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State Representative Joyce Peppin
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-7806
For more information contact: Austin Bleess 651-296-5529
NEWS COLUMN
IT’S TIME TO END ETHANOL SUBSIDIES
Since 1986, Minnesota lawmakers have actively encouraged the development of a sizable state ethanol industry. We now have 17 operating ethanol plants in the state, with 10 more in the proposed or early planning stages. According to the Minnesota Pollution Control Agency, ethanol production in Minnesota is projected to nearly triple, climbing to two billion gallons per year.
This increased production sounds like a huge boon to our local economy, but in reality the increased production of ethanol comes at a huge cost to the state in the form of subsidies. As the state legislature works through a nearly $1 billion budget deficit and gas and food prices continue to rise, it is clear to me that it is time to end ethanol subsidies.
Minnesota has paid owners of state ethanol plants for 22 years, typically at about 20 cents per gallon of ethanol produced. In years 2004 through 2007, the payments were set at 13 cents per gallon, with a pledge to make up the remaining 7 cents per gallon as funds become available. For the 2007-2008 biennium alone, producer payments to 13 of the 17 plants totaled $30.3 million, with almost $53 million still due producers.
This subsidy may have made sense at one time, when it was believed ethanol production would lead us to energy independence and would be gentler on the environment than regular gasoline. But back then, the cost of ethanol wasn’t fully understood.
According to a 2005 report issued by the U.S. Department of Agriculture, corn ethanol costs an average of $2.53 to produce, or several times what it costs to produce a gallon of gasoline. Furthermore, ethanol cannot be transported through pipelines. It must be transported by truck, barge or train, all of which are more expensive than pipelines. Increase in transportation needs has likely contributed to the rise in gas prices.
The continued widespread use of ethanol from corn could also result in nearly twice the greenhouse gas emissions as the gas it would replace because of land use changes, according to a report released earlier this year from Princeton University’s Woodrow Wilson School of Public and International Affairs.
The Princeton study showed that after taking account of world-wide land use changes, corn-based ethanol will increase greenhouse gasses by 93 percent compared to using gasoline over a 30-year period. Another concern is ground-water use, with plants generally using between three and five gallons of water to make a gallon of ethanol.
Another cost of increased ethanol production is the increase in food costs as a result of changes in land use. In 2006, Joachim Von Braun, the director of the International Food Research Policy Institute said this about food prices. “I do not just expect somewhat higher food prices, but new instability as well,” he said. “In the future, instability of energy prices will be translated into instability of food prices.”
I support efforts to become energy independent. I believe we need to look at every possible avenue to meet our energy needs so that we don’t have to rely on foreign oil. But continuing to subsidize the ethanol industry without looking at the big picture is a mistake. If it has merit, the industry should be able to stand on its own without subsidies. If it can’t, it’s not worth the cost.
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