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Milwaukee, Wisconsin, USA


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Posted on  

April 9, 2002

Ethanol debate is ready to boil over

BY TOM WEBB
Washington Correspondent

WASHINGTON Ethanol is a fuel that burns both ways.

In Minnesota corn country, nothing burns as brightly. A boom in ethanol production has created rural jobs, boosted corn prices and rejuvenated farming communities, luring farmers to invest in facilities that turn yellow corn into golden profits.

"It's been a success story all the way around," said Richard Eichstadt, manager of Pro-Corn, an ethanol plant near Preston. The plant opened in 1998 and is already expanding to four times its original capacity.

But outside the Midwest, ethanol burns in a different way: It inflames.

Taxpayer groups howl about its government subsidies. Environmentalists say ethanol causes as much harm as good. And critics mock its energy claims, saying ethanol requires almost as much energy to make as it yields.

"If you have a government order forcing people to consume it, an industry will develop," said Jerry Taylor of the Cato Institute, a Washington policy group. "But it doesn't make it an efficient industry, or a good industry, or economically wise."

The ethanol debate has simmered for years, but this spring it may erupt.

Three big decisions are pending that will chart ethanol's national future.

So far, Midwestern ethanol boosters are winning on all three fronts:

The U.S. Senate this week will resume work on an energy bill that requires tripling ethanol use nationwide, and would eventually ban an additive called MTBE that competes with ethanol in clean-air programs.

Congress this spring will try to pass a 10-year farm bill that could include new incentives for growing corn, for building ethanol plants and for using the fuel.

In California, a fight is coming to a head on whether the state must use ethanol to meet clean-air requirements. Democratic Gov. Gray Davis is balking, fearing an ethanol shortage that could send gas prices soaring to $3 a gallon.

Alluding to last year's crisis over man-made electricity there, Davis said, "I am not going to allow Californians to be held hostage by another out-of-state energy cartel."

For Minnesota, which has never produced fossil fuels of its own, it's a turnabout to be seen as an "out-of-state energy cartel." But it reveals how the successes of the Midwest farm lobby is stirring up strong resentments on both coasts.

For the past decade, Minnesota's ethanol growth has been fueled by state and federal subsidies, goals of energy independence and a strong environmental appeal.

But some environmentalists aren't convinced.

Under federal rules, cities that don't meet clean-air standards must use oxygenated fuels, like ethanol, to reduce pollution. California used MTBE, a chemical additive, but it polluted the groundwater. Ethanol fans say the solution is obvious: Stop using MTBE and switch to ethanol for cleaner air and water.

California officials dislike MTBE, but they don't see ethanol as the answer, and they resent federal edicts forcing them to use it. Some environmentalists are sympathetic, including Daniel Becker, director of the Sierra Club's global warming program.

"If ethanol is produced in the right way and is used properly, it can help reduce pollution," Becker said. "If it's produced in the wrong way and used in the wrong seasons, it can increase pollution."

Becker said ethanol does reduce some emissions, like carbon monoxide, which helps in cold weather. But in warm weather, "it makes the entire (fuel) mixture evaporate more readily than with just gasoline alone, and that causes an enormous smog problem."

In cold-weather Minnesota, by contrast, ethanol-blended gasoline is widely credited with improving air quality. Twin Cities gas stations have been required to sell only ethanol blends since 1995. The restriction went statewide in 1997.

Today the state has 14 ethanol plants in the state, in towns such as Preston, Little Falls and Buffalo Lake, nearly all new. Most of those 14 plants were bankrolled by groups of farmer-investors, with help from a state subsidy.

"They were responding to a depressing situation in rural communities where, gee, there weren't any jobs, kids were leaving town because there were no jobs, and the price of corn was cheap," said Ralph Groschen with the Minnesota Department of Agriculture. "In most cases, the towns and the farmers and the local banks all chipped in to make it happen."

Not only was the formula a success, but the building boom continues.

"Most of the (14) plants have expanded recently or are in the process of expanding," Groschen said.

In Preston, Eichstadt said, "the impact it has had on the community here is enormous": higher corn prices, 30 new jobs in the community south of Rochester, new economic activity.

"There is some local pride associated with these plants, too," he said. "They feel that they're doing somewhat their part (to help the country) because they're producing an environmentally clean fuel, a renewable fuel."

It's those hopeful stories, repeated around the corn belt, that prompt farm-state Republicans and Democrats to push so hard on ethanol.

But as their fight goes national, outsiders will resist subsidies and mandates designed mostly to produce good things in the Midwest.

Scoffed Taylor, the Cato analyst, "I'm sure robbing banks looked like a good thing to Bonnie and Clyde, too."


--------------------------------------------------------------------------------
Tom Webb can be reached at twebb@krwashington.com or (202) 383-6049.
 

 

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