Despite its slowing growth, corn-based ethanol is still a massive industry nationwide. Hoping to protect consumers from unstable gasoline prices and wean drivers off of fossil fuels, the government has provided agri-business with heavy subsidies to produce corn that can be blended with gasoline and employed as a transportation fuel. As a result, the use of ethanol as a motor fuel in the United States has grown at an annual average rate of nearly 25 percent. In Illinois alone, the U.S. Department of Agriculture predicts that 530 million bushels of corn will be siphoned off for ethanol in 2009, enough to produce the equivalent of 30 percent of the state’s fuel supply.

But economists and environmentalists have long criticized Congress' approach to corn-based biofuels because of its effect on food prices, the amount of oil that's required to grow the product, and its cost to taxpayers. A report the Congressional Budget Office released late last week reinforces those concerns.

On his blog, CBO Director Douglas Elmendorf synthesizes the findings. According to the offices' estimates, the increased use of ethanol accounted for about 10 to 15 percent of the rise in food prices between April 2007 and April 2008. This upward pressure negatively affected the government's ability to provide affordable and healthy food to the nation's most vulnerable:

In turn, increases in food prices will boost federal spending for mandatory nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps) and the school lunch program by an estimated $600 million to $900 million in fiscal year 2009. The Special Supplemental Assistance Program for Women, Infants, and Children—better known as WIC—is a discretionary program that provides a specific basket of goods to recipients rather than a set cash benefit, so changes in food prices in 2008 had an immediate impact on costs for the program.  Under the assumption that the effects are much the same, increased production of ethanol would have added less than $75 million in fiscal year 2008 to the cost of serving the same number of WIC participants as in 2007.

Ethanol did not significantly limit the nation's transportation emissions either, lowering travel-related greenhouse-gases by less than 1 percent last year. If ethanol production requires deforestation to plant more crops in the future, those reductions could be offset too. The Midwestern agricultural lobby and the legislators that lauded ethanol as a legitimate alternative to gasoline will not be happy with these findings.

What's a better alternative? Elmendorf points to cellulosic ethanol, which does not require fertilizer, is more efficient, and produces a smaller footprint. Unfortunately, the current technologies for producing this biofuel from woodchips or agricultural plant waste are still five years away from becoming viable. But researchers at the University of Illinois are working hard to move the ball forward ad part of a multi-year, multi-institutional initiative. Specifically, professor Stephen Long and his team have concluded that the giant perennial grass Miscanthus, per acre, can yield 2.5 times as much biofuel as corn -- and without any chemical additives. It's an approach environmentally-concious legislators should closely examine.

(H/T Grist)

Image used under a Creative Commons license by Flickr user Coreyu.