It is not often that this newspaper agrees with Fidel Castro, Cuba's tottering Communist dictator. But when he roused himself from his sickbed last week to write an article criticizing George W. Bush's unhealthy enthusiasm for ethanol, he had a point.
Along with other critics of the United States' ethanol drive, Castro warned against the "sinister idea of converting food into fuel." The United States' use of corn to make ethanol biofuel, which can then be blended with gasoline to reduce the country's dependence on foreign oil, has already driven up the price of corn.
As more land is used to grow corn rather than other food crops, such as soy, their prices also rise. And since corn is used as animal feed, the price of meat goes up, too. The food supply is being diverted to feed the United States' hungry cars.
Ethanol is not much used in Europe, but it is a fuel additive in the U.S., and a growing number of cars can use either gasoline or ethanol. It accounted for only around 3.5 percent of U.S. fuel consumption last year, but production is growing by 25 percent a year because the government subsidizes domestic production and penalizes imports. As a result, refineries are popping up like mushrooms all over the Midwest, which sees itself as the Texas of green fuel.
Why is the government so generous? Because ethanol is just about the only alternative-energy initiative that has broad political support. Farmers love it because it provides a new source of subsidy. Hawks love it because it offers the possibility that the U.S. may wean itself off Middle Eastern oil.
The automotive industry loves it, because switching to a green fuel will take the global-warming heat off cars. The oil industry loves it because ethanol as a fuel additive means it is business as usual for the time being.
Taxpayers seem not to have noticed they are footing the bill.
But corn-based ethanol is neither cheap nor green. It requires almost as much energy to produce (more, say some studies) as it releases when it is burned. And the subsidies on it cost taxpayers, according to the International Institute for Sustainable Development, somewhere between $5.5 billion and $7.3 billion a year.
Ethanol made from sugar cane, by contrast, is good. It produces far more energy than is needed to grow it, and Brazil, the main producer, has plenty of land available on which to grow sugar without necessarily reducing food production or encroaching on rain forests.
Other developing countries with tropical climates could prosper by producing sugar ethanol and selling it to rich Americans to fuel their cars.
There is a brighter prospect still out there: cellulosic ethanol. It is made from feedstocks rich in cellulose, such as wood, various grasses and shrubs, and agricultural wastes. Turning it into ethanol requires expensive enzymes, but much research is under way to make the process cheaper.
That is still some way off. In the meantime, the U.S. should trash its silly policy. If it stopped taxing good ethanol and subsidizing bad ethanol, the former would flourish, the latter would wither, the world would be greener and the U.S. taxpayer would be richer.
Ethanol is not going to solve the world's energy problems on its own. But its proponents do not claim that it would. Ethanol is just one of a portfolio of new energy technologies that will be needed over the coming years. Good ethanol, that is -- not the bad stuff the U.S. is so keen on.
Copyright 2007 Economist Newspaper Ltd. Distributed by The New York Times Syndicate.