Ethanol is getting a bad rap right now. Pundits, politicians and even the United Nations are blaming a serious global rise in food prices on an increase in ethanol production. They are calling for less ethanol production and the removal of mandates, and they're couching it all in a food vs. fuel debate. Ethanol has been called one of the great scams, a dead-end fuel and other even less kind names.
But the reality is that, while ethanol production is likely having some impact on the rise in food prices - credible estimates have ranged from a 1.5 percent to 20 percent impact - other factors such as a rise in oil prices, droughts and rising demand in developing countries have played bigger roles. And producers of corn ethanol point out that at the same time that production of ethanol has increased, so have yields of food corn and exports of corn for food.
Corn ethanol still has a role to play as a gasoline additive that can lessen oil imports; there is even more potential in cellulosic ethanol. Certainly, Wisconsin's farmers can benefit from ethanol production, and the state's goal of producing a significant share of its energy needs from biofuels in the near future is laudable.
But federal mandates on ethanol should not be maintained or expanded. Sen. John McCain, R-Ariz., and other Republicans who have signed a letter urging the Environmental Protection Agency to consider an ethanol mandate waiver have a point. As does Rep. Jim Sensenbrenner, R-Wis., who has called for the repeal of tariffs on importing ethanol.
Questions remain on ethanol. There has been an impact on food prices, even if that impact is less than the impact of the rise in oil prices. There is an argument that ethanol is not as efficient as gasoline. Ethanol production is not environmentally benign; in addition to other issues, a report co-authored by a University of Wisconsin-Madison researcher predicts that the "dead zone" in the Gulf of Mexico will grow, thanks to ethanol production's impact on the Mississippi watershed.
Ethanol is part of the nation's energy future. But how big a part should be determined by how effective ethanol is in reducing the nation's reliance on foreign oil. The government is right to set goals for renewable sources of energy and alternative biofuels, but it should not determine which technology wins. The best one should. The use of ethanol should be encouraged through such devices as tax credits but not required through mandates.
Reprinted from The Milwaukee Journal Sentinel – CNS.