August 21st, 2013


Distinguished Professor of Agricultural and Resource Economics , UC Davis

CEO, Pacific Ethanol

CEO, Western United Dairymen

America is corn country, the world’s largest producer of the crop. U.S. companies first started blending corn with gasoline following 9/11, when there was a belief that it would reduce our dependence on foreign sources of energy and that it was good for the environment, according to UC Davis agricultural economics professor Colin Carter.
Ethanol’s impact on the dairy and agriculture industries has been “devastating,” said Western United Dairymen CEO Michael Marsh, attributing loss of dairy farms to the increasing cost of feed.
“I think corn should be used for food, rather than for fuel,” Marsh said.
Opinions between the industry representatives were strong ­– while Carter argued that ethanol from corn creates more greenhouse gases than gasoline, Pacific Ethanol CEO Neil Koehler said ethanol is 40-60 percent cleaner than gasoline on a full life-cycle basis.
Some research also points to corn production for ethanol as a cause for increasing food costs. Koehler disagreed, saying that corn used to make ethanol is the type used for feeding animals, not people. Carter claimed lower corn prices today are the result of other countries that have torn down forests to produce corn, which results in output of more greenhouse gas.
“In terms of this not being a food, I have to disagree – the number one input in American agriculture is feed grains,” Carter said. “The U.S. ethanol policy has driven up food prices by 20-30 percent because this feed is used for the production of eggs, pork, dairy products and so on.”
Marsh agreed: “To suggest that it [corn blended with fuel] hasn’t had an impact on food prices is absurd.”
The panelists discussed how the U.S. could combat carbon emissions that accelerate global warming.
“Corn is not a low-carbon fuel and biodiesel is even worse,” Carter said. “It’s not a low-carbon fuel, so that is not the answer, it’s actually making the situation worse.”
Meanwhile, Koehler said ethanol meets all of California’s low-carbon fuel standards.
“We do not believe that ethanol is the end-all. We believe that it’s the most immediate, viable opportunity we have today and it’s been providing significant benefits,” said Koehler, who also noted that two of the top five ethanol companies are oil companies.
While U.S. consumers do not have a choice about how much ethanol is blended with gasoline, drivers in Canada and Brazil have options at the pump, which impacts fuel prices and flex fuel car production.
The speakers disagreed about whether there is overproduction of milk in the U.S. or not, but Marsh said, "the global marketplace is going to be the new industry for U.S. dairy."
While cellulosic production of ethanol – using husks and grasses – is not moving as quickly as anticipated, some of the fault lies with the unrealistic goals of the federal Renewable Fuel Standard.
“We do need to find solutions that don’t raise the price of gasoline, like putting ethanol into gasoline, that don’t take food away from people,” Marsh said. “These solutions have to make sense.”
The changing climate will affect the agriculture industries and biomass used to make ethanol, which is worsened by the Renewable Fuel Standard that mandates their use in the production of gasoline, according to Carter.
"Climate change is occurring,” Marsh said. “I kind of chuckle sometimes when I hear people say that it isn't, but I don’t know how you can look around and say that it’s not."
- Danielle Torrent
Photos by: Rikki Ward
Commonwealth Club of California
August 21, 2013