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As candidate's look to Iowa, ethanol becomes top issue

BY MARTIN C. EVANS | martin.evans@newsday.com

11:35 PM EDT, July 22, 2007

DES MOINES, Iowa

As Sen. Hillary Rodham Clinton climbed onto a makeshift stage at the Iowa State Fairgrounds and embraced motor fuel from corn as a key to America's future, she completed a turnabout from being an ethanol opponent, a position she held only two years ago.

"Now, Iowa is way ahead of the rest of the country," the presidential hopeful told listeners at a July 2 campaign stop. "What you've done with ethanol ... you're setting the pace."

Political observers view her about-face as a political necessity, saying Iowa's first-in-the-nation's caucuses -- in which residents of the country's biggest corn-producing state vote their choice for presidential nominee -- makes it politically risky to avoid kneeling at the altar of ethanol-from-corn.

"John McCain tried that, and not too successfully," said former Iowa Gov. Tom Vilsack, referring to the Arizona senator's opposition to ethanol during his unsuccessful bid for the 2000 Republican presidential nomination.

Clinton's turnabout puts her at odds with critics of converting food to fuel, who say diverting grain into the nation's gasoline tanks is a costly boon to the agricultural industry, one that wastes energy, degrades the environment, depends on government subsidies and increases the price of meat, milk, eggs and other foods derived from corn-fed livestock.

"It looks like the high cost of corn is here to stay, which means higher costs for chickens and other food animals," said Richard Lobb, a spokesman for the National Chicken Council. "It really has had a significant impact."

Clinton is hardly the only presidential hopeful who has campaigned in favor of the corn-based fuel.

Former New York City mayor Rudy Giuliani, who visited the Hawkeye Renewables ethanol plant in Fairbank, Iowa, during a presidential campaign swing Thursday, said more plants should be built.

"I agree with subsidies for energy independence," Giuliani said.

Illinois Sen. Barack Obama has proposed giving motorists a 35-cent-per-gallon tax credit for using E-85 -- a mostly ethanol blend that includes 15 percent gasoline -- and creating additional incentives to boost sales of ethanol/gasoline flex-fuel vehicles.

"Washington should lead the way on energy independency," Obama told the Governors' Ethanol Coalition at a February speech in Washington.

The push to distill motor fuel from corn dates to the search for renewable fuels during the 1970s energy crisis.

Ethanol's advantages seemed obvious: It could harness the sun's energy in a renewable product that cut tailpipe emissions and reduced the nation's dependence on imported oil.

Ethanol gained momentum in 2005, when Congress granted ethanol producers a 51-cent per gallon subsidy and mandated that refiners by 2012 mix as much as 7.5 billion gallons of ethanol with gasoline they sell.

That has led to a skyrocketing amount of U.S. corn used to produce ethanol. It has doubled to 2.1 billion bushels since 2003, is expected to double again by 2009, and already consumes nearly a quarter of the nation's total corn crop.

Ethanol production jumped from 2.1 billion gallons produced by 68 ethanol refineries in 2002 to 4.8 billion gallons produced by 110 refineries in 2006.

But some critics say the increased corn-to-ethanol production has pushed up the cost of animal feed by 40 percent.

"The result is it is affecting food prices everywhere," said agricultural economist Lester Brown, of the Washington-based Earth Policy Institute. "Here we're seeing it in livestock products like milk and eggs and pork."

Other critics say Archer Daniels Midland and other ethanol refiners benefit from what amounts to government welfare because ethanol -- which was selling for $2.20 per gallon on the wholesale market in New York Wednesday -- is subsidized. Wholesale unleaded gasoline, which can power a vehicle more than one-third farther than E-85, sold the same day for 8 cents less.

They also say because corn cultivation depends on the use of tractor fuels, pesticides and inorganic fertilizers, ethanol production contributes to air and water pollution, and can use as much or more energy than it provides.

Clinton switches sides

At one time, Clinton stood squarely with ethanol's opponents, and voted several times against ethanol bills.

When the Senate last took up ethanol-related legislation in 2005, the former first lady unsuccessfully opposed requiring refiners to boost their use of renewable fuels and the 51-cent tax credit.

Previously, she had warned that requiring added ethanol would bring higher gasoline prices and environmental risks.

"We are providing a single industry with a guaranteed market for its products -- subsidies on top of subsidies on top of subsidies and, on top of that, protection from liability," she said during an April 2002 Senate energy bill debate. "What a sweetheart deal."

But last July, six months before announcing her presidential candidacy, Clinton spoke in favor of ethanol.

Suggesting that tax breaks could help stimulate ethanol production, Clinton said during a visit to an upstate New York farm: "Why don't we put that into homegrown fuels like ethanol, not just from corn but from soybeans, from cellulosic, from fast-growing willow trees, a lot of the things we're now experimenting with?"

Clinton spokesman Blake Zeff said Clinton based her early opposition on reports that ethanol shortages could lead to higher New York gasoline prices. He said those concerns have been addressed now that two ethanol refineries under construction -- near Buffalo and in Fulton -- will make ethanol more available.

"New York has developed ethanol plants, and Sen. Clinton has been a consistent supporter of ethanol as part of the solution to our energy crisis," Zeff said.

Win-win situation

Touting ethanol from corn has emerged as a win-win for political hopefuls who face a tough sell preaching energy independence via smaller vehicles, fewer road trips and mass transit.

Among blue-state urban and suburban liberals, "gasahol" is often embraced as a "green" alternative to imported oil.

Farmers, grain haulers, equipment dealers and other residents of the corn-belt states Iowa, Illinois, Indiana, Nebraska, Minnesota and Ohio -- which combined wield a quarter of the electoral votes needed to win the presidency -- generally regard ethanol as money in the bank.

Iowa farmer Bill Couser, who drives a diesel pickup, said ethanol has helped him get more than twice as much cash as he did two years ago for the 10,000 acres of corn he grows in Nevada, Iowa: population 6,712. That is because corn he once raised exclusively for cows can now be sold to the $74 million Lincolnway Energy ethanol distiller he helped build at the edge of one of his cornfields three years ago with the backing of local investors.

"What it has done for the farmer, it has given him a world market," said Couser, Lincolnway's president, who said the ethanol plant has helped revitalize the local economy. "All those dollars stay right here in town."

Ethanol proponents, including some environmental groups, say the effect on food costs has been minimal, and that even if the corn-to-ethanol process nets little or no new energy, it transforms dirty power from coal -- used to fire corn distillers -- into a cleaner fuel that can power cars.

"We have to be careful how we do it," said Laura Sands, a consultant to New York-based conservation think tank Environmental Defense. "But clearly the overall benefit for overall security and climate can be strong with corn ethanol."