Biofuels not enough, critics say; Goal is 20% drop in oil consumption

BYLINE: RICK BARRETT, Staff, Milwaukee Journal Sentinel

President Bush's comments on alternative energy might spark interest in ethanol and other biofuels, but critics say the increased use of the fuels won't make much of a dent in reducing U.S. oil consumption.

The only real effect of the ethanol industry is the transfer of money from urban taxpayers to corn farmers and shareholders of ethanol plants, said Jerry Taylor, senior fellow at the Cato Institute, a libertarian think tank in Washington, D.C.

Bush called on Congress to require the use of 35 billion gallons of ethanol and other alternative fuels, such as biodiesel, by 2017, a fivefold increase over current requirements. Ethanol would be blended into conventional gasoline.

The president's plan is aimed at cutting U.S. gasoline consumption by 20% over the next decade, reducing the demand for foreign oil.

In Wisconsin, proponents of alternative fuels applauded the plan, although some of the compliments were not Bush endorsements.

"Sometimes even a blind squirrel finds a nut," said Brett Hulsey, an environmental consultant from Madison whose clients have included corn growers and soybean farmers.

Wisconsin has a lot at stake in alternative fuels. The demand from ethanol plants has boosted corn consumption and helped farmers get some of their highest crop prices in years. There's also been increased interest in biodiesel made from soybeans.

Ethanol use will act as a catalyst for other types of bio-based products, said Joshua Morby, executive director of the Wisconsin Bio Industry Alliance, which represents businesses and others with interests in renewable energy.

"Wisconsin is positioned to be a leader regionally, nationally and even globally," Morby said.

Corn is the main ingredient for ethanol. A bushel of corn produces about 2.8 gallons of ethanol.

About 20% of Wisconsin's corn crop is destined for ethanol, which is significant considering that Wisconsin didn't have an ethanol plant six years ago. There are five plants in the state, with several more on the drawing board.

There's huge demand for ethanol as a replacement for imported oil, according to Hulsey.

"People would rather grow our fuel here than fight for it in Iraq," he said.

50% renewable by 2050?

One study has said the United States could get 50% of its liquid fuels from renewable sources by the year 2050. The president's plan could help put the nation on a "glide path to get there," Hulsey said.

Still, Hulsey, a former Sierra Club representative, remains skeptical of the president.

"What Bush has typically done in the past is make grand statements" about alternative energy, but not back them with action, Hulsey said.

Ethanol use isn't the answer to energy woes, said Taylor with the Cato Institute.

"That's because ethanol cannot be produced in sufficient volume to significantly affect global demand for other liquid fuels," he said. "If all of the corn produced in America in 2005 were dedicated to ethanol production, it would have reduced U.S. demand for gasoline by, at most, 12 percent."

Food price concerns

Some worry that the president's plan could trigger higher food prices as corn supplies are tightened.

"A big push on ethanol production right now could become a major foreign policy blunder. If it drives up world grain prices, as I expect it will, the United States will be seen as a country that wants to run its sport utility vehicles regardless of how it affects the rest of the world," said Lester Brown, a researcher and president of the Earth Policy Institute, an environmental think tank in Washington, D.C.

"This could lead to a strong consumer backlash against ethanol production," Brown said. Also, "rising corn prices are dividing farm communities between the corn growers and the corn feeders."

Ethanol production is heavily subsidized to keep it affordable. One study says that federal and state subsidies in 2006 were as high as $6.8 billion and will increase to $8.7 billion this year.

"If ethanol had economic merit, no government assistance would be needed. Investors would pour money into the ethanol business and profits would be made," Taylor said.

But subsidies are necessary for fledgling alternative energies to gain a foothold in the marketplace, said Joel Kurtzman, senior fellow at the Milken Institute, an economic think tank in Santa Monica, Calif.

The problem is that alternative energy sources are quickly forgotten when the price of crude oil drops. Then, people return to their wasteful ways, according to Kurtzman.

"What we have proposed is a (fuel) tax that only kicks in when energy prices fall. . . . That way investors in alternative energy have a little bit of insurance" against fallen prices.

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