With food costs rising, ethanol benefits now questioned

By H. JOSEF HEBERT Associated Press Writer

WASHINGTON (AP) - Just months ago, ethanol was the Holy Grail to energy independence and a "green fuel" that would help nudge the country away from climate changing fossil energy.

Democrats and Republicans cheered its benefits as Congress directed a fivefold increase in ethanol use as a motor fuel. President Bush called it key to his strategy to cut gasoline use by 20 percent by 2010.

But now with skyrocketing food costs - even U.S. senators are complaining about seeing shocking prices at the supermarket - and hunger spreading across the globe, some lawmakers are wondering if they made a mistake.

"Our enthusiasm for corn ethanol deserves a second look. That's all I'm saying, a second look," said Rep. Jane Harman, D-Calif., at a House hearing Tuesday where the impact of ethanol on soaring food costs was given a wide airing.

The dramatic reversal has stunned ethanol producers and its supporters in Washington as they have seen their product shift from being an object of praise to one of derision.

Sen. Charles Grassley, R-Iowa, one of the Senate's two working farmers and a longtime ethanol booster, said he finds it hard to believe that ethanol could be "clobbered the way it's being clobbered right now" over the issue of food costs. What does the cost of corn have to do with the price of wheat or rice, he is telling people.

The uproar over ethanol is clearly gaining momentum.

Two governors - Texas and Connecticut - and 26 senators, including the GOP's presumptive presidential nominee John McCain, are asking the Environmental Protection Agency to cut this year's mandate for 9 billion gallons of corn ethanol in half to ease, they say, food costs.

Robert Meyers, an EPA deputy assistant administrator, told a House hearing Tuesday the agency will respond to the request as quickly as possible, but doubts anything will be forthcoming for about three months. There's a regulatory process to follow, he said.

But lawmakers, even those who enthusiastically supported the requirement for refiners to ramp up ethanol use to 36 billion gallons a year by 2022 from about 7 billion gallons last year, have begun to have qualms.

"Corn ethanol was presented as an almost Holy Grail solution," said Rep. Mike Doyle, D-Pa. "But I believe its negatives today far outweigh its benefits. ... We need to revisit this ... and back away from the food to fuel policy."

Rep. Joe Barton of Texas, the ranking Republican on the House Energy and Commerce Committee, said he will introduce a bill to abandon the ethanol mandate passed just before last Christmas and go back to the one Congress enacted in 2005 that would call for a more modest ethanol increase.

But Barton is not so naive to think his bill has a chance. House Democratic leaders have given no indication of retreating from the ethanol mandate. Still, said Barton, "it's worth putting in."

In fact, most of the squirming over ethanol and food prices appears to many as little more than political posturing with little chance of actual legislation emerging this crowded election year when much of Congress often seems to be in stalemate.

Like soaring gasoline prices, skyrocketing food costs are largely beyond the realm of what Washington can do.

And ethanol's powerful farm lobby still has considerable clout.

"The ink has hardly dried on this new law when the clamoring began ... for congressional intervention," Rep. John Dingell, D-Mich., chairman of the Energy and Commerce Committee, said Tuesday of the ethanol uproar.

But Dingell made clear he has no intention of making any significant changes in the production requirements passed in December as part of a broader energy bill, saying such a move "would be unwise and could lead to unintended consequences."

Still, congressional unease about the food for fuel debate is showing itself in a number of places.

In a massive farm bill, for the first time in memory lawmakers recently trimmed back the federal tax subsidy for corn ethanol, reducing the tax break from 51 cents to 45 cents a gallon.

At the same time, however, lawmakers reiterated their support for making ethanol production from cellulosic feedstocks - wood chips, switchgrass and even garbage - commercially viable. The same farm bill provides $400 million for cellulosic ethanol research and development.

And the rush of hearings into the food-to-fuel issue show no sign of subsiding. The hearing on Tuesday by an Energy and Commerce subcommittee vied for attention with another hearing into the soaring cost of diesel fuel. The Senate's Homeland Security and Government Affairs Committee has scheduled another hearing on food and fuel on Wednesday.

Will anything come of it?

"Nothing," says Rep. John Shimkus, R-Ill., during a break in Tuesday's session.

Shimkus, whose state has one of the biggest ethanol producers in Archer Daniels Midland Co., supports the mandate and sees heavy reliance on corn as a feedstock only temporary. "It's a bridge (to) cellulosic ethanol and we can't jettison the present and not get to the future," he says.

Bob Dineen, president of the Renewable Fuel Association, which represents the ethanol industry, says the issue is about getting away from using oil, an argument that resonated with lawmakers and convinced them to mandate the increased ethanol production.

His argument is twofold: It's a myth that corn-based ethanol is causing today's high food prices and that because ethanol is cheaper than gasoline, it's cutting the costs for consumers at the pump.

If ethanol production were cut in half this year, as EPA is being asked to do, insists Dineen, gasoline prices could increase by nearly a third because of supply disruptions and the higher cost of replacement gasoline.

"It's difficult for me to conceive that they will back away from something they passed just five months ago," says Dineen.