unlikely with current policies -- starvation and 
malnourishment are becoming worse among the poorest of the poor.

The European Union has announced that it wants to replace 10 percent of its oil 
consumption with biofuels by 2020. President George W. Bush announced last year 
a goal of replacing 15 percent of domestic gasoline use with biofuels over the 
next 10 years, which would require almost a five-fold increase in mandatory 
biofuel use to about 35 billion gallons. In June 2007, the U.S. Senate pushed 
the target to 36 billion gallons by 2022, of which 15 billion are mandated to 
come from corn and 21 billion from other more advanced but largely unproven 
sources. China is aiming for 15 percent conversion to biofuels.

The reality is that with current technology, almost all of this biofuel would 
have to come from corn because there is no other feasible, proven alternative. 
But because of the inefficiencies inherent in producing ethanol from corn and 
the relatively meager amount of energy yielded by burning ethanol, the demands 
on farmland would be staggering. An analysis by the Paris-based Organization for
Economic Cooperation and Development suggested that replacing even 10 percent of
America's motor fuel with biofuels would require that about a third of all the 
nation's cropland be devoted to oilseeds, cereals and sugar crops. Achieving the
15 percent goal would require the entire current U.S. corn crop, which 
represents a whopping 40 percent of the world's corn supply.

In the short- and medium-term, ethanol can do little to affect oil consumption, 
but the diversion of grain from food to fuel exerts widespread and profound 
ripple effects on various commodity markets. It has already has been 
catastrophic for the poor around the world. The U.N. Food and Agriculture 
Organization's food price index, which is based on export prices for 60 
internationally traded foodstuffs, climbed 37 percent last year, following a 14 
percent increase in 2006. Protests have erupted in Pakistan and Indonesia over 
wheat and soybean shortages, respectively, and China has imposed price controls 
on many staple foods. Keith Bradsher, writing in the New York Times, reveals 
another outcome of the shortages: "Smugglers have been bidding up prices as they
move [palm] oil from more subsidized markets, like Malaysia's, to less 
subsidized markets, like Singapore's."

The shortages and rise in the prices of edible oils have had a devastating 
impact on the nutrition of poor families not only in Asia, but also in Latin 
America, Africa and the Middle East. Any sort of shock to yields, such as 
drought, unseasonably hot or cold weather, pests or disease in the next few 
years could send food prices farther into the stratosphere and cause 
unprecedented social upheavals.

Politicians like to say that ethanol is environmentally friendly, but these 
claims must be put into perspective. Although corn is a renewable resource, it 
has a far lower energy yield relative to the energy used to produce it -- what 
policy wonks call "net energy balance" -- than either biodiesel (such as soybean
oil) or ethanol from many other plants.

Moreover, ethanol yields about 30 percent less energy per gallon than gasoline, 
so mileage per gallon in internal combustion engines drops off significantly, 
and the addition of ethanol raises the price of blended fuel because it is more 
expensive to transport and handle. Lower-cost biomass ethanol -- for example, 
from rice straw (a byproduct of harvesting rice) switchgrass, or other sources 
-- would make far more economic sense. And also environmental sense: Estimates 
of greenhouse-gas reductions from the substitution of biofuels for gasoline 
failed to take into consideration the carbon emissions that occur as farmers 
worldwide respond to higher prices by converting forest and grassland to new 
cropland to replace the grain (and cropland) diverted to biofuels. Performing 
the analysis correctly yields shocking results: Instead of producing savings in 
carbon emissions, corn-based ethanol "nearly doubles greenhouse emissions over 
30 years and increases greenhouse gases for 167 years," according to a research 
article published earlier this month in the journal Science.

Politicians may be drunk with the prospect of corn-derived ethanol, but without 
policies based on science and sound economics, our problems will only increase, 
and the poorest of the poor around the world will suffer from the worst 

Henry I. Miller, a physician and fellow at Stanford University's Hoover 
Institution, was an FDA official from 1979 to 1994; his most recent book is "The
Frankenfood Myth."

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