The Ethanol Debate Heats Up

An interesting debate about corn-based ethanol and its role in the run-up on global corn prices has emerged in the last few weeks. Advocates and foes are waging battle in the popular media. BusinessWeek, for example, has articles on both sides of the issue in this week's edition. Where, not all that long ago, ethanol was being almost universally haled (by those who invested in it and those who wish they had) as the "answer" to the U.S. energy crisis, now there is a sudden chorus of naysayers decrying the impact ethanol is already having on world food stores, by diverting food crops into the energy supply chain and critics claiming that it takes more btu's to produce ethanol than ethanol saves as an alternative energy supply.

I have no doubt whatsoever that corn-as-fuel is bad energy policy but an important agricultural crop. There is no doubt that demand for ethanol has driven up the price of corn, a basic food staple, to the point of in-affordability for people around the world who depend on it for their daily caloric intake. One article quotes Patrick S. Schnable, a professor from Iowa State University -- smack in the corn-growing center of the world -- as saying, "Crops will go to the highest bidder, and we in the Western world are willing to pay more for fuel than poor people are able to pay for food."

"Of course, it's impossible to divert nearly one-quarter of the corn crop to fuel without causing prices to rise. Corn is now around $5.50 per bushel, more than double its price in 2005," BW says in a different article on page 60. (In fairness, the article also says the price increase in corn has had a "relatively small impact" on global food prices in general. Which may be true, but corn is the basis for the sudden world market in ethanol, which by the way, has done nothing to stop oil prices from reaching new record highs almost daily).

While scientists and industrialists continue to debate the relative merits of corn-based ethanol and to pursue other potential agricultural feedstocks for alternative energy, Changing World Technologies is successfully producing and selling commercial-grade oil from waste material. That's right. Waste. The stuff that companies pay to get rid of. The stuff that floats around on barges with nowhere to unload. The stuff that accumulates in places like the Fresh Kills landfill in Staten Island, the largest garbage dump it the world, which some residents fear may be a source of local spikes in the incidence of cancer.

The waste we use at our plant in Carthage, Missouri, is mostly turkey offal (the parts unfit for human consumption) from a local food processing plant, but any carbon-based feedstock will work. Oh, and by the way, not only are we turning a low-value waste stream into a high-value energy source, we are also demonstrating the only proven-effective way to rid the food chain of BSE, the protein that causes Mad Cow Disease.

More on this later. For now, I'll keep my eye on the ethanol match. It's hard to tell whose court the ball is in, but one thing's for sure. There's no love in this game.