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The Corn Ethanol Lobby's Land Grab

Thursday, February 9, 2012

December 31 marked the overdue demise of one of the government subsidies that has long propped up the corn ethanol industry. But if you think corn ethanol is now standing on its own in the energy marketplace, take another look. Yes, the Volumetric Ethanol Excise Tax Credit (VEETC) is gone and will no longer pay oil companies for every gallon of ethanol they mix with gasoline. But ethanol still has massive federal backing for corn production as well as lavish state level support. The industry, meanwhile, keeps trotting out spurious “data” as it tries to deny the reality that the ethanol boom is chewing up millions of acres of grassland and forest in order to plant more corn fields, with serious consequences for the climate-altering buildup of carbon in the atmosphere.

A little history: In an effort to encourage the oil industry to accept mandatory ethanol production requirements in the federal Renewable Fuel Standard (RFS) introduced in 2007, Congress created the now-dead VEETC tax credit to reward oil companies for buying the ethanol that they were already required by law to use. The ethanol industry was handed a guaranteed market that ensured they could charge 45 cents more for every gallon – while benefiting from a tacit agreement to ignore ethanol’s poor engine performance and destructive side effects.

Continued subsidies mean continued scrutiny, and corn ethanol lobbyists are worried that the industry could lose the RFS crutch as well. The standard sets a 36 billion gallon target for mixing renewables into vehicle fuel, and it currently limits corn ethanol to no more than 15 billion gallons of that. The remaining 21 billion gallons are supposed to come from “advanced biofuels” that would substantially reduce lifecycle greenhouse gas emissions, but unfortunately, they don’t exist – at least not yet. Corn doesn’t qualify as an advanced biofuel because of a provision called “International Land Use Conversion,” which penalizes corn ethanol for the greenhouse gas impact of converting millions of acres of carbon-sequestering grassland and forest to cornfields. With cellulosic ethanol still largely a pipe dream and corn ethanol long overdue to stand on its own, many are beginning to question the logic of the renewable standard. But not the ethanol industry: Its goal is to increase the amount of corn ethanol required under the RFS. And they will lobby hard for it in 2012.

On Dec. 21, the Renewable Fuels Association (RFA) launched its first salvo by highlighting a new US Department of Agriculture report (Major Land Uses of the United States, 2007). The ethanol lobby group claimed that the report shows that no significant amounts of land moved into corn production from 2002 to 2007 – that no new land has been converted to grow biofuel feed stocks. Former Secretary of Agriculture John Block parroted the same claim on Jan. 19, adding another off-key voice to a continuing chorus of misinformation.

The RFA is certainly creative. It based its claim on its reading of three elements of the USDA report, all of which are contradicted by the actual data. According to the RFA, the USDA report:

… shows that forest and grassland increased dramatically during a period when ethanol production more than tripled. This is more proof that the wild predictions of ethanol causing cropland expansion and conversion of forest and grassland are just plain wrong.

As proof, the trade group pointed to USDA’s finding of a 34 million acre decline in farmed cropland nationally between 2002 and 2007, while grasslands increased approximately 26 million acres. There’s just one problem with that. The report notes that the government’s method of counting grassland changed between 2002 and 2007, and 26 million acres of pasture land that could be farmed – but hadn’t been – was moved from the cropland to the grassland category. Due to land recovering from drought and other factors, what the report data shows is that harvested cropland actually increased 5 million acres during the period.

And in direct contradiction of RFA’s claims, a 2007 USDA press release makes clear that the increased acreage was planted primarily in corn:

Driven by growing ethanol demand, U.S. farmers intend to plant 15 percent more corn acres in 2007… Producers plan to plant 90.5 million acres of corn, the largest area since 1944 and 12.1 million acres more than in 2006.

The second pillar of the RFA’s specious argument is based upon the claim that:

Urban land acreage quadrupled from 1945 to 2007, increasing at about twice the rate of population growth over this period.

On a national basis, that’s true. But if we look at the places where corn is actually grown, the USDA report paints a much different picture. From 2002 to 2007, fewer than 15,000 acres of land in the Corn Belt were converted to urban uses… out of a total of 8 million urban acres. In Missouri, Ohio and Illinois – home to the largest urban areas in the Corn Belt with more than 6 million acres – no state had more than 30,000 acres converted to urban use in that period. And these increases were offset by decreases in urban land in other states. From 1997 to 2007, for example, Iowa converted almost 300,000 acres of urban land to cropland – with the result that the amount of urban land in 2007 was lower than it had been in 1959. The same thing happened in South Dakota (41,000 acres converted) and North Dakota (34,000 acres).

So where did all that urban sprawl actually occur? Exactly where you’d would expect: Arizona, Texas, Maryland, Florida, Nevada and other fast-growing areas of the east and west coasts and the south – not exactly places known for their endless cornfields.

The third pillar of the RFA’s argument centers on the claim that:

The estimated acreage of grassland pasture and range increased by 27 million acres (almost 5 percent) between 2002 and 2007, while forest-use land increased 20 million acres (3 percent) from 2002 to 2007, “continuing a trend that became evident in 2002 and reversing an almost 50-year downward trend.”

The quotation was lifted from USDA’s summary – but the full report explains things differently. The authors note that 6 million acres of grassland with cropland potential was converted to other uses – continuing a 70-year trend. And with respect to forestland, the report is quite clear that the supposed “trend” was actually another accounting change:

The 14 percent decline in forest-use land between 1949 and 2002 was largely due to forest-use land reclassified to special-use areas.

In other words, what reversed was the government practice of not counting “special use” areas as forest, putting those acres back into the forest total. Presto – a forestland increase!

The RFA “analysis” also suffers from relying on five-year old data. It completely disregards what has happened to the Midwest landscape since the corn ethanol boom began in 2007, when the RFS was last updated. As the USDA’s Economic Research Service concludes in its report The Ethanol Decade, “Until 2006, corn production increases were largely due to increases in corn yields. Since 2006, corn production expansion resulted from increases in corn acreage.”

The RFA concluded by asking policymakers and regulators to:

… take a close look at the new USDA report. There is simply no substitute for real data. Our renewable energy policies and regulations should be based on what is actually happening on the ground…

We couldn’t agree more. Policymakers should look very closely at the original data when reviewing the RFS’s claims, not the lobbyists’ creative interpretations. And after they’ve seen the real data first-hand, they should get back to penalizing corn-based ethanol for its unending assault on the environment and revise the renewable fuel standard to begin phasing out all requirements for using corn ethanol.

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