The craze for maize: Iowa's ethanol economy

The Economist: The craze for maize: Iowa's ethanol economy

Ethanol is rapidly transforming life in Iowa and the rest of the corn belt.

YOU might think that the opening of a new ethanol facility in Nevada, Iowa—a town of 6,700 in the centre of the state—would be of interest mainly to the local farmers who supply the corn that the factory turns to car fuel. You would be wrong. Investors in the refinery include the person who delivers fuel to it, a couple of local parts-suppliers for John Deere (a big farm-equipment company) and the local school-bus driver, among 900 or so other small investors. Like many others in the corn belt, the Nevada refinery is seen as a way for the whole rural community to thrive by exploiting America's new craving for ethanol and the corn (maize) that is being used to make it.

Corn-based ethanol is neither cheap nor especially green: it requires a lot of energy to produce. Production has been boosted by economically-questionable help from state and federal governments, including subsidies, the promotion of mixing petrol with renewable fuels and a high tariff that keeps out foreign ethanol. The federal government offers ethanol producers a subsidy of 51 cents per gallon (13.5 cents per litre); and a growing number of states are pushing for wider use of E85, a fuel blend that is 85% ethanol and only 15% petrol. Since oil prices rose above $30 a barrel in 2004 (they are more than double that now), ethanol capacity has grown especially rapidly. And although the country is experimenting with other renewable plant-based fuels of varying feasibility, from biodiesel to (much greener) ethanol derived from trees, the biggest boom has been in corn-based ethanol. ...

Comments

[Dana Ames]

I wish people would look into growing other crops for ethanol besides corn. Aside from the cost of production, there must be other kinds of vegetation that don't deplete the soil so much. I'm only a hobby gardener, but if you don't have soil you don't have nuthin'.

Dana

[Michael W. Kruse]

I'm with you. I'm not sure this is such a great idea on a large scale over extended periods.