State Issues

Schrag: Corn, ethanol and other subsidized stupidities

House Speaker Nancy Pelosi must welcome the heat she's getting for wobbling on the farm and energy bills. Having caved in to Detroit on fuel economy standards and compromised with Midwest agro-plutocrats on crop subsidies for millionaires, she's shown that she's more a pragmatic Baltimore pol like her father than a knee-jerk San Francisco liberal. That'll serve her well.

Both the farm and the energy bills won approval in the House in the past couple of weeks. Both are monuments to waste, stupidity and policy distortions going back generations -- longer in the case of the ag subsidies.

Pelosi says she hopes the Senate energy bill, which contains a sharp increase in fuel economy requirements -- from roughly 25 miles per gallon to 35 -- for cars and trucks, will prevail over the House version when the two are reconciled. She said it almost the same day that we learned that for the first time ever foreign models were outselling Detroit.

More significant, maybe, is the fact that the farm law -- and agricultural policy generally -- is morphing into an energy program.

The bill, HR 2419, which calls itself the "Farm, Nutrition and Bioenergy Act of 2007," has oodles of incentives for the development and transportation of renewable fuels.

The link is corn -- already subsidized to the tune of billions -- since corn is the source of ethanol, which refiners are now required by federal law to mix into almost everybody's gasoline. The theory is that gas blended with ethanol doesn't emit greenhouse gases in the same concentrations as regular gas, and that it reduces dependence on imported oil. In fact, it does little of either.

Nor does the theory calculate the impact on food prices or the environmental impact of growing the corn and producing the ethanol, not only in greenhouse-gas emissions from farm equipment, but from the trucks, ships and trains that haul the ethanol (nearly all of which comes from Midwest corn) for delivery to refineries.

Because of its corrosive qualities, it can't be shipped through pipelines. The farm bill passed the other day contains a string of programs aimed at developing pipelines for ethanol transport. But that may never be economically feasible.

Corn cultivation also requires enormous quantities of water and fertilizer that generate polluting runoff into rivers and groundwater.

And while ethanol does reduce greenhouse-gas emissions, it also generates smog-producing pollutants such as nitrous oxide (NOX) that have a wide range of health and environmental effects.

Since the feds subsidize corn ethanol (a tax credit of 51 cents for every gallon of ethanol blended into gas) in addition to the regular multibillion-dollar corn subsidy, and since Congress protects corn ethanol with hefty tariffs to prevent the import of cheaper Brazilian ethanol, ethanol, as Sen. Dianne Feinstein, D-Calif., complains, enjoys a triple subsidy. Some $600 million annually comes from highway funds.

Every major presidential candidate, even Sen. John McCain, R-Ariz., who once called ethanol "highway robbery," has been to Iowa, the nation's leading producer of corn, to cheer for ethanol. Given the fact that most experts believe that the future of bioenergy lies in "cellulosic" technology -- ethanol from biomass, switchgrass and various forms of ag waste -- the cheers for corn ethanol are far more political than they are scientific.

When California moved its presidential primary to Feb. 5, Gov.

Arnold Schwarzenegger saw it as a chance for Californians to challenge candidates on their vows to Iowa voters -- he mentioned ethanol in particular. Most of our political seers seem to believe that rather than diminishing the clout of the traditional early primary and caucus states, the glut of February primaries is likely to increase their influence. Still, it might give Californians a chance to be heard.

We're the ones paying the price.

Last week, the University of California energy experts at Berkeley and Davis whom Schwarzenegger commissioned to develop a California "low-carbon fuel standard" issued a cautiously optimistic report indicating that the state could reduce greenhouse-gas emissions from fuel by 10 percent by 2010. The goal, though ambitious, they said, was possible.

But one of the report's two authors, Alex Farrell, director of Berkeley's Transportation Sustainability Research Center, also acknowledged that their assignment was only to look at fuels, not at engine design, fuel economy or broader policy changes.

And it's there -- in improved transit, in tolls and other forms of demand management on roads and bridges, in higher fuel taxes -- that the real possibilities lie. Classic economic liberals, people we call conservatives, argue that if government didn't meddle so much, the market would take care of the problem.

But attaching a cost to depletion of the ozone is virtually impossible. So is costing out the foreign-policy consequences of empowering hostile foreign governments with our petrodollars. We all seem to want to check global warming and our energy dependence on Venezuela, Nigeria and the Middle East. The question is: What are we really willing to pay for that, and how soon?

Peter Schrag is the retired editorial page editor of The Sacramento. Write him at