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ALPERT: The Ethanol Fraud

America’s ethanol scam is responsible for the malnourishment of millions of people, higher energy costs and substantial resource misallocations. The most damning count of this indictment is corn ethanol fails to do what it is supposed to do and is more tragic because corn ethanol is not environmentally responsible. 

The United States now uses 40 percent — or more than 6 billion bushels — of its corn production for conversion to ethanol (2021). If this acreage were employed for corn or other grains for human consumption, it could be enough to stave off starvation for millions. In addition, it would also lower fuel costs and improve automotive performance. 

Currently, if the United States were to devote the 6 billion bushels of corn used for ethanol to corn for food, it could more than meet the world’s total demand for imported corn. 

The scam began with the bipartisan passage of the Open Fuel Standard Act of 2011, which phased in requirements that new vehicles be engineered to operate on sustainable fuels to reduce carbon emissions and lower American dependence on oil.

We produce so much ethanol because the government subsidizes it big time. As David Frum points out in a recent Atlantic article, the government has required ethanol to be added to gasoline, with the production of ethanol receiving “all kinds of grants and subsidies.” 

An honest computation of these subsidies would be helpful but is not readily available. In congressional testimony in 2017, the Congressional Budget Office stated the private economy could not make profit-producing ethanol, therefore “the federal government provides financial support for the development, production and use of fuels and energy technologies … through tax preferences and … spending programs … with the purpose of increasing energy production, reducing greenhouse gasses and encouraging research.”

While the amount of government financial support is uncertain since both the prices of oil and corn are involved in the final prices received by producers (farmers and oil refiners). These are classic examples of production complements — when the demand for gasoline increases, the need for ethanol also increases.

However, a higher price of gasoline will cause the quantity demanded of gasoline to decline and, likewise, the demand for ethanol. There are many moving parts when determining government payments for ethanol, including the jumble of corn subsidies and the payments for ethanol itself. Estimates of taxpayer costs via subsidies and special interest carveouts vary widely, but a reasonable guess is $10 billion per year.

Frum recalls that the late senator John McCain joked that he began his day with a glass of ethanol. It would be an amusing quip if it were not for the fact that the ethanol boondoggle is costing lives and treasure. It costs the world not only American corn but other crops that would be grown in replacement of corn without ethanol subsidies.

A recent study in Proceedings of the National Academy of Sciences (“Environmental Outcomes of the US Renewable Fuel Standard” by Tyler J. Lark et al.) shows that ethanol does not help the environment and might be harmful to it.

The authors state that “our findings confirm that contemporary corn ethanol production is unlikely to contribute to climate change mitigation.” In addition, the authors point out that their research does not consider land-use impacts. They do find that ethanol production harms water quality, and it changes farmers’ planting decisions, heavily favoring corn over other grains that are more desirable for human food consumption.

The tragic consequences of ethanol mandates are not only that are they costly to the world community via misallocation of food production but that they pollute the planet with fertilizers and farm-equipment exhausts and are useless in combating climate change. Unless a technical change is made and adopted in ethanol production and use, these mandates are harmful and will be at best neutral for carbon emissions going forward.

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LOMBORG: How to Alleviate the Looming Global Hunger Crisis

global food crisis is looming, so policymakers everywhere need to think hard about how to make food cheaper and more plentiful. That requires making a commitment to producing more fertilizer and better seeds, maximizing the potential offered by genetic modification, and abandoning the rich world’s obsession with organics.

Russia’s brutal war in Ukraine is making less food available because the two nations have been responsible for more than a quarter of global wheat exports and big quantities of barley, corn and vegetable oil. On top of punishing climate policies and the world emerging from the pandemic, prices of fertilizer, energy and transport are soaring, and food prices have climbed 61 percent over the last two years.

The war has exposed some harsh truths. One is that Europe — which portrays itself as a green energy trailblazer — is highly reliant on Russian gas, especially when the sun is not shining or the wind is not blowing. The war has reaffirmed the basic reality that fossil fuels remain crucial for the vast majority of global needs. And the emerging food crisis now reveals another harsh truth: organic farming cannot feed the world and could even worsen future crises.

Long simply a fashionable trend for the world’s 1 percent, environmentalists have increasingly peddled the beguiling idea that organic farming can solve hunger. The European Union is actively pushing for a tripling of organic farming on the continent by 2030, while a majority of Germans actually think organic farming can help feed the world.

However, research conclusively shows that organic farming produces much less food than conventional farming per acre. Moreover, organic farming requires farmers to rotate soil out of production for pasture, fallow or cover crops, reducing its effectiveness. In total, organic approaches produce between a quarter and half less food than conventional, scientific-driven agriculture.

This not only makes organic food more expensive, but it means that organic farmers would need much more land to feed the same number of people as today — possibly almost twice the area. Given that agriculture currently uses 40 percent of Earth’s ice-free land, switching to organics would mean destroying large swathes of nature for less effective production.

The catastrophe unfolding in Sri Lanka provides a sobering lesson. The government last year enforced a full transition to organic farming, appointing organics gurus as agricultural advisers, including some who claimed dubious links between agricultural chemicals and health problems. Despite extravagant claims that organic methods could produce comparable yields to conventional farming, within months the policy produced nothing but misery, with some food prices quintupling.

Sri Lanka had been self-sufficient in rice production for decades, but tragically has now been forced to import $450 million worth of rice. Tea, the nation’s primary export crop and source of foreign exchange, was devastated, with economic losses estimated at $425 million. Before the country spiraled downward toward brutal violence and political resignations, the government was forced to offer $200 million in compensation to farmers and come up with $149 million in subsidies.

Sri Lanka’s organic experiment failed fundamentally because of one simple fact: it does not have enough land to replace synthetic nitrogen fertilizer with animal manure. To shift to organics and keep production, it would need five to seven times more manure than its total manure today.

Synthetic nitrogen fertilizers, mostly made with natural gas, are a modern miracle, crucial for feeding the world. Largely thanks to this fertilizer, agricultural outputs were tripled in the last half-century, as the human population doubled. Artificial fertilizer and modern farming inputs are the reason the number of people working on farms has been slashed in every rich country, freeing people for other productive occupations.

In fact, one dirty secret of organic farming is that, in rich countries, the vast majority of existing organic crops depend on imported nitrogen laundered from animal manure, which ultimately comes from fossil fuel fertilizers used on conventional farms.

Without those inputs, if a country — or the world — were to go entirely organic, nitrogen scarcity quickly becomes disastrous, just like we saw in Sri Lanka. That is why research shows going organic globally can only feed about half the current world population. Organic farming will lead to more expensive, scarcer food for fewer people, while gobbling up more nature.

To sustainably feed the world and withstand future global shocks, we need to produce food better and cheaper. History shows that the best way to achieve that is by improving seeds, including by using genetic modification, along with expanding fertilizer, pesticides and irrigation. This will allow us to produce more food, curb prices, alleviate hunger and save nature.

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