WASHINGTON — The nation's new energy law means that corn is likely to rule the U.S. ethanol industry for years, but soaring food prices and questions about whether corn-for-fuel can reduce global warming have sparked a debate about whether the United States is going down the wrong road in the search for alternatives to fossil fuels.
Venture capitalists, oil and ethanol companies and the Department of Energy have pumped billions of dollars into efforts to make ethanol from cellulose, a material found in all plants, in a quest to find an alternative fuel that has less impact on food supplies and on the environment.
So far, its commercial prospects are years off.
The Brazilian government and some American analysts suggest that until there are breakthroughs on the advanced ethanol front, the United States should import more Brazilian ethanol, which is made from sugarcane, because it outperforms corn in reducing greenhouse gas emissions. U.S. trade and agricultural policies, however, limit the use of sugarcane to make fuel here.
Roger A. Sedjo, an economist and senior fellow at Resources for the Future, said "the jury's still out" on whether biofuels will reduce emissions when land use changes are taken into account.
"I think there's good reason to believe they're betting on the wrong horse here with corn ethanol," Sedjo said. "It's even a question in my mind whether we're going to go the biofuel route. But right now we're used to liquid transport fuel in the form of oil, and the closest substitute would be biofuels."
The 2007 energy bill allowed for a doubling of corn ethanol production, most of it with no requirement for overall greenhouse gas emissions reductions. The bill set a ceiling of 15 billion gallons of corn-based ethanol, up from the 6.5 billion gallons produced last year. It also calls for 21 billion gallons of advanced biofuels by 2022, including 16 billion gallons of ethanol from other plant fiber.
Critics have complained that the growing U.S. use of corn for fuel is driving up food prices worldwide. Corn, mostly for livestock feed, supplies more than 65 percent of world exports.
Earlier this month, the heads of the U.N. Food and Agriculture Organization and the World Bank said that soaring world food prices in recent months were due in part to increased demand for biofuels. They noted that other factors were also at work, including higher energy prices and higher consumption of meat and dairy products in countries such as China.
Alexander Karsner, the assistant secretary in charge of renewable energy and efficiency at the Department of Energy, said his office is working on encouraging ethanol from plant cellulose with the goal of spreading the technology around the world to slow or even reverse global warming.
Karsner's office spent $1 billion on biofuels development last year, all of it on using non-edible plants and plant wastes instead of corn. Ethanol is distilled from sugar — whether it's pressed out of sugarcane, derived from the starch of corn kernels or, in the case of cellulosic ethanol, produced when enzymes break down plant material.
A study by Tim Searchinger, a visiting scholar at the Woodrow Wilson School at Princeton University, and other scientists found that most biofuels are likely to produce more greenhouse gases than the gasoline they replace because carbon dioxide will be released when farmers plow and burn forest or grassland to grow the fuels or to grow food to replace crops that were eliminated by the demand for ethanol.
Karsner said the study was flawed and that other examinations of land use changes would be needed.
"It's not the time to panic at the outset of a new era that displaces carbon-based fossil fuels," he said.
Michael Wang, who's been comparing pollution emissions from biofuels with those from gasoline for more than a decade at the Argonne National Laboratory, recently began a new study of corn ethanol.
Wang originally found that corn ethanol from the United States reduced greenhouse gas emissions about 20 percent compared with gasoline, when the full "life cycle" of the fuel — from growing it (or, in the comparison case of oil, extracting it) to producing the fuel and burning it — is taken into account. Sugarcane ethanol reduces emissions by 56 percent compared with gasoline. Ethanol from cellulose promises reductions of more than 80 percent.
Wang now says that the 20 percent reduction only holds for U.S. ethanol production so far. In 2007, the United States produced 6.5 billion gallons of ethanol using 18 percent of its corn crop. The size of the crop set a record, and exports of U.S. corn didn't decline. U.S. ethanol also produces animal feed as a byproduct.
But the Department of Agriculture expects that corn exports will decline over the next few years as ethanol consumes more of the crop.
Wang's new study will look at what it'll mean to ramp up corn ethanol production to 15 billion gallons, looking at domestic and international land use changes. Wang said his previous study didn't take into account indirect land use changes in other countries. He expects preliminary results by summer.
The energy law that went into effect in December said biofuels must reduce emissions by at least 20 percent, but the requirement applies only to ethanol plants whose construction started after the law was passed.
New plants won't be allowed to use coal as an energy source. But most of the 15 billion gallons of ethanol from corn allowed under the law will be from plants that already were built or under construction at the time. The use of coal to make electricity to run ethanol plants is one of the ways that ethanol production contributes to global warming.
Agricultural policy, however, has helped ensure that corn reigns supreme in American ethanol production.
The government controls how sugarcane can be grown for sugar and guarantees growers a higher price than the world price. Growers in the four sugarcane states — Florida, Louisiana, Texas and Hawaii — have found it more profitable to grow sugarcane for sugar instead of ethanol, although companies in Hawaii and Louisiana have plans to use some surplus sugarcane for ethanol.
The U.S. ethanol industry expects to produce 8.5 billion gallons this year, almost all of it from corn. The U.S. uses less than 150 billion gallons of gasoline per year. Replacing it would require more than 200 billion gallons of ethanol, because ethanol provides less energy per gallon.
The world's ethanol today is mainly from U.S. corn or Brazilian sugarcane.
Searchinger reported that even when land use changes were taken into account, sugarcane, if grown under the right conditions, could reduce emissions.
Lester B. Lave and Michael Griffin of the Carnegie Mellon Green Design Initiative have argued that the United States should import more Brazilian ethanol.
"We could use all the ethanol we can get — probably in the future as well," Lave said.
But it's doubtful the world's biomass could supplant gasoline, he said. "If the price of liquid fuels gets to be high enough, it will crowd out food. The rich will have sufficient food — it's the poor who will not be able to afford food. All that leads to more fuel-economic vehicles and other ways of curtailing the demand for liquid fuels."
Karsner said Brazil doesn't have a big surplus to export.
But Brazil plans to expand. Under current conditions, including the 54 cents per gallon U.S. tariff, the Brazilian ethanol industry and government project that Brazil's production will grow to 17 billion gallons by 2020 and Brazil will use 13 billion gallons, leaving 4 billion gallons for export.
Brazil's government is pressing for eliminating the tariff, a move it says would help boost exports. In a recent vote, the U.S. Senate soundly defeated the idea.
ETHANOL AT A GLANCE
Ethanol is blended now in 60 percent of the country's gasoline, mostly in a mix of 10 percent ethanol to 90 percent gasoline. The Energy Information Administration's 2008 outlook report projects that biofuels will make up about 11 percent of total demand for motor vehicle fuel nationwide in 2030.
The Department of Energy's goal is to help drive down costs so that cellulosic ethanol is competitive with gasoline in 2012.
(Jack Chang in Brazil and Kevin G. Hall in Washington contributed to this report.)