The 5 most maddening myths about corn and ethanol

Food vs Fuel, emissions, cost competitiveness, and RINsanity. Some of the most unfair bricks hurled at corn starch-based ethanol — and here’s why.

If you were, like me, employed in the late 1980s in the eight-block radius around New York’s Washington Square Park, you knew to keep a sharp eye out for bicycle-mounted messengers that hurtled around Lower Manhattan at light speed, because a crash could cost your life.

You hardly see them any more — in many cases, they were transporting manuscripts, type, contracts and layouts between office buildings — and these days, all of that is handled through the internet. What was a carbo-intensive enterprise — think of all the emissions needed to support all those messengers in their daily lives — became a cleaner one, through technology. And a safer one.

Though technology appears gradually and may feel klunky at first — the Quip machine that replaced the messenger (later replaced by fax technology, then the internet) could only transmit one crudely renderered black-and-white page every 20 minutes, and in image form only. But eventually we arrive at a point, some 25 years later, where we think nothing of streaming 4-gigabyte movies in real-time during a night of Netflix-based entertainment.

Technology advances, but sometimes the myths that were born during their earliest days days persist long after they have exceeded their shelf life. I know more than a few people, even today, who routinely avoid the use of ATM machines, still preferring over-the-counter banking, because of problems experienced long ago with this machine or that.

In the field of renewable fuels, there’s no technology that’s done more growing up in the public eye than the processing of corn starch into distillers grains, CO2, ethanol and corn oil. And, consequently, there’s no technology more beset with myths originating in its novelty and infancy.

The internet is replete with images of ears of corn “stuffed” (via Photoshop) into fuel tank intake valves (as seen in the lead image for today’s story, from rainforest-rescue.org)— as if that was exactly what was going on. And the usual suspects, armed with a persuasive collection of old or discredited “data”, persist in spreading a number of myths that are right up there with tossing a pinch of spilled salt over your shoulder to ward off bad luck.

Looking at the long-term, corn starch is just one feedstock of many, ethanol is just one fuel out of many. But the low-cost and relatively ease of scale-up has resulted in corn starch and ethanol dominating the biofuels scene for several years now — to the extent that many members of the public equate the two. In fact, it’s been difficult for technologies that offer alternative fuels to ethanol, or alternative feedstocks to corn starch, to get the attention and support they deserve, in many cases, because of the negative myths surrounding corn starch ethanol that have been extended to biofuels as a whole.

Let’s today look at the 5 most persistent myths.

Myth #1. Uncompetitive on cost.

Ethanol as a renewable fuel, and specifically as it is made from corn, can’t compete with petroleum-based gasoline on price without subsidies, and potentially massive ones.

Reality. To be sure, in a world of $50 oil, gasoline is pretty cheap. RBOB gasoline reached a low of $1.30 per gallon this week on the NYMEX exchange.

But E85 ethanol is doing reasonably well in response. It’s currently available at $0.84 per gallon, according to the Iowa Renewable Fuels Association, which tracks prices. Now, E85 has about 70 percent of the energy density of straight gasoline — so how does that stack up? Actually, E85 is running about 8% less expensive than straight gasoline — unsubsidized.

Myth #2. They’re heavily subsidized.

Ethanol only makes money for its producers because they get a whole bunch of money from RINs — renewable fuel credits — and that’s a hidden form of subsidy.

Reality. Actually, ethanol producers don’t see a dime from RINs. When ethanol is sold by a producer, the customer receives a free RIN with each gallon.  The fuel blender has the choice to blend the fuel and produce the RIN at the end of the year to the EPA as a certificate of compliance, or sell the RIN in the marketplace — where it is worth 77-87 cents today.

Consider, as one ethanol producer told the Digest, “we are selling ethanol in selected markets at as low as 83 cents a gallon, compared to before-tax retail prices of $2.00 per gallon and higher (this price excludes about 55 cents of taxes), once you subtract the value of the 87 cent RIN from the $1.70 price for ethanol.

“So, fuel blenders and retailers are earning $1.17 cents per gallon for trucking ethanol from our plant to racks and then to gas stations. The trucking cost is about 20 cents per gallon, and the resulting profits is about $1.00 per gallon.

Myth #3. Spiking RIN prices will spike the cost of gasoline.

Reality, Actually, no. RINs aren’t sold by ethanol producers as a source of revenue, thereby adding cost to fuels. They are provide free by producers to fuel blenders, who trade them amongst themselves. A fuel blender is paid by a fuel blender – one profits and one loses – and neither the ethanol producer or the EPA is paid anything for a RIN, nor does it add anything to the cost of fuel.

If every fuel blender bought the RFS required amount of biofuels, RIN’s would be worthless. RIN’s would merely pass from ethanol producers to blenders to the EPA without any value ascribed to a RIN.

Essentially, RINs are a “receipt” and never acquire value in terms of the supply chain from producer to consumer. They are given to fuel blenders for nothing, and are turned in to the EPA for nothing.

Myth #4. Food vs fuel.

The world’s poorest people are starving to death, and a great deal of blame should be placed on the conversion of corn starch into ethanol, instead of food products.

Reality, it’s not what you might have heard elsewhere. As these charts from the FAO demonstrate, people around the world aren’t getting fewer calories, they’re getting more and more. You might not know it, but the average caloric intake in the poorest region of the world, Sub-Saharan Africa, is higher now in 2015 than the average global daily intake of calories in 1965, fifty years ago.

Globally, the availability of food calorie intake, per capita, is up more than 20% globally and more than 30% in the developing world, compared to 50 years ago.

Specific to corn starch, it’s also worth pointing out that the developing world derives only about 10% of its calories from “other cereals” a catch all category excluding rice and wheat and including corn starch, sorghum and barley.

The world, generally speaking, is not suffering from a food availability crisis, but a food distribution crisis — and we would be well advised a a society in search of healthier lifestyles to “lay off” some of the carbs anyway — eat less sugars and starches and more veggies.

Myth #5. Corn starch ethanol creates more net carbon emissions than gasoline.

Reality. Not so, and beware of outdates or skewed studies on this topic, they’re everywhere. Even the initial 2008 assessment by the California Air Resources Board showed that any midwestern corn starch plant could deliver 10% reductions compared to baseline RBOB gasoline.

According to a white paper released this week:

“Since 2008, innovation in energy use and conversion technology at ethanol production facilities, innovation in enhanced efficiency fertilizers and in corn production management, and improved accuracy of GHG modeling assumptions have reduced current corn ethanol fuel CI by more than 50%.”

The white paper adds that:

“Argonne National Laboratory, Agricultural Scientists, Environmental Scientists, and Ethanol Production Companies have documented significant reductions in corn ethanol fuel CI since 2008. ANL Scientists recently determined (GREET version 2.0, 2013) that average ethanol mfg. energy use has decreased 25%, corn farming energy use decreased 24%, corn fertilizer and chemical use decreased by 3%, and that ethanol manufactures are extracting 3% more ethanol from each bushel of corn.

“ANL affiliated scientists have also updated their Land Use Change calculations (Dunn et al. 2013)1 with recent data and now estimate that soil carbon emissions from LUC are 7.6 grams CI, a 75% reduction from the widely used estimate of 30 grams CI.”

One reason for the confusion over emissions? The white paper contends:

“Low carbon fuel market regulators, such as the U.S. EPA and the California Air Resource Board (CARB) have yet to acknowledge these improvements and update their models with this new science. Because fossil fuel CI is trending higher and corn ethanol fuel CI is trending lower, failure to account for and acknowledge these trends erodes public support for biofuels and unfairly penalizes biofuels in low carbon fuel markets.”

The white paper can be downloaded here.

The Bottom Line

Con starch ethanol is just one dimension of an overall national solution — it is no more a “silver bullet” than cheap gasoline is, in a world of electric cars, CNG vehicles, diesels and flex-fuel cars. And it is no more the “all by its onesy” answer any more than LeBron James, for all his basketball talents, could win championships without the other four players on the court. For sure, cellulosic fuels are providing, already, stronger performance on emissions, and drop-in fuels will add a dimension of “blend wall busting” in the future as well as opening up markets such as aviation.

But give the fuel its rightful place — it delivers measurable benefits for energy security, economic development and emissions benefits — and has been unfairly tarred, in some cases because old data or attitudes have persisted for too long.