The Unraveling of the Ethanol Scam: The High Cost of Ethanol and Biofuels
February 16, 2009
By Robert Bryce, Feb. 5 2009
On its website, Wisconsin-based Renew Energy says it is the “biofuels industry leader for innovation and efficiency.” It goes on, saying that its new 130 million gallon per year ethanol plant in Jefferson, Wisconsin is “the largest dry mill corn fractionation facility in the world” which uses 35 percent less energy and 33 percent less water than similar ethanol plants.
That would be impressive but for one fact: Renew Energy just filed for bankruptcy.
The failure of Renew is the latest bankruptcy in the corn ethanol industry, a sector that despite billions of dollars in federal subsidies, hasn’t been able to prove its long-term economic viability. About 9 percent of all the ethanol plants in the US have now filed for bankruptcy and some analysts believe the numbers could go as high as 20 percent.
Even if the 20 percent figure is never reached, it’s readily apparent that billions of investment dollars will be lost on the corn ethanol scam, a darling of farm state legislators. Today, about four years after Congress increased the mandates on the use of corn ethanol in gasoline, the US is nowhere close to the much-promised goal of “energy independence.” Instead, the increasing use of corn to make motor fuel has caused a myriad of problems. Chief among them: increased food prices.
While it’s true that other factors have helped inflate food prices, including rising energy prices and increased grain demand in other countries, it’s also abundantly obvious that the corn ethanol industry has had a major effect on food prices. The reason is obvious: in 2008, some 4.1 billion bushels of corn – fully one-third of the US crop – was used to make motor fuel. And the results are being seen in the supermarket.
