WASHINGTON — The Obama administration on Tuesday proposed renewable-fuel standards that could reduce the $3 billion a year in federal tax breaks given to producers of corn-based ethanol. The move sets the stage for a major battle between Midwest grain producers and environmentalists who say the gasoline additive actually worsens global warming.
For much of the last decade, federal officials have touted the potential of corn ethanol as a substitute for gasoline and a tool for reducing global warming and foreign oil dependence.
For The Record
Los Angeles Times Thursday, May 07, 2009 Home Edition Main News Part A Page 4 National Desk 2 inches; 64 words Type of Material: Correction
Corn ethanol tax breaks: An article and headline in Wednesday's Section A about the Environmental Protection Agency's proposed renewable-fuel standards said that the standards could lead to an end to tax breaks for corn ethanol because the gasoline additive could add to global warming. Though the EPA's proposal could undermine the original rationale for the tax breaks, only Congress can change the tax provisions.
However, environmentalists and others have questioned the wisdom of that support.
A recent Congressional Budget Office study found that increased ethanol production was responsible for 10% to 15% of last year's increased U.S. food costs. And the rush to produce more corn for fuel has had a global environmental impact as forests and other vegetation have been cleared to make way for cropland.
The Environmental Protection Agency's climate-change rules are subject to public comment and revision before they become final. And exactly how big their impact will be on corn producers' tax breaks depends how corn ethanol is determined to affect the environment.
The wide range of possibilities was evident in the EPA's analysis of various fuels' contributions to global warming. Corn ethanol could be substantially worse for the climate than traditional gasoline, or it could be substantially better -- depending on how it is produced and on the accounting methods the EPA settles on for tallying its greenhouse gas emissions.
"The rules are kind of in the category of wait-to-see-what-happens," said Rodney Weinzierl, executive director of the Illinois Corn Growers Assn.
However, industry officials were cheered Tuesday by the announcement that nearly $1 billion in stimulus funds would go toward advanced biofuel research and that the government would take new steps to promote ethanol-powered cars and fueling stations.
Although biofuels as a whole -- including those made from grasses and even algae -- are considered promising alternatives to petroleum, some researchers have begun challenging the use of corn for this purpose.
In particular, they point to the "indirect land-use" effects of pulling corn out of the world food supply, which could force farmers in developing nations to clear rain forests -- and release massive amounts of carbon dioxide in the process -- in order to plant corn.
