Challenges with Corn-Based Ethanol

Today, the world's ethanol supply is mainly derived from U.S. corn or Brazilian sugarcane. Corn and other grain (as farmers planted corn instead of other grains) prices have soared internationally, and the corn-to-ethanol industry has been blamed for driving up food prices worldwide (Figure 6.1). The Food and Agriculture Organization of the United Nations and the World Bank have said that soaring world food prices are due in part to increased demand for biofuels. However, additional factors that contribute to increased food prices include higher energy prices and increased consumption of meat and dairy products in developing economies of China and India. Note that it requires about 13 kg of corn to raise 1 kg of meat; hence, a shift toward nonvegetarian diet will put even more pressure on the food supply. The U.S. energy bill of 2007 allows for the doubling of corn-based ethanol with a ceiling of 15 billion gallons per year. The bill also calls for an additional 21 billion gallons per year of advanced biofuels, including 16 billion gallons per year of ethanol from nonfood sources, by 2022. The energy policy means that corn is likely to rule the U.S. ethanol industry for many years. However, soaring food prices and questions about whether corn-for-fuel can reduce global warming have sparked a debate about whether the United States is going down the wrong road in the search for alternatives to fossil fuels.