Recently, ActionAid USA and CEI filed a correction request under the Data Quality Act targeting misleading claims made by the EPA regarding the effects of ethanol mandates and subsidies, claims that have obscured how government policies have contributed to world hunger, malnutrition, disease, and death. This legal request, which was filed shortly before World Food Day, can be found here.

According to one recent study, ethanol diversion to fuel has caused nearly 200,000 excess deaths annually. Marie Brill, Senior Policy Analyst at ActionAid USA, stated: “High and volatile prices are already causing misery. The real price of a typical global food basket is up nearly 50% over the last year. With poor people in developing countries spending between 50-80% of their income on food, it is no surprise that 44 million people fell into extreme poverty from June 2010-February 2011 because of high food prices. The big surprise is that the EPA still fails to acknowledge the human impact of the Renewable Fuel Standard and still refuses to cite the plethora of reports that reveal the significant role of biofuels in global food price volatility.” According to Sam Kazman, CEI general counsel: “EPA’s refusal to address this issue has gone on long enough, and there isn’t a more appropriate time for the agency to change its approach than in the wake of World Food Day.”

The inestimable Indur Goklany has an important new report on biofuels and developing countries. “Could Biofuel Policies Increase Death and Disease in Developing Countries?” appears in the Spring 2011 issue of the Journal of American Physicians and Surgeons. In his analysis, Goklany concludes that biofuels production “may have led to at least 192,000 additional deaths and 6.7 million additional lost DALYS [Disability Adjusted Life Years] in 2010.” He points out that those estimates may be low:

These estimates are conservative.

First, they exclude consideration of a number of health risks that are, in fact, directly related to poverty (e.g., indoor smoke from burning coal, wood and dung indoors; and iron deficiency). Second, the analysis only considered the poverty effects of biofuel production over and above the 2004 level; therefore, it does not provide a full estimate of the effect of all biofuel production. Despite the underestimations, these estimates exceed the WHO’s estimates of the toll of death and disease for global warming. Thus, policies to stimulate biofuel production, in part to reduce the alleged impacts of global warming on public health, particularly in developing countries, may actually have increased death and disease globally.

CEI has long warned of the human, land, and environmental problems with ethanol mandates, incentives and other subsidies for biofuel production.  See here and here and here (which includes discussions relating to the politics of ethanol).

Sens. Amy Klobuchar (D-Minn.) and Tim Johnson (D-S.D.) introduced legislation last week to provide more support to the biofuel industry. This would counter a number of bills introduced recently intending curb biofuel incentives (here, here). Fortunately, support for this kind of bill does not seem to be in the pipeline, so it must mostly be for show.

The “Securing America’s Future with Energy and Sustainable Technologies Act” (SAFEST) is bold. Rather than picking one or two things the ethanol industry was interested in, it throws them everything they’ve ever dreamed of.

Let’s look at a few provisions:

It amends the definition of “advanced biofuel” to include corn starch-derived ethanol.

This would allow the corn ethanol industry access to a much larger share of the Renewable Fuel Standard, which is scheduled to increase from 9 billion gallons to 32 billion gallons by 2022. This would be one of the more damaging aspects of the legislation.

It also supports a mandate for automakers to ramp up the production of “fuel choice-enabling” vehicles to 100 percent by model year 2021. This includes FFVs, biodiesel-powered vehicles, hydrogen fuel cell technologies and hybrid vehicles.

This will drive up the cost of vehicle production. It will conflict with efficiency mandates as automobile manufacturer’s get a credit for CAFE standards when they produce E85. It will also ensure that E85 sticks around for much longer, and not allow the market to effectively test new modes of automobile transporation.

It attempts to eliminate liability concerns related to the use of ethanol in combustion engines.

Hmm. I thought E15 and higher blends were completely safe in all of the testing the DoE has done. Why are they concerned with liability?

The blenders credit would be shifted to a credit for producers and would be reduced from 45 cents per gallon to 20 cents per gallon beginning in 2012. The credit is then phased out slowly, at a reduction rate of 5 cents per year, until it zeros out in 2016. The $1.01-per-gallon credit for cellulosic biofuels is retained as is a 10-cent-per-gallon small producer credit for ethanol facilities with capacities no greater than 60 MMgy.

This is until they attempt to pass more legislation in 2015 giving them “just a few more years” of the tax credit, as the industry is “still maturing” and American oil imports will have inevitably continued to rise.

There are many more provisions in the link here.

Grassley also completed some ethanol-penance. He had recently noted that he would be unable to vote against the Republican CR amendments despite anti-ethanol provisions in them. In his recent speech, he made it clear that he will defend ethanol as long as it helps his career forever.

Via The Hill’s Energy blog:

“The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers’ pockets where it can be used to spur innovation, stimulate growth and create jobs,” Coburn said in a statement Wednesday.

The bill would repeal the VEETC. As before, a broad coalition emerged in support of the legislation.

CEI’s Marlo Lewis commented on the idea that ethanol is an infant fuel that needs protection:

Henry Ford built his first car, the Quadricycle, to run on pure ethanol. That was in 1896. In 1908, Ford built the first flexible fuel vehicle capable of running on either gasoline or ethanol. Today, more than a hundred years later, the perennial infant known as the corn-ethanol industry still can’t ‘compete’ without government coddling. We commend Senators Cardin and Coburn for challenging Congress to stop throwing good money after bad.

The Wall Street Journal interviewed Secretary of Agriculture Tom Vilsack who suggested the ethanol industry might be able to wean itself off of federal subsidies. Not too quickly, obviously.

The WSJ took this as a positive sign:

Still, Mr. Vilsack may be the first Agriculture Secretary in generations to concede that ethanol subsidies are not immutable. That’s progress.

I do not share their view that this is progress. As they admit, there’s a chance the industry will receive new forms of support without ditching the old. Obama will still have a potentially tough re-election in 2012. Virtually all of the potential Republican candidates have praised the industry, and Obama will certainly acquiesce and do the same.

Furthermore, as they note, Vilsack praised the idea of building infrastructure or providing incentives for E85. These will be equally damaging in that they will ensure the U.S. continues to produce much more ethanol than the market would demand.

Imagine a scenario in 2016 when cellulosic ethanol is still “just a few years away” from being commercialized and the DoE is tired of the embarrassment that comes along with lowering a “mandate” by 95 percent. The corn ethanol industry will scream about how their technology is already proven and lobby for the RFS2 to be amended such that starch based ethanol can fulfill the cellulosic mandate.

Farmland will continue to be diverted towards growing corn and the problems will reverberate throughout the global economy. This problem will only worsen itself if gasoline prices continue to rise because the voters will want politicians to “do something” especially if it involves producing domestic fuel, no matter the cost, at home.

The ethanol industry took a beating last year in that they expected a five-year extension of the VEETC no questions asked, and got only a one-year extension. And despite the recent efforts to limit the industry via stopping E15 production, they still wield a lot of power on the Hill.

Another convert to the food vs. fuel debate on corn ethanol — former President Bill Clinton. In his speech on Thursday before the U.S. Department of Agriculture’s annual Agricultural Outlook Forum, Clinton said that farmers shouldn’t be putting so much of their corn crop into ethanol production rather than food. He cautioned that the diversion of the food and feed crop could increase food prices and lead to food riots in developing countries and urged farmers to look to the needs of the poor countries of the world.

The USDA’s chief economist Joe Glauber in his closely watched presentation at the Forum also spent some time on projections relating to corn. He said that in 2011/2012 –

“corn use for ethanol would account for 37 percent of total use and 36 percent of corn production.”

Reading between the lines, one can also anticipate higher food costs for beef, pork and poultry, as Glauber noted that high corn feed costs –

“would limit expansion in the pork and poultry sectors and beef feeding declines with tighter feeder cattle supplies.”

That’s not good news for people even in developed countries hit by escalating oil prices resulting from oil disruptions in the Middle East. Food and fuel costs will be rising. While unrest in the Middle East may not be controllable, the corn ethanol issue certainly is. Read CEI’s Marlo Lewis’ article on how the climate for getting rid of the Volumetric Ethanol Excise Tax Credit (VEETC) has changed, and even some of its strongest supporters are saying they may have to “bite the bullet” on that.

During the annual National Ethanol Conference, where ethanol rent-seekers enthusiasts from around the country gather to discuss achievement of the still-out-of-reach goal of making significant amounts of ethanol commercially viable. It’s always just a few years away.

Very early that morning, the House voted to de-fund EPA’s program to implement E15 throughout the country as well as funding for the installation of blender pumps. Growth Energy responded, “OPEC Wins, America Loses in House Vote.” Explaining his amendment, Jeff Flakes stated: “I’ve long thought that the ethanol industry should be able to stand on its own — not be propped up by federal subsidies.”

The Senate has signaled that they will not be accepting the House package as is, and there will almost certainly be last minute negotiations as to which spending cuts stay and which go. Hopefully, the Senate can agree that the expansion of ethanol isn’t in the nations best interest, and can be cut.

In signaling the president’s continued quest to selectively support the science, Energy Secretary Steven Chu attended the event and had a number of nice words to say about ethanol, reassuring Iowans that Obama is doing everything he can to keep the green-river flowing. On Chu’s attendance, Bob Dineen commented:

Renewable Fuels Association President and CEO Bob Dinneen introduced the videotaped remarks from Chu at the end of his state of the industry address that opened the conference. “I believe in redemption,” Dinneen said, referring to the oft repeated dislike of corn ethanol by the secretary of energy. “Sec. Chu’s comments about our industry have been misconstrued,” he said.

The statement he is referring to is when Chu said: “Ethanol is not an ideal transportation fuel.” It seems that this type of blunt comment would be hard to misconstrue, and its more likely that Chu is still adjusting to putting his scientific experience behind his primary role as a political spokesman. His office, afterwards, issued a mea culpa.

This might make things interesting, as the past few years have demonstrated the extent to which certain aspects of G.M. have clout in Washington: Automakers want House to block 15 percent ethanol blend. Also consider the obvious irony of a partially government-funded/owned company opposing policy supported by the Obama administration — the “slam on the breaks while hitting the gas approach.”

The Big 3 hadn’t been too loud on this issue, though they did join a lawsuit attempting to prevent EPA from approving the fuel late last year. Representative Sullivan (R-OK), as previously mentioned here, has introduced an amendment (of which there are almost 600 introduced amendments) to be attached to the CR which would de-fund EPA’s ability to introduce E15.

Much like the strange bedfellows who opposed the extension of the VEETC last year, the article notes:

“Our organizations rarely agree on any public policy issue, but we are united in opposing the premature introduction of E15,” said the letter that was also signed by the American Bakers Association; American Meat Institute; American Petroleum Institute; National Petrochemical & Refiners Association; National Turkey Federation; Outdoor Power Equipment Institute; and Specialty Equipment Market Association.

While testing done on vehicles from MY 2001-present have been confirmed by the EPA as able to handle blends of E15, a positive conclusion has not been reached for a number of other engine types (motorboat, lawnmower, etc.). Some manufacturers of non-automobile engines have stated they already struggle with E10, which is commonly sold throughout the United States, and are very concerned with the declining availability of gasoline without ethanol in it as well as increased damage by misfueling.

It’s hard to tell who would support this amendment. Most Congressman don’t consider ethanol to be a big issue, and the farm-belt will stand behind it. Many Democrats don’t support the extension of ethanol policy but might see this issue framed as an attack on the EPA which they would feel inclined to defend.

Two bills have recently been introduced that intend to block efforts made to increase U.S. consumption of ethanol.

The first, from Rep. John Sullivan (R-OK), intends to cut funding for EPA’s E15 program. My understanding of the legislation is that “cutting funding” for the program is the equivalent of ending it, as the EPA needs funds to carry out the remainder of the regulatory process (permits, guidelines for fueling stations, E15 warning stickers, etc.).

The second is from Jeff Flake (R-AZ), would end the VEETC and corresponding tariff on foreign ethanol.

Both bills would slightly limit the excessive production of corn ethanol (a good thing), but the bigger problem is the ever-increasing mandate known as the Renewable Fuel Standard. An ideal bill would end the mandate, tax credit, tariff, end the law that allows E-85 vehicles to qualify for mileage standards, and end EPA’s ability to regulate the amount of ethanol in our fuel. Then the ethanol industry couldn’t fairly argue that they’re being denied access to the market. Some energy analysts even believe E85 could exist profitably as a niche industry in the mid-west.

Realistically, in the short run, petroleum would still dominate. However, freeing capital away from politically motivated ends makes it more likely that capital will flow into areas that will actually generate benefits for consumers. It is unclear if that will ever happen with corn ethanol and/or its variants (cellulosic, biodiesel, etc.).

Here is a good piece (and a challenge) by Tim Carney on the ethanol’s industry claim that they’re being unfairly denied access to the fuel market by the EPA. Of course, the ethanol industry is being incredibly disingenuous in its calls for fair competition. They have done this before.

Recently, Egypt’s pro-American dictator, Hosni Mubarak, was forced to resign after 30 years in power, and forced to give way to a military-controlled government.  Victor Davis Hanson has some interesting reflections on the revolution in Egypt at this link.

Earlier, we discussed the role of ethanol subsidies and biofuel mandates in increasing support for the Muslim Brotherhood, an anti-American group opposed to Mubarak, at this link.  By indirectly increasing wheat prices, ethanol subsidies drove up unrest in Cairo’s slums, which are more supportive of the Muslim Brotherhood than they are of Egypt’s historically much smaller pro-western democracy movements.  (Egyptians historically have spent nearly half their income just on food — more than that in the slums of Cairo and Alexandria, Egypt’s largest cities).

The Washington Post‘s editorial board and various columns in the Post, like one by Professor Tim Searchinger, agreed about the folly of ethanol subsidies and their role in contributing to misery and unrest among Egypt’s poorest.