Is Ethanol the Answer?
Politically it's a winner. But experts aren't sure ethanol can deliver on its promise
By Marianne Lavelle and Bret Schulte
Posted Sunday, February 4, 2007
Galva, Iowa-This farming town of fewer than 400 people might be most memorable for what it doesn't have: a Wal-Mart, a high school, even a stoplight. But humble Galva and its environs have two things in abundance: corn and, by extension, hope. "We feel we're on the cusp here as far as things happening," says Rita Frahm, an 18-year resident and president of the county's economic development corporation. That's because Galva is the lucky home of an ethanol plant.
Since opening in 2002, the plant has produced ever increasing dividends, to date putting more than $13 million into the hands of the 420 local farmers and investors who own it. That cash is slowly but markedly changing Galva's landscape. For the first time in 30 years, the town witnessed construction of three new homes at once, and a whole new street, Sixth Street, on which to place the houses. Those dwellings are now occupied by families "who saw an opportunity to stay rather than the community dying," Frahm says.
Heartwarming stories like Galva's-in a state that hosts the first presidential contest-help explain why Washington is so fired up over ethanol. In 2006, production skyrocketed, and Washington is poised to push it still higher. What's not to like? Every gallon theoretically means more money for the iconic American farmer and less cash lining the pockets of foreign sheiks. "There's almost a sense," says Iowa State University political scientist Steffen Schmidt, "that ethanol is morally better than oil."
Washington loves a "win-win," but there are plenty of doubts as to whether the love affair with ethanol qualifies. Even though the ethanol industry profited handsomely last year, it continued to benefit from billions of dollars in taxpayer subsidies. And as ethanol becomes a larger part of the energy mix, it is not clear that Washington is prepared for the fallout. Ethanol already consumes so much corn that signs of strain on the food supply and prices are rippling across the marketplace. Environmental impacts will multiply as more land and water are devoted to the prized yellow grain. And, even if these problems were overcome, ethanol's potential growth could be stunted by an energy system currently tailored to gasoline. Ethanol undoubtedly plays a role in the quest for energy independence and the desire to curb global warming. But some observers worry that ethanol development may take the place of more effective initiatives: forcing automakers to increase gas mileage, for instance, or mandating cuts in carbon dioxide emissions. "Some members of Congress are looking for quick fixes," says one economist who has studied the issue. "It's an easy bandwagon to jump on. But there's a lot of exaggeration about what ethanol is capable of doing."
Beginnings
Ethanol is alcohol distilled from fermented, mashed grain. It took a century for it to make a big splash on the U.S. energy scene, even though Henry Ford built his first Model T in 1908 to run on either gasoline or ethanol. Over the decades, petroleum proved cheaper, and grain alcohol was relegated to college fraternity parties rather than gas tanks. No one looked seriously at ethanol as fuel until the oil price shocks of the 1970s, when Congress decided to subsidize a homegrown alternative-most significantly through a tax credit to oil companies for every gallon of the costly alternative they blended into gasoline. But when oil prices fell again in the late 1980s through the 1990s, the nation's dependence on petroleum imports mushroomed to 60 percent, and ethanol was reduced to a performance-boosting additive for some midwestern gasoline-a nice, subsidized side business for the dominant producer, Archer Daniels Midland.
http://www.usnews.com/usnews/news/articles/070204/12ethanol.htm
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