Why ethanol endures as important market for Midwestern farmers

With the Iowa caucuses just two weeks off, would-be Democratic presidential candidates have each paid their obligatory tributes to corn ethanol.

The biofuel's intended uses for energy independence and greenhouse gas reduction have become matters of debate. But no one questions its political clout, economic importance or staying power, especially in the Midwest.

Virtually all politicians of all parties, whether they stand against climate change or for petrochemicals, must make the quadrennial pilgrimage to the throne of King Corn to succeed in the nation's first formal contest of the presidential-nominating season.

"Ethanol is not a green fuel," said Jason Hill, a professor of bioproducts and biosystems engineering at the University of Minnesota. "What ethanol really is, is another market for corn. [But] Iowa plays a disproportional role in American politics, and Iowa has corn. Any candidate against corn would be sunk in Iowa."

The same might be said in Minnesota. Iowa leads the nation in ethanol production. Minnesota ranks fourth, behind Nebraska and Illinois.

The influence of ethanol dates to 2005 and the passage of the federal law that established the Renewable Fuel Standard (RFS). The RFS dictates how many billions of gallons of biofuel-gasoline blends refiners must produce each year. Under the RFS, the number of bushels of corn used to make ethanol soared from 1.32 billion in 2004 to 5.6 billion in 2018.

"We convert one-third of corn grown in the U.S. to ethanol," Hill said. Still, "it offsets just 7 percent of gasoline use."

That was not how it was supposed to play out. The Energy Independence and Security Act of 2007, which succeeded the law that created the RFS, "set extraordinarily optimistic goals for future ethanol production," said David Swenson, an economist at Iowa State University who follows the ethanol industry. "We were at the peak of energy nationalism in the United States," and the country was increasingly dependent on foreign oil. The idea was to produce more domestic energy. "Then all of sudden we had the shale oil revolution, and everything changed."

Using hydraulic-fracturing technology, in which water split rock so oil could be removed, the U.S. became the world's largest oil producer.

Janet McCabe is a former assistant administrator of the air and radiation office at the U.S. Environmental Protection Agency. She once oversaw the nation's ethanol program. She believes the country will never reach its sustainable-energy goals without major policy changes. But McCabe also has "some sympathy for the agricultural community," which got drawn into ethanol at the government's behest.

"We said to farmers, 'Please step up to end our reliance on foreign oil,' " she explained. "A lot of people in the farm belt stepped up."

The idea was to expand traditional corn ethanol up to 15 billion gallons a year and then move toward advanced biofuels made from more truly renewable sources known as cellulosic.

"Corn ethanol was supposed to be transitional," Swenson said. But cellulosic ethanol production was more complicated and therefore more expensive than expected. "They had a lot of processing and pre-processing hurdles to get over."

Congress anticipated that cellulosic ethanol would be the green gem of biofuel production. Cellulosic is made from the stalks, stems and leaves of plants, including corn detritus — but not corn itself. Cellulosic biofuels were expected to cut carbon dioxide emissions by at least 60%. In 2007, ethanol supporters estimated that cellulosic biofuel production would be 7 billion gallons in 2018. Instead, about 11 million gallons were produced.

"It was a complete failure," Swenson said.

Ethanol was used as an additive in gasoline even before Congress passed the Renewable Fuel Standard. While ethanol has one-third less energy than gasoline, it serves as an "oxygenate" to prevent carbon monoxide pollution and boosts octane to reduce engine knock.

The RFS, which today requires most gasoline to include 10% ethanol, also envisioned cutting greenhouse gas emissions by partly substituting biofuels for petroleum-based fuels. Emissions of carbon dioxide from conventional corn ethanol are supposed to be 20% lower than from gasoline and diesel.

The green credentials of corn ethanol have long been questioned, including in a May 2019 study by the U.S. Government Accountability Office (GAO), which evaluates federal programs. Expert opinion was split on whether ethanol is meeting the 20% emission reduction goals, the GAO found.

Of 13 experts interviewed for the GAO study, 10 "generally agreed that the RFS likely had a limited effect, if any, on greenhouse gas emissions," due to the copious amount of energy needed to grow corn and transform it into ethanol.

The U.S. Department of Agriculture (USDA) objected to the GAO's conclusion. The USDA, which both regulates and promotes U.S. agriculture, concluded in its own April 2019 study that greenhouse gas emissions from corn-based ethanol are 39% lower than from gasoline.

The American Petroleum Institute (API), whose members do not like having to refine ethanol, leapt on the GAO study to prove their contention that the RFS is what API CEO Mike Sommers calls "a failed policy." Big Oil and King Corn, two lobbying behemoths, continue to wrestle over ethanol in part because traditional, old-school energy sources will continue to dominate the U.S. for years, if not decades, as wind and solar power and the electric-vehicle market grow to critical mass.

The petrochemical industry seeks hardship waivers from the Trump administration to reduce the gallons of ethanol some small refiners must produce. Corn interests fire back that the wave of waivers is causing a financial crisis in the ethanol industry, leading to plant closures.

"It's a classic example of Congress defining a pie, and the pie gets smaller because of fuel efficiency," said McCabe, now director of the Environmental Resilience Institute at Indiana University-Purdue University Indianapolis.

The battle for market share continues with Democratic Rep. Collin Peterson of Minnesota often leading the charge for corn farmers in his capacity as head of the House Agriculture Committee.

Lost are larger questions about where the country should invest its resources to create the most economic and environmentally friendly energy future.

Environmentalists decry hydraulic fracturing — fracking — for polluting water supplies and potentially causing earthquakes. The API's Sommers calls fracking a "technological marvel."

The U's Hill said the complete cycle of ethanol production — from land use to corn refining to increased sales of cheap fuel that increase driving — adds more greenhouse gases to the environment.

While dueling research reaches different conclusions on the environmental effectiveness of ethanol, few, if any people dispute its importance in Midwestern agricultural communities. Even with an oversupply, folks like Martin County farmer Lawrence Sukalski call production of biofuel critical.

Losing the renewable-fuel standard "would be a disaster," said Sukalski, who was board chairman of a Minnesota ethanol plant, Corn Plus, that closed last year. "The RFS in Martin County and southern Minnesota has made farmers more profitable. They're paying more for land, property taxes are going up and everybody prospers."

In the end, maybe not everybody.

Hill said climate change represents a much bigger threat to the country than the death of the RFS or a final divorce from petrochemicals. Transportation emissions account for a third of U.S. greenhouse gas production.

"When you get down to it," Hill said, "corn and oil are interested in the same thing: putting liquid [fuel] in a gas tank."

Former EPA manager McCabe knows that the Renewable Fuel Standard remains the law of the land and that the American Petroleum Institute endures as one of America's most powerful lobbies. She also says neither ethanol nor petrochemicals offers an ultimate, sustainable, environmentally friendly energy solution.

"What we need to be doing is going to electric vehicles powered by [electricity derived from] clean power sources like wind and solar," she said.

No matter how presidential candidates must court favor in Iowa, McCabe believes battery life will do much more to save us than biofuel.