CEO of Growth Energy, Tom Buis argues ... we spend plenty of money for overseas oil ... why not support home-grown ethanol?(Photo courtesy of the NREL)
President Obama’s visit to the Corn Belt is highlighting a tough debate about the future of corn-based ethanol used in our cars.
Transcript
President Obama’s visit to the Corn Belt is highlighting a tough debate about the future of corn-based ethanol used in our cars.
Congress is looking to cut the federal budget and one target is a key ethanol subsidy.
It’s a tax credit of about 4 and a half billion dollars, and it runs out by the end of the year.
Ethanol trade groups are fighting to extend that credit.
Tom Buis is CEO of Growth Energy.
He argues … we spend plenty of money for overseas oil … why not support home-grown ethanol?
“We create jobs, jobs that can’t be outsourced. I don’t know why we want to fund economies of foreign governments. We should be looking at spurring our own economic development here in the United States.”
Last year the Government Accountability Office questioned whether we need this particular ethanol tax credit, since the government requires gasoline refiners to blend-in billions of gallons of ethanol anyway.
John Wakeman of SUR Energy says government and utility incentives have lowered the costs of a solar installation for consumers.(Photo courtesy of Mark Brush)
Sources of renewable energy like wind, solar, and hydroelectric are still just tiny players in a world powered by fossil fuels. Most of the power for your light switch comes from burning coal and natural gas. Mark Brush reports the government is trying to change that. There are state and federal programs that will pay you to put solar panels on your house:
Transcript
Sources of renewable energy like wind, solar, and hydroelectric are still just tiny players in a world powered by fossil fuels. Most of the power for your light switch comes from burning coal and natural gas. Mark Brush reports the government is trying to change that. There are state and federal programs that will pay you to put solar panels on your house:
John Wakeman was laid off from his factory job eight years ago. So, for him it was, “well… Now what?” He’d always been interested in solar panels and wind turbines. So he decided to go into business helping homeowners put these things up. It’s been eight years, business was slow at first, but he says these days, business for solar panels is picking up.
“There are a lot of people that have always just dreamed of it. You know, they thought it was really cool, they looked into it in the ‘70s. In the 70’s it cost, you know, ten times as much for the same energy. The costs have really come down.”
But it’s still really expensive for a lot of people. Wakeman says a typical solar job costs around sixteen thousand dollars these days.
But now – you can get help from the government.
There’s a federal tax credit that will pay for 30% of the cost of new solar panels on your house. So you spend sixteen grand – you get $4,800 off your next tax bill. And on top of that, there are a bunch of state and utility operated programs that will help pay for the up-front costs.
In fact, more than half the states in the country are forcing utilities to make more renewable power.
So more utilities are paying people to install things like solar panels, wind turbines, and geothermal heat pumps.
In many places, it costs less to install these things than it ever has.
Wakeman says these incentives have been good for his business.
“I can actually build a business somewhat on that. I can hire some people and get them trained. You know we can go out and sell some systems.”
But some say these subsidies are not a good idea:
“The sunlight may be free, but solar energy is extremely expensive.”
Robert Bryce analyzes the energy business for the Manhattan Institute. It’s a conservative think tank. Bryce says solar power is enjoying big subsidies from the government right now, but it’s not translating into a lot of power going onto the grid:
“Solar energy received 97 times as much in subsidies per megawatt hour produced as natural gas fired electricity; even though the gas-fired electric sector produced 900 times as much electricity as solar. So how much subsidy are we going to have to give them to make them competitive. And I think the answer is going to be… It’s going to have to be a whole, whole lot.”
Bryce agrees – there are some big environmental costs to traditional fossil fuel sources. Costs that are not always paid for. But in the end – he says renewable energy sources like solar just can’t compete with traditional fossil fuels.
But others say the subsidies for renewable power are boosting an industry that is trying to get a start.
Rhone Resch is the president of the Solar Energy Industries Association. He says the subsidies renewables are getting today just make the game fair:
“We’re starting to get the same kinds of support from the federal government that the fossil industry has enjoyed for the last 75 to 100 years. And when you do that, the cost of wind comes down, the cost of solar comes down, the cost of geothermal becomes more cost competitive.”
If you look at the numbers, traditional power sources have always gotten more money from the government. In 2007, the federal government gave out 6.7 billion dollars in subsidies to support electricity production. Most of it went to coal, natural gas, and nuclear.
Today, renewable energy sources, like solar, are getting a little more help. And supporters hope that help doesn’t disappear – like it has in the past – when the political winds change.
A new national report recommends building more nuclear power plants in the
U.S. Chuck Quirmbach reports:
Transcript
A new national report recommends building more nuclear power plants in the
U.S. Chuck Quirmbach reports:
A study by the National Research Council urges the Department of Energy to
place greater emphasis on identifying sites for more nuclear power plants and
improving plant designs.
University of Wisconsin Engineering Physics Chairman Mike Corradini served on
the committee. He says there’s a need for more large scale electricity generation
that doesn’t add to carbon emissions:
“And it’s important we do it with a fuel source which is relatively secure. Nuclear
power is a logical way to do this and therefore that should be the major focus in
the next 10 to 15 to 20 years.”
Another part of the national report recommends scaling back of a new program to
speed the reprocessing of spent uranium fuel to share with other countries. Nuclear power opponents worry about radioactive waste and want to block
proposed subsidies for the nuclear power industry.
Jenny Chang at a farmers' market with her produce. (Photo by Joel Grostephan)
Demand for corn-based ethanol is growing and that’s made farmland more valuable. This
year, American farmers planted 14 million acres more corn than they did last year. Some
small immigrant farmers believe that’s why they’re having a hard time finding land to rent
to grow fresh fruits and vegetables. Joel Grostephan reports:
Transcript
Demand for corn-based ethanol is growing and that’s made farmland more valuable. This
year, American farmers planted 14 million acres more corn than they did last year. Some
small immigrant farmers believe that’s why they’re having a hard time finding land to rent
to grow fresh fruits and vegetables. Joel Grostephan reports:
Jenny Chang doesn’t want to change the government’s policy on ethanol subsidies. She
just wants some good land to raise her vegetables that she sells at the farmer’s market.
When planting time came around this year, she was still looking for a plot to rent. Chang is
Hmong and she came from Laos more than 20 years ago with few job skills. For
the last 7 years, she’s made part of her income from farming on land she rents. In the
past, finding land to rent wasn’t that hard. But, Chang says through her daughter who
interprets for her, this year was different:
“She said that this year, we couldn’t find land, that’s why we got stuck with this bad area.
She’s really sad.”
With corn selling for double what it did last year, land values are going up. That means
rent is going up. And the 300 Hmong farmers in this area are having a hard time finding
land they can afford.
Kent Olson is an economics professor at the University of Minnesota. He says he thinks
land scarcity is due to higher demand for ethanol:
“Your ethanol may have started the ball rolling, and created higher prices for corn, which
pushed corn onto other land from other crops but that’s pushed soybean prices up. So we
are seeing higher rent from a couple different directions.”
In theory, ethanol from corn is supposed to be good for the environment. It burns cleaner
and means less reliance on foreign oil.
But… conventional corn farmers rely on fossil fuel-based fertilizers and chemical
pesticides. By the time their diesel-powered tractors plant the corn, combines harvest it,
trucks transport it and ethanol distillery plants cook it, the energy gain from corn ethanol
is marginal.
The Hmong farm differently. Most don’t use fossil fuel-based fertilizers or pesticides.
Instead, they do a lot of hand weeding, and put in long days. Jenny Chang fertilizes her
tomatoes with chicken manure. Chang’s daughter, who is also named Jenny Chang, says
many older Hmong farmers are suspicious of chemicals:
“They like gardening the way they used to back in old Laos. They don’t really know what
insecticides and pesticides are, or how to use it so that’s why they just don’t use it. And a lot of
people are afraid of cancer, so they just like to grow things organically because they eat it
themselves.”
And researchers say growing food this way seems more environmentally friendly than
growing corn for ethanol.
Bill Moseley is a professor at Macalester College in St. Paul. He studies the
environmental effects of agriculture:
“Conventional corn production is displacing, in this particular case, a form of
agriculture that is more environmentally sound in terms of it’s using fewer fossil
fuel imports, and it’s producing crops for the local market, it’s particularly ironic in
this instance.”
Government officials don’t think increased corn production for ethanol is the problem.
Perry Aasness works with the U.S. Department of Agriculture’s Farm Service Agency. When he learned the Hmong farmers were having a hard time finding land to rent, his
agency helped them. But Aasness believes corn production for ethanol is NOT the cause
of the land shortage:
“Well, at least in Minnesota I think it’s very, very minimal. I think the real issue that I
have seen in Minnesota is that the Hmong farmers, the Hmong community is primarily
based in the Twin Cities metro area. They have to go further out to get land — a lot
of it I think is just due to urban sprawl.”
For many people in the Minneapolis-St. Paul area, the Hmong are the face of agriculture
at farmers markets. But since no government agency keeps track of their numbers, it’s
hard to know if their tradition of raising crops on small plots of rented land is going well,
or if ethanol and high corn prices are actually putting their small businesses in danger of.
As ethanol is becoming more common, the demand for corn is driving up prices for the grain. (Photo by Lester Graham)
Using corn to make fuel for cars and trucks will cause more pollution, higher food prices,
and will not greatly reduce the country’s dependence on foreign oil. That’s according to a
recent report by several environmental groups. Mark Brush has more:
Transcript
Using corn to make fuel for cars and trucks will cause more pollution, higher food prices,
and will not greatly reduce the country’s dependence on foreign oil. That’s according to a
recent report by several environmental groups. Mark Brush has more:
About 20% of this year’s crop in the US will go into making ethanol. That’s expected to jump to 27% next year. The push for more corn-based ethanol has already led to higher food prices. A new report
says if the ethanol trend continues unchecked – it will cause more fertilizer pollution in
water – and more air pollution from ethanol processing plants powered by coal and
natural gas.
Dulce Fernandez is with the Network for New Energy Solutions – one of the groups that
put out the report. She says ethanol is not the answer:
“I think everybody is looking for one great solution to solve all of these problems. But
nobody is thinking about the great potential that is out there to reduce demands.”
Fernandez says the best way to reduce demands is for the federal government to raise fuel
economy standards, instead of subsidizing corn-based ethanol.
Some people are warning there are hidden costs
to the drive for ethanol. The demand for corn-based
ethanol for fuel has pushed the price of corn close
to the highest price it’s been in 10 years. In the
first of our two-part series on ethanol, Rebecca Williams
reports that economists say the push for more ethanol will
mean higher prices at the supermarket:
Transcript
Some people are warning there are hidden costs
to the drive for ethanol. The demand for corn-based
ethanol for fuel has pushed the price of corn close
to the highest price it’s been in 10 years. In the
first of our two-part series on ethanol, Rebecca Williams
reports that economists say the push for more ethanol will
mean higher prices at the supermarket:
(Sound of burger sizzling)
Everything in your classic American meal has one thing in common.
(Sound of soda can opening and fizzing)
The burger, chips, soda, even the ketchup. They all depend on corn.
Cows eat corn. Chips have corn oil in them. And your soda and ketchup
have high fructose corn syrup as a main ingredient. Supermarkets are
loaded with food that has something to do with corn.
And lately, corn’s been near its highest price in ten years. The price
has nearly doubled. Everyone from livestock producers to beverage
companies has been feeling the squeeze of more expensive corn. And
that’s been starting to show up at the grocery store.
The US Department of Agriculture predicts our food is going to get more
expensive this year, and maybe for many years to come.
Ephraim Leibtag is a USDA economist. He says we’ll probably be paying
between two and a half and three and a half percent more this year at
the store:
“That’s on average for your food bill. So if you’re buying an average
basket of products and you spend $100 when you go to the store, now
you’ll be spending $103. But you’ll see it first in products most
related to corn. In addition you’ll see some after-effects because if
more corn is produced that may drive up the price of other commodities
if the tradeoff in land is between, let’s say, corn and other potential farm
products.”
So if farmers plant more corn for ethanol instead of soybeans, that
will drive up the price of soybeans, and in turn, the food that’s made
from them.
It turns out that’s exactly what farmers are planning to do this year.
A recent USDA report says farmers will be planting 12 million more
acres of corn than last year… and less soybeans, and rice.
Leibtag says high corn prices have been great for corn farmers, but he
says it’s been rough on a lot of other people:
“If you use corn as a main ingredient you’ve already noticed your costs
go up quite a bit. Some companies have explored the possibility of
substituting or using other products. But certainly producers of livestock and
poultry have higher feed costs. They have to think about exactly how they’re
going to produce their product when one of their inputs goes up 20, 30,
50, 80 percent in price.”
Ethanol backers say it’s just a matter of time before the market will
adjust to more expensive corn. Bob Dinneen is the president of the
Renewable Fuels Association:
“Corn prices are indeed going up… Our own industry is paying more for feedstock for ethanol today. But
at the end of the day, as the marketplace adjusts, we’ll be able to grow
more than sufficient grain to satisfy the country’s demand for food,
fuel and fiber and rural America will be better for it.”
But others argue it won’t be possible to have it all forever. Lester
Brown is the president of the Earth Policy Institute:
“Usually in the past, rises in food prices come when we have a poor
harvest somewhere in the world as a result of weather and therefore is temporary. It usually
lasts a year or so and weather comes back to normal and we get a good
harvest again. What we’re looking at now is continuous pressure on
prices as far as we can comfortably see in the future, simply because in
agricultural terms, the demand for automotive fuel is insatiable.”
Brown says we’re at risk of trading food for ethanol fuel. And he says
it’s not just going to impact food prices in the US. It’s also going
to affect food supplies worldwide, especially in developing countries.
“The biggest effects are hitting people in other countries who consume
corn more directly, like Mexico for example, which has a corn-based diet and there
the price of tortillas has gone up about 60 percent.”
Brown says many US politicians have what he calls “ethanol euphoria.”
He’s called for a moratorium on licensing new ethanol plants. He wants
the government to think about whether it makes sense to keep
subsidizing ethanol made from corn.
Many people, even some in the ethanol industry, say ethanol from corn
is a limited solution. So researchers are looking for ways to make
ethanol from other sources, such as woody plants like switchgrass.
In the meantime, ethanol from corn is still the most viable option.
Economists say if corn gets diverted into ethanol on a large scale,
that might mean we’ll all be paying higher food prices for the next
several years.
The nation’s leading food processor is making big profits from ethanol. Archer Daniels Midland has had two straight years of record profits. And in its latest quarter, the company nearly set another record. Dustin Dwyer has more:
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The nation’s leading food processor is making big profits from ethanol. Archer Daniels Midland has had two straight years of record profits. And in its latest quarter, the company nearly set another record. Dustin Dwyer has more:
ADM’s profits on corn processing, which includes ethanol production, more than doubled in its latest quarter. Total profits for the period were about $400 million.
Daniel Kammen studies energy policy at the University of California – Berkeley. He says while ADM is making lots of money from corn-based ethanol, future profits could go to companies that make ethanol from switchgrass and other woody products.
“It’s really the first companies that switch into cellulosic sources that I think are going to be the big winners, because they’re going to capture the environmental prize as well as the offsetting gasoline prize.”
ADM executives have laid out a new strategy that includes plans to expand ethanol production from fuel sources other than corn.
Daniel Kammen notes that there might not even be a market for ethanol if not for government subsidies, which also helped ADM reap its bigger profits.
Jamie Juenemann invested in equipment to produce energy at his home in northern Minnesota. He says the government should offer more consistent incentives for renewable energy. (Photo by Stephanie Hemphill)
The Juenemann family has a carbon-neutral home - they produce as much energy as they use. (Photo by Stephanie Hemphill)
Americans are thinking more about energy. We’re facing higher prices. There’s worry about climate change, and there are questions about whether our need for foreign oil is forcing the country into wars in the Middle East. Even former oilman President Bush says we have to kick our addiction to oil, but what’s the government doing about it? Stephanie Hemphill looks at our national energy policy and its priorities:
Transcript
Americans are thinking about energy more. We’re facing higher energy prices, there’s worry about climate change, and there are questions about whether our need for foreign oil is forcing the country into wars in the Middle East. Even former oilman President Bush says we have to kick our addiction to oil, but what’s the government doing about it? Stephanie Hemphill looks at our national energy policy and its priorities:
This winter, a handful of people around the country won’t have to worry about oil or gas prices. Jamie Juenemann is one of them. He lives out in the country in northern Minnesota, and he’s installed his own energy plant.
Behind the house, there’s a pole reaching above the trees. At the top, a modern windmill turns as it catches the wind. There’s also a solar hot water heater, and a geothermal heat pump, that brings underground heat into the house.
“This was the final phase in our goal to become carbon neutral; essentially producing as much energy as we’re consuming.”
Carbon neutral means not using fossil fuels that emit carbon dioxide, believed to be a greenhouse gas, and warming the planet.
Of course these systems aren’t cheap. Juenemann took out a second mortgage to pay for them. It was a big decision, but he says he’s doing what he can to make sure his young daughters will inherit a livable world.
“It’s all about choices. We have the choice to either purchase a Chevy Suburban, or we can use that same outlay, that same expense and put in some renewable energy systems.”
Eventually these systems will pay for themselves, and the Juenemann family will have free hot water, electricity, and heat.
The government helps pay for some of these systems; as much as three-quarters of the cost can be covered by tax-breaks and rebates. The trouble is one of the major federal subsidies ends next year, and others are limited to the first few buyers in a fiscal year. Businesses that sell renewable energy systems say that on-again, off-again subsidy approach by the government makes it difficult to stay in business to provide the alternative systems.
Politicians have been sending mixed messages about energy. Last year’s energy bill offered subsidies for nearly every energy source, without sending a clear message favoring one over another. Congress even offered subsidies for fossil fuels.
And that makes sense to John Felmy. He’s chief economist at the American Petroleum Institute. He says the country depends on traditional sources — including the 40% of our total energy budget that comes from oil. He says the government should subsidize exploration and research on fossil fuels.
“You have to say where can you get the biggest impact from encouraging additional supplies, and those numbers of 40% clearly dwarf what you have from the alternatives.”
He says to keep the economy strong, the government should make it easier to drill for oil and gas, and to bring energy to where it’s needed.
Another government approach to the challenge of energy is to reduce the demand. Some groups predict conservation could cut energy needs as much as thirty percent.
J. Drake Hamilton is a scientist with Fresh Energy, a non-profit organization. She says conservation is cheaper and cleaner than producing more energy.
“Every time you cut energy use, you cut pollution. Every time you increase it, you increase pollution.”
And some people regard pollution as a hidden cost of traditional fuels. They say if consumers directly paid for the environmental and health costs of burning coal and oil and gas, the prices would be a lot higher. Economists call these “external costs,” and they argue over how to set a price on them.
Environmentalists say we should start charging an extra tax on fossil fuels because they contribute to global warming. At the same time, we could reduce the income tax, so the shift would be revenue-neutral, but the idea is still likely to be politically unpopular. A higher tax on fossil fuels would mean higher prices, which would make renewable energy systems more competitive.
There’s nothing new about taxing things that are bad for us, and subsidizing things that are good. But so far, when it comes to energy, Congress hasn’t been able to agree on what to discourage, and what to encourage.
For The Environment Report, I’m Stephanie Hemphill.
A bill being introduced in Congress could double the number of gas stations in the United States that sell E-85 ethanol fuel. The GLRC’s Erin Toner reports:
Transcript
A bill being introduced in Congress could double the number of gas stations in the United States
that sell E-85 ethanol fuel. The GLRC’s Erin Toner reports:
Congressman Mike Rogers of Michigan says the federal government should subsidize new
ethanol pumps at gas stations. Ethanol is made from corn or other kinds of plants. Rogers says it
would cost 20 million dollars to double the number of gas stations selling E-85; a blend of 85
percent ethanol and 15 percent gasoline:
“Our big three – General Motors, Ford and Chrysler – are building total almost a
million E-85 cars, so they’ve done their part. Now we need to do our part and get these
gas stations out across America selling E-85 gas.”
Rogers says the government should also boost subsidies for ethanol research to improve the
production process. He says if that happens, within five years, ethanol fuel could cost drivers
one dollar a gallon. But critics say taxpayers would be footing the actual cost of making ethanol.
Many of the crops being grown in the U.S. don't end up in the produce aisle. In fact, they usually aren't even sold to people in neighboring areas. (Photo by Rene Cerney)
Some experts think farmers could do a lot better for themselves if they changed what they’re growing. They say growing corn and soybeans subsidized by the government doesn’t do much for the farmer and almost nothing for the local economy. The Great Lakes Radio Consortium’s Julie Grant reports on efforts to change that:
Transcript
Some experts think farmers could do a lot better for themselves if they changed what they’re growing. They say growing corn and soybeans that are subsidized by the government doesn’t do much for the farmer and almost nothing for the local economy. The Great Lakes Radio Consortium’s Julie Grant reports on efforts to change that:
It can be hard to find locally-grown broccoli, milk, or beef in most grocery stores, even in the middle of farm country. In some states, ninety percent of the land is farmed, but ninety-eight percent of food people eat is shipped in from other parts of the nation or other countries.
The local farmers are growing commodities: corn and soybeans harvested for cattle-feed or processed foods, not stuff that winds up in the produce aisle. But ag economist Ken Meter wants to see that change.
“Farmers have doubled their productivity since 1969, and yet, they’re not making more money, they’re actually losing more money after doubling productivity.”
Meter has studied the economics of farm communities. In one area, he found that nearly all of the farm fields there were used to grow corn and soybeans for the commodities market, but farmers were losing money. At the same time, nearly all of the food people bought there was shipped in from other places.
“The economy we’re in right now is extremely efficient at taking any money that you or I earn in our neighborhood or in our daily lives and basically pulling it into a big global network that very efficiently takes that money and helps other people elsewhere make some value from it.”
It hasn’t always been this way. Richard Pirog is food systems researcher at the Leopold Center for Sustainable Agriculture in Iowa. Eighty years ago, he says, most farms grew a lot of different
products and processed them to be sold locally or within the region.
“Iowa back in the 1920’s had fifty-four canneries. We were the canned sweet corn capital of the world in the mid-1920’s. Fast forward to today, there isn’t a single cannery in Iowa. So that infrastructure is gone.”
Pirog says you could tell similar stories in farm areas across the U.S. Back during World War Two, the federal government encouraged farmers to grow commodities, such as corn and soybeans. The government starting paying them subsidies to grow those crops.
These days, Pirog says a lot of farmers wouldn’t even think about risking those subsidies to grow something besides corn and soybeans. Economist Ken Meter says that might be a mistake. He says many farmers don’t realize there’s a growing market for local ag products.
“All of us get focused on whatever we’re paying attention to, and as a farmer you get focused on producing quite well. I’ve spoken with farmers who’ve told me that they really didn’t have any clue that that their neighbors would be looking for different foods, because they just haven’t heard of the tremendous increase in demand we’ve had for things like organic milk or higher quality meats or fresher produce.”
There has been an organic explosion of local farm markets in recent years, because customers want to buy fruit, vegetables, milk, and meat directly from the farmers who produce them. But government policy and farm subsidies mainly still support the commodity production of corn and soybeans.
Richard Pirog hopes that changes, but it’s unclear if growing produce for the new local markets is always economically viable. No one has studied the phenomenon.
“It has to make economic sense for a community and a region. We believe it will, which is why it’s spread so rapidly. But it’s sort of like, the real numbers, the quantification hasn’t caught up with all the growth and explosion and the interest.”
Pirog says he’d like to push the process along. He says it would make more sense for the government to shift subsidies from corn and soybean production to the farms that produce food for their local communities.
CEO of Growth Energy, Tom Buis argues ... we spend plenty of money for overseas oil ... why not support home-grown ethanol?(Photo courtesy of the NREL)
