Dirty secrets of the green fuel industry

The town of Columbus, NE, bills itself as a "City of Power and Progress." If Archer Daniels Midland (ADM) gets its way, that power will be partially generated by coal, one of the dirtiest forms of energy. When burned, it emits carcinogenic pollutants and high levels of the greenhouse gases linked to global warming. Ironically, this coal will be used to generate ethanol, a plant-based petroleum substitute that has been hyped by both environmentalists and President Bush as the green fuel of the future. The agribusiness giant ADM is the largest US producer of ethanol, which it makes by distilling corn. ADM also operates coal-fired plants at its company base in Decatur, IL and Cedar Rapids, IA, and is currently adding another coal-powered facility at its Clinton, IA ethanol plant. According to Mike Ewall, director of the Energy Justice Network, "The EPA [Environmental Protection Agency] has cracked down in recent years on a lot of midwestern ethanol plants for excessive levels of carbon monoxide, methanol, toluene and volatile organic compounds, some of which are known to cause cancer." A single ADM corn processing plant in Clinton, IA generated nearly 20,000 tons of pollutants including sulfur dioxide, nitrogen oxides and volatile organic compounds in 2004, according to federal records. The EPA considers an ethanol plant as a "major source" of pollution if it produces more than 100 tons of any one pollutant per year, although it has recently proposed increasing that cap to 250 tons. Sulfur dioxide is classified by the EPA as a contributor to respiratory and heart disease and the generation of acid rain. Nitrogen oxides produce ozone and a wide variety of toxic chemicals as well as contributing to global warming, according to the EPA, while many volatile organic compounds are cancer-causing. Last year, Environmental Defense, a national environmental group, ranked the Clinton plant as the 26th largest emitter of carcinogenic compounds in the US. For years, ADM promoted itself as the "supermarket to the world" on major US radio and television networks where it underwrites influential programs. Now, as it actively promotes its ethanol business, ADM has rolled out its new eco-friendly slogan, "Resourceful by Nature" which "reinforces our role as an essential link between farmers and consumers." Despite the company's attempts at green packaging, ADM is ranked as the tenth worst corporate air polluter, on the "Toxic 100" list of the Political Economy Research Institute at the University of Massachusetts. The Department of Justice and the EPA has charged the company with violations of the Clean Air Act in hundreds of processing units, covering 52 plants in 16 states. In 2003 the two agencies reached a $351 million settlement with the company. Three years earlier, ADM was fined $1.5 million by the Department of Justice and $1.1 million by Illinois for pollution related to ethanol production and distribution. Currently, the corporation is involved in approximately 25 administrative and judicial proceedings connected to federal and state Superfund laws regarding the environmental clean-up of sites contaminated by ADM operations. Environmentalists have cried foul, but they are up against the 56th largest company in the US, as ranked by revenue in Fortune Magazine. ADM is one of the world's biggest processors of soybeans, corn, wheat and cocoa, which it buys from growers in the US and around the world. The company recently hired Patricia A. Woertz, an executive vice president of Chevron Corporation, as its chief executive officer. ADM has another resource at its disposal– the considerable clout it has built up over decades of courting and lobbying Washington's power brokers. Days after the company's February expansion announcement of the coal-fired Nebraska plant, US Energy Secretary Samuel W. Bodman visited ADM's Decatur headquarters to tout its part in President Bush's Biofuels Initiative. The secretary announced that the Department of Energy would offer up to $160 million for the construction of three biorefineries to expand US ethanol production. "Partnerships with industry like these will lead to new innovation and discovery that will usher in an era of reduced dependence on foreign sources of oil, while strengthening our economy at home," Secretary Bodman said from ADM's trade floor. Like the ADM ethanol plant in Columbus, the three biorefineries could be partially coal-powered, given the absence of conditions imposed by the Department of Energy. ADM and its signature project have never lacked friends in high places, despite a history of price fixing scandals and monopolistic misdeeds. Since the 2000 election cycle, ADM has given more than $3 million in political contributions, according to the Center for Responsive Politics: $1.2 million to Democrats and $1.85 million to Republicans. These donations may have helped sustain a multitude of government subsidies to ADM, including ethanol tax credits, tariffs against foreign ethanol competitors and federally mandated ethanol additive standards. Politicians from the midwestern cornbelt are some of the company's staunchest allies. Senators Richard Durbin, Charles Grassley and Tom Harkin, and Representative Dick Gephardt have consistently supported lavish federal tax subsidies to ethanol producers, for which ADM is the prime beneficiary. All are recipients of political action committee donations from the agribusiness behemoth. ADM's political heft was behind the 54 cent per gallon tariff that the US government has imposed on imports of sugar-cane based ethanol from Brazil, which is cheaper than ADM's corn-based fuel. The tariff dates back to 1980 when the CEO of ADM convinced President Carter to adopt it, according to former ADM lobbyist Joseph Karth. Over many decades, the company has been the recipient of government largesse in the form of federal and state corn and ethanol subsidies that have totaled billions of dollars, prompting the libertarian Cato Institute to declare ADM the biggest recipient of corporate welfare in the US in 1995. ADM has been a prime beneficiary of the federal tax credit on ethanol, which the refiner can apply to the tax it pays on corporate income. First implemented in 1978, the tax credit currently stands at 51 cents per gallon of ethanol sold. The Government Accounting Office estimates the subsidies to the ethanol industry from 1980-2000 at $11 billion. As the biggest ethanol producer in the US, ADM has received the largest portion of the government's generosity. The Energy Policy Act of 2005's Renewable Fuel Standard stipulates that gasoline sold in the US must include a certain percentage of ethanol or biodiesel, starting at four billion gallons this year and rising to 7.5 billion gallons by 2012. ADM got another boost when the federal government mandated that oil companies replace MTBE, a cancer-causing gasoline additive, with ethanol. Forty-five states have adopted policies to encourage the production and use of the fuel. ADM has responded with plans to increase its output of ethanol by 42 percent over the next three years. Subsidies and tax incentives might make public policy sense even when they flow into the coffers of a Fortune 500 company with mega-profits but only if corn ethanol delivers on the promise that its boosters claim: to significantly cut greenhouse emissions, protect the environment and slow global warming. Debate has raged for years over whether ethanol made from corn generates more energy than the amount of fossil fuel that is used to produce it. UC Berkeley's Alexander Farrell recently co-authored a comprehensive study, published in Science, on the energy and greenhouse gas output of various sources of ethanol. His group found that corn ethanol reduces greenhouse gases by only 13 percent, which compares unfavorably with ethanol made from vegetable cellulose. "Our best guess," says Farrell, "is that using corn ethanol today results in a modest decline of greenhouse gas emissions." Yet the enormous amounts of corn that ADM and other ethanol processors buy from midwestern farmers wreak damage on the environment in a multiplicity of ways. Modern corn hybrids require more nitrogen fertilizer, herbicides and insecticides than any other crop, while causing the most extensive erosion of top soil. Pesticide and fertilizer runoff from the vast expanses of corn in the US prairies bleed into groundwater and rivers as far as the Gulf of Mexico. The nitrogen runoff flowing into the Mississippi River has fostered a vast bloom of dead algae in the Gulf that starves fish and other aquatic life of oxygen. To understand the hidden costs of corn-based ethanol requires factoring in "the huge, monstrous costs of cleaning up polluted water in the Mississippi River drainage basin and also trying to remedy the negative effects of poisoning the Gulf of Mexico," says Tad Patzek of the University of California's Civil and Environmental Engineering department. "These are not abstract environmental effects," Patzek asserts, "these are effects that impact the drinking water all over the Corn Belt, that impact also the poison that people ingest when they eat their food, from the various pesticides and herbicides." Corn farming substantially tops all crops in total application of pesticides, according to the US Department of Agriculture, and is the crop most likely to leach pesticides into drinking water. While banned by the European Union, atrazine is the most heavily used herbicide in the US. It is primarily applied to cornfields and the EPA rates it as the second most common pesticide in drinking wells. The EPA has set maximum safe levels of atrazine in drinking water at three parts per billion, but scientists with the US Geological Survey have found up to 224 parts per billion in midwestern streams and 2,300 parts per billion in cornbelt irrigation reservoirs. Then there is the question of how practical it is to replace petroleum with corn-based ethanol. "There are conflicting figures on how much land would be needed to meet all of our petroleum demand from ethanol," says Energy Justice Network's Ewall, "and those range from some portion of what we currently have as available crop land to as much as five times as the amount of crop land in the US." The Department of Agriculture estimates that the Midwest has lost 90 percent of its original wetlands, two thirds of which has taken place since draining for agriculture began mid-century. "No one who's looked at this issue [from an environmental perspective] talks about using corn kernels as the only, or even major component, of the long term solution," counters Nathanael Greene, senior policy analyst with the Natural Resources Defense Council. "Everyone assumes we'll evolve the industry from its current technology to the advanced technologies." If that happens, it will be a marked reversal of many decades of government policy in support of ADM and the company may well wonder what it's getting for its unceasingly ample gifts to both political parties. But with the "full-throated support of the Bush administration," in the words of the Renewable Fuels Association, a corn ethanol-dominated, ADM-led trade group, that day doesn't seem to be approaching any time soon.