U.S. ethanol industry should take a leaf out of São Paulo’s book

critics and supporters have looked to cellulosic ethanol made from biomass other than corn as a technological fix to corn ethanol’s problems. A better approach would be to accept that corn ethanol is here to stay but emphasize sustainability and decarbonize the corn ethanol production cycle. Brazil, the world’s second-largest ethanol producer—and specifically its biggest producing state of São Paulo—serves as a model for the U.S. to follow.</p> <h2>The U.S. lagging behind</h2> <p>Cellulosic ethanol— sometimes called advanced or second-generation ethanol—has been portrayed as a way to use biofuels without the problems of corn ethanol. This is what President George W. Bush referred to in his 2006 State of the Union address when he touted funding for “cutting-edge methods of producing ethanol, not just from corn, but from wood chips and stalks, or switchgrass.”</p> <p>The 2007 Energy Independence and Security Act established the Renewable Fuel Standard, which was designed to shift the biofuels blended into the fuel supply from corn ethanol to cellulosic or other advanced biofuels. Yet today, a decade and a half after Congress mandated biofuel blends, cellulosic biofuels have been a failure.</p> <p>According to the original legislation, the U.S. was supposed to blend 7 billion gallons of cellulosic ethanol in 2018. In reality, the country produced only 8 million gallons. Last month, biofuel company POET announced it was ending cellulosic ethanol production at its plant in Emmetsburg, Iowa. The Environmental Protection Agency (EPA) has had to waive the legislative targets for advanced biofuels every year since 2010, a fact largely ignored by ethanol groups that cry foul at other EPA waivers handed out to refineries to exempt them from blending requirements.</p> <p>The entire saga of cellulosic ethanol reflects what energy historian David Nye has described as “a fundamental structure of thinking in the high-energy society: an admission of weakness and vulnerability is followed by a proclamation that a new technological breakthrough will alleviate the problem.&#8221; Cellulosic ethanol’s failure has led some environmentalists to conclude that all support for biofuels should be eliminated.</p> <p>But another way forward is possible for U.S. biofuels policy. Such a path must begin by accepting that corn ethanol has so much political, technological, and economic support that it is thoroughly embedded in current energy policy. Like it or not, corn ethanol is here to stay for the foreseeable future.</p> <p>Globally, biofuels will play an important role in decarbonizing the transportation system, especially in hard-to-electrify sectors such as aviation and shipping. Electrification of private automobiles is the obvious solution to limit greenhouse gas emissions, but full-scale electrification remains years—even decades—away and biofuels offer a viable bridge to that future date. Given these realities, a serious effort to decarbonize corn ethanol that is supported by policymakers and environmental organizations and backed by law is the best way forward for U.S. biofuel policy.</p> <h2>The São Paulo model for ethanol</h2> <p>To understand how the U.S. could decarbonize corn ethanol, it should look closely at what has happened in the Brazilian state of São Paulo, the heart of <a href="https://brazilian.report/business/2019/08/01/chinese-demand-heats-brazil-ethanol-industry/">the country’s sugarcane ethanol industry</a>, which produces more ethanol than any nation except the U.S.</p> <p>São Paulo’s economy dominates that of Brazil’s other twenty-six states, accounting for a third of the country’s GDP. In addition to its financial and industrial power, São Paulo has the country’s most productive agricultural sector. About a third of São Paulo’s rich farmland is planted in sugarcane, supplying 60 percent of Brazil’s ethanol output and an even greater share of Brazil’s sugar production.</p> <p>Producers established a world-class sugarcane research infrastructure in the 1920s and expanded it over the past century. Beginning in the 1960s, private support flooded into São Paulo’s agricultural and industrial research centers, outstripping all federal funding of sugarcane research. This public-private research infrastructure solidified São Paulo state’s leadership and eventual dominance in sugarcane production. Over the past decade and a half, São Paulo’s sugarcane researchers and producers have focused on sustainability.</p> <p>When physicist José Goldemberg served as São Paulo’s Environment Secretary in the mid-2000s, he drafted rules cutting down on the sugarcane sector’s air pollution. Mr. Goldemberg’s law, passed in 2007, eliminated the common practice of burning sugarcane before it was harvested. Workers previously refused to cut “raw,” or unburned, sugarcane because of the difficulty of contending with the sharp-edged leaves and so-called “hair,” or spines, that would otherwise be burned off. But burning sugarcane created horrible air pollution problems. Mr. Goldemberg’s ban on burning took effect over time, which gave producers and workers time to adjust to the mechanized harvesting of unburned cane.</p> <p>When we spoke to Mr. Goldemberg in November he modestly acknowledged that the burning ban was good politics. The main opposition, he said, came from unions worried about the loss of work. But an effective retraining program—and Brazil’s booming economy of the time—managed to place most rural workers in other jobs.</p> <p>Mr. Goldemberg’s law began in São Paulo’s environment department but it soon challenged the state’s sugarcane producers to answer a larger question: how would their sector change to meet the challenge of long-term environmental sustainability? That was the question highlighted for us when we spoke with Carolina Matos, who has worked in São Paulo’s state government on a program that dates to 2007 called <em>Etanol Verde </em>(Green Ethanol).&nbsp;</p> <p>She said that the opposition to burning came from the grassroots, from communities in cane-growing areas where air pollution created serious health impacts. The state government began to think about water pollution too, especially from the massive use of water to wash cane after it was harvested. And it began drawing a detailed map of the appropriate and inappropriate areas to plant the crop.</p> <p>Over the past decade, these efforts have resulted in remarkable cooperation between the state government and producers, with Green Ethanol now shifting to a new stage—&#8221;Greener Ethanol&#8221;—placing the reforestation and rehabilitation of native forests on the agenda.</p> <p>In addition, the state’s producers have fully embraced a new federal law called RenovaBio, otherwise known as the National Biofuels Policy. The thrust of the program is the creation of a market in certificates representing carbon not released by the burning of fossil fuels. Ethanol producers will be allocated these certificates in proportion to their production and fuel distributors will be the first buyers.</p> <p>Essentially, the government is trying to decarbonize the fuel sector by monetizing a “positive externality,” as consultant Júlio Borges puts it. We attended a meeting of São Paulo’s Agribusiness Council, with major producers as well as representatives of the Ministries of the Economy, Agriculture, and Energy. São Paulo’s ethanol producers were clearly enthusiastic. In some ways, this federal plan represents an extension of their own sustainability efforts over the past decade.</p> <h2>Putting focus on sustainability and climate change</h2> <p>The U.S. should follow São Paulo’s model and focus on decarbonizing ethanol from our primary feedstock (corn) rather than pinning our hopes on more distant technologies. Now is an especially auspicious time to focus on decarbonizing corn ethanol. Most importantly, the <a href="https://brazilian.report/business/2019/07/07/climate-change-food-prices-brazil/">climate crisis demands urgent action</a> to limit carbon emissions and transportation is the leading cause of those emissions in the U.S.</p> <p>The United Nations&#8217; Intergovernmental Panel on Climate Change (IPCC) issued a recent report on Climate Change and Land highlighting agriculture’s important role in emissions, contributing nearly 12 percent of anthropogenic global greenhouse gases per year. Focusing on decarbonizing corn ethanol offers a rare chance to limit emissions from both the agricultural and energy sectors.</p> <p>Farmers in the U.S.—especially large-scale row-crop farmers who grow most of the corn used for ethanol—have historically denied the science of climate change and regulations based on it. But there are signs that the extreme weather of recent years has led a growing number of farmers to accept the science of climate change and start thinking about what they can do to mitigate it.</p> <p>U.S. taxpayers should also demand decarbonization in exchange for the enormous subsidies showered on farmers in recent years. Through the USDA’s Market Facilitation Program, taxpayers spent nearly USD 20 billion on direct farm subsidies in 2018 and 2019. These payments were meant to help farmers suffering from the Donald Trump administration’s trade war, but asking farmers to decarbonize as much as possible is a reasonable request in exchange for public funding.</p> <p>From plow to pump, opportunities to decarbonize corn ethanol and improve its sustainability abound. In fact, avoiding plowing altogether and adopting the conservation agriculture practices perfected in Brazil and Argentina has been identified by Project Drawdown as one of the top 20 solutions to <a href="https://brazilian.report/podcast/2020/02/12/explaining-brazil-podcast-95-brazil-climate-crisis-already-begun/">climate change</a>. Farmers, researchers, and agricultural groups have already begun many corn ethanol decarbonization efforts, often in an attempt to tap into California’s lucrative low-carbon fuel standard and also to find some stability amid the shakiness of the Renewable Fuel Standard under the Trump administration.</p> <p>But the corn ethanol industry and lobbying groups have also cynically tried to exploit legislative loopholes or parse definitions to make corn ethanol appear greener without any substantive change. In 2014, the EPA accepted the corn ethanol lobby’s argument that fiber within corn kernels could count as cellulosic and therefore qualify for more lucrative subsidies.</p> <p>Following the São Paulo model and assuring corn ethanol producers of their place in the energy mix, while demanding real improvements in greenhouse gas emissions and sustainability is the best option to ensure that future biofuel policy focuses on genuine advances rather than fruitless debates. Farmers need assurance that their biofuel crops will have a place within U.S. energy policy. And we all will benefit when farmers, environmental groups, and policymakers work as allies to make U.S. biofuels more sustainable and less carbon-intensive.