Green Fuel's Dirty Secret
By Sasha Lilley
CorpWatch
Thursday 01 June 2006
The town of Columbus, Nebraska, bills itself as a "City of Power and
Progress." If Archer Daniels Midland 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 George Bush as the green fuel of the future. The agribusiness
giant Archer Daniels Midland (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, Illinois, and Cedar Rapids, Iowa,
and is currently adding another coal-powered facility at its Clinton,
Iowa ethanol plant.
That's not all. "[Ethanol] plants themselves - not even the part
producing the energy - produce a lot of air pollution," says Mike Ewall,
director of the Energy Justice Network. "The EPA (US 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, Iowa 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 like NPR, CBS, NBC, and PBS where
it underwrites influential programs such as the NewsHour with Jim
Lehrer. 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 Environmental Protection Agency 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 the State of 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.
Friends in High Places
Environmentalists have cried foul, but they are up against the 56th
largest company in the United States, as ranked by revenue in Fortune
Magazine. ADM has more than 25,000 employees, net sales last year of
$35.9 billion, with $1 billion in profits, as well as a recent 29
percent profit increase in the last quarter. The company is a global
force: 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 posed for photos with then ADM Chair G. Allen
Andreas and 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 well be partially coal-powered,
given the absence of conditions imposed by the Department of Energy.
"It's been some 30 years since we got a call from the White House
asking for the agricultural industry, ADM in particular, to take a
serious look at the possibilities of building facilities to produce
alternative sources of energy for our fuel supply in the United States,"
said Allen Andreas, who was chair, chief executive and president of ADM
at the time of Secretary Bodman's visit. "We are delighted to
participate in any way that we can in the president's programs."
ADM and its signature project have never lacked friends in high
places, despite a history of price fixing scandals and monopolistic
misdeeds. The Andreas family, which has headed up the publicly-traded
company for decades, has cultivated bipartisan support through generous
donations to both Republicans and Democrats. 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 Corn Belt 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. The Wall Street Journal has
referred to the former South Dakota senator and Senate minority leader
as "Archer Daschle Midland," because of his unswerving support for the
interests of the company.
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. Iowa's Senator
Grassley recently stated his intention to block any attempt to remove
the tariff on lower-cost Brazilian fuel in the face of rising gas
prices, stating that "lifting this tariff would be counter-productive to
the widely supported goal of promoting home-grown renewable sources of
energy."
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.
Recent legislation has further greased the tracks of the ethanol
gravy train. 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 4 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. 45 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.
When Corn Is King
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 such as
switchgrass. "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 United States - 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 3 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 Corn Belt 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 Corn Belt 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 Archer Daniels Midland - 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.
Fueling Exploitation: ADM in Brazil and the Ivory Coast
Greenpeace International recently accused Archer Daniels Midland of
funding, along with two other agricultural commodities traders, much of
the razing of the Amazon rainforest for soy production. The group claims
that that ADM, along with Cargill and Bunge, are responsible for 60
percent of the financing of soy production in the vital rainforest
ecosystem. ADM lends money to farmers who plant in areas of the
rainforest that have been illegally cleared, alleges Greenpeace, and
then finances the shipping of soy out of the region. ADM has set up four
grain silos in the Amazon, for the export of soy from Brazil. The
primarily destination of the soy is Europe where it ends up as high
protein cattle feed.
ADM is also currently being sued by the International Labor Rights
Fund for alleged involvement in the trafficking, torture and forced
labor of children who cultivate and harvest cocoa beans in the Ivory
Coast. The suit, which is being filed on behalf of Malian children
brought against their will to the Ivory Coast, argues that the company,
as well as Nestle and Cargill, has knowingly turned a blind eye to the
use of forced child labor in the cocoa plantations where the
agricultural processor's chocolate originates.
"It is unconscionable that Nestle, ADM and Cargill have ignored
repeated and well-documented warnings over the past several years that
the farms they were using to grow cocoa employed child slave labor,"
says International Labor Rights Fund attorney Natacha Thys. "They could
have put a stop to it years ago, but chose to look the other way. We had
to go to court as a last resort."
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Sasha Lilley is a writer for CorpWatch and producer of the program
Against the Grain on Pacifica Radio.
Alternative Fuel Ethanol Gains in Popularity
The Associated Press
Sunday 04 June 2006
White House, Wall Street help push corn product's explosive growth.
Coon Rapids, Iowa - A tractor trailer rig rumbles into the Tall Corn
Ethanol plant. Corn pours from openings in its belly to bins
underground, where conveyor belts and buckets haul it to gleaming steel
silos rising 13 stories above the Iowa plains.
The 40-acre distillery turns corn into alcohol in quantities that
would make a moonshiner drool. Instead of white lightnin', the brew is
converted to ethanol, a fuel that makes money for farmers and is seen as
a possible solution to today's high oil and gas prices.
Like the other modern-day stills dotting the Midwestern landscape,
the Coon Rapids plant reached capacity soon after opening - within 12
days, to be precise.
Ethanol production in the United States is growing so quickly that
for the first time, farmers expect to sell as much corn this year to
ethanol plants as they do overseas.
"It's the most stunning development in agricultural markets today -
I can't think of anything else quite like this," says Keith Collins, the
US Agriculture Department's chief economist.
The amount of corn used for ethanol, estimated at 2.15 billion
bushels this year, would amount to about 20 percent of the nation's
entire crop, according to department projections.
Even as ethanol devours corn and pushes prices higher, the president
and Congress are calling for even greater ethanol use. Wall Street
cannot seem to get enough of ethanol-related investments. Automakers are
speeding ethanol-capable vehicles onto the road.
Yet the ethanol industry is not without its critics, who question
whether tax incentives provided by Congress are really needed.
"Train Cars After Train Cars"
The enthusiasm for ethanol makes farmer Lynn Phillips want to grow
more corn. Phillips helped raise the money for the farmer-owned Tall
Corn plant, which opened in 2002 as a way to make more money by
processing every kernel of locally grown corn.
"We saw train cars after train cars of raw material being shipped
away and value being added somewhere else," said Phillips. Now, the corn
"is still going out on train cars - it's just going out in the form of
ethanol and distillers' grain."
Corn can cost more to grow because it needs heavy applications of
fertilizer. Right now, Phillips plants corn on about half his 2,000
acres and soybeans on the rest.
Inside the ethanol plant, corn is ground and mixed with water to
make mash. It is heated and mixed with enzymes to convert starch into
sugar and fermented with yeast to make alcohol - just like making
moonshine. Hanging in the air around the 500,000-gallon fermenting tanks
is the smell of sweet, white wine.
The mixture is kept just below 90 degrees Fahrenheit. Yeast seem
happier below that temperature, general manager Owen Shunkwiler hollers
over the hum. Shunkwiler works for South Dakota-based Broin Companies,
which invested in Tall Corn and is responsible for its operations.
After fermentation, the mixture is boiled to remove water, then
dehydrated to boost the alcohol content. Before leaving the plant, a
denaturant, or poison, is added to make the alcohol unfit for drinking.
Then the ethanol is ready for shipping to fuel storage terminals that
will blend it with gasoline as it goes into trucks for distribution to
gas stations.
Also yielded in the process is livestock feed. Corn kernels minus
the starch are left over - think South Beach for cows. Every 56-pound
bushel makes about 17.4 pounds of grain feed, according to the
Agriculture Department.
Tall Corn produces 150,000 gallons of ethanol each day, enough to
power an estimated 272 cars for an entire year if they ran on ethanol
alone.
But automobiles do not run on pure ethanol. Instead, ethanol is
combined with unleaded gasoline to boost its octane rating and reduce
emissions.
The most common blends are 10 percent ethanol, approved for any make
or model sold in the US, or 85 percent ethanol, known as E-85 and used
in specially made flexible fuel vehicles. About 5 million vehicles in
the US can run on E-85; more are in production.
In Iowa in April, regular unleaded gasoline was selling for $2.71,
E-10 for $2.65 and E-85 for $2.33.
Visions of Growth
With demand comes expansion. In Iowa alone, three new ethanol plants
opened last month. The industry likely will outpace a mandate from
Congress to pump out 7.5 billion gallons a year by 2012, according to
Collins.
Meanwhile, lawmakers envision vastly more ethanol in the nation's
automobiles. Sens. Tom Harkin, D-Iowa, and Richard Lugar, R-Ind., are
pushing to require 60 billion gallons of ethanol and soy-based biodiesel
by 2030.
An expansion that big would require sources for ethanol besides
corn. Ethanol is made from sugar cane in Brazil, which meets about half
its fuel demand with ethanol. Sorghum, another feed grain, accounts for
about 3 percent of US ethanol, according to the Agriculture Department.
Research is under way on other potential sources, such wood fibers
and residue from crop harvesting.
The big question is whether oil and gas will remain expensive.
"When the price of anything gets high enough, then all kinds of
substitutes come out of the closet," Collins said. "That's what's going
on now. As long as the price of oil stays high, where ethanol is
profitable, this industry is going to keep growing."perm