Green Fuel's Dirty Secret

The town of Columbus, Nebraska, bills itself as a "City of Power and
Progress." If Archer Daniels Midland gets its way, that power will be
partially generated by coal, one of the dirtiest forms of energy. When
burned, it emits carcinogenic pollutants and high levels of the
greenhouse gases linked to global warming.

Ironically this coal
will be used to generate ethanol, a plant-based petroleum substitute
that has been hyped by both environmentalists and President George Bush
as the green fuel of the future. The agribusiness giant Archer Daniels
Midland (ADM) is the largest U.S. producer of ethanol, which it makes
by distilling corn. ADM also operates coal-fired plants at its company
base in Decatur, Illinois, and Cedar Rapids, Iowa, and is currently
adding another coal-powered facility at its Clinton, Iowa ethanol plant.

That's
not all. "[Ethanol] plants themselves - not even the part producing the
energy - produce a lot of air pollution," says Mike Ewall, director of
the Energy Justice Network. "The EPA (U.S. Environmental Protection
Agency) has cracked down in recent years on a lot of Midwestern ethanol
plants for excessive levels of carbon monoxide, methanol, toluene, and
volatile organic compounds, some of which are known to cause cancer."

A
single ADM corn processing plant in Clinton, Iowa generated nearly
20,000 tons of pollutants including sulfur dioxide, nitrogen oxides,
and volatile organic compounds in 2004, according to federal records.
The EPA considers an ethanol plant as a "major source" of pollution if
it produces more than 100 tons of any one pollutant per year, although
it has recently proposed increasing that cap to 250 tons.

Sulfur
dioxide is classified by the EPA as a contributor to respiratory and
heart disease and the generation of acid rain. Nitrogen oxides produce
ozone and a wide variety of toxic chemicals as well as contributing to
global warming, according to the EPA, while many volatile organic
compounds are cancer-causing. Last year, Environmental Defense, a
national environmental group, ranked the Clinton plant as the 26th
largest emitter of carcinogenic compounds in the U.S.

For years,
ADM promoted itself as the "supermarket to the world" on major U.S.
radio and television networks like NPR, CBS, NBC, and PBS where it
underwrites influential programs such as the NewsHour with Jim Lehrer.
Now, as it actively promotes its ethanol business, ADM has rolled out
its new eco-friendly slogan, "Resourceful by Nature" which "reinforces
our role as an essential link between farmers and consumers."

Despite
the company's attempts at green packaging, ADM is ranked as the tenth
worst corporate air polluter, on the "Toxic 100" list of the Political
Economy Research Institute at the University of Massachusetts. The
Department of Justice and the Environmental Protection Agency has
charged the company with violations of the Clean Air Act in hundreds of
processing units, covering 52 plants in 16 states. In 2003 the two
agencies reached a $351 million settlement with the company. Three
years earlier, ADM was fined $1.5 million by the Department of Justice
and $1.1 million by the State of Illinois for pollution related to
ethanol production and distribution. Currently, the corporation is
involved in approximately 25 administrative and judicial proceedings
connected to federal and state Superfund laws regarding the
environmental clean-up of sites contaminated by ADM operations.

Friends in High Places

Environmentalists
have cried foul, but they are up against the 56th largest company in
the United States, as ranked by revenue in Fortune Magazine. ADM has
more than 25,000 employees, net sales last year of $35.9 billion, with
$1 billion in profits, as well as a recent 29 percent profit increase
in the last quarter. The comany is a global force: ADM is one of the
world's biggest processors of soybeans, corn, wheat, and cocoa, which
it buys from growers in the U.S. and around the world. The company
recently hired Patricia A. Woertz, an executive vice president of
Chevron Corporation, as its chief executive officer.

ADM has
another resource at its disposal, the considerable clout it has built
up over decades of courting and lobbying Washington's power brokers.
Days after the company's February expansion announcement of the
coal-fired Nebraska plant, U.S. Energy Secretary Samuel W. Bodman
visited ADM's Decatur headquarters to tout its part in President Bush's
Biofuels Initiative. The secretary posed for photos with then ADM Chair
G. Allen Andreas and announced that the Department of Energy would
offer up to $160 million for the construction of three biorefineries to
expand U.S. ethanol production.

"Partnerships with industry like
these will lead to new innovation and discovery that will usher in an
era of reduced dependence on foreign sources of oil, while
strengthening our economy at home," Secretary Bodman said from ADM's
trade floor. Like the ADM ethanol plant in Columbus, the three
biorefineries could well be partially coal-powered, given the absence
of conditions imposed by the Department of Energy.

"It's been
some 30 years since we got a call from the White House asking for the
agricultural industry, ADM in particular, to take a serious look at the
possibilities of building facilities to produce alternative sources of
energy for our fuel supply in the United States," said Allen Andreas,
who was chair, chief executive and president of ADM at the time of
Secretary Bodman's visit. "We are delighted to participate in any way
that we can in the president's programs."

ADM and its signature
project have never lacked friends in high places, despite a history of
price fixing scandals and monopolistic misdeeds. The Andreas family,
which has headed up the publicly-traded company for decades, has
cultivated bipartisan support through generous donations to both
Republicans and Democrats. Since the 2000 election cycle, ADM has given
more than $3 million in political contributions, according to the
Center for Responsive Politics: $1.2 million to Democrats and $1.85
million to Republicans. These donations may have helped sustain a
multitude of government subsidies to ADM, including ethanol tax
credits, tariffs against foreign ethanol competitors, and federally
mandated ethanol additive standards.

Politicians from the
Midwestern Corn Belt are some of the company's staunchest allies.
Senators Richard Durbin, Charles Grassley, and Tom Harkin,
and Representative Dick Gephardt have consistently supported lavish
federal tax subsidies to ethanol producers, for which ADM is the
prime beneficiary. All are recipients of political action committee
donations from the agribusiness behemoth. The Wall Street Journal has
referred to the former South Dakota senator and Senate minority
leader as "Archer Daschle Midland," because of his unswerving support for
the interests of the company.

ADM's political heft was behind
the 54 cent per gallon tariff that the US government has imposed on
imports of sugar-cane based ethanol from Brazil, which is cheaper than
ADM's corn-based fuel. The tariff dates back to 1980 when the CEO of
ADM convinced President Carter to adopt it, according to former ADM
lobbyist Joseph Karth. Iowa's Senator Grassley recently stated his
intention to block any attempt to remove the tariff on lower-cost
Brazilian fuel in the face of rising gas prices, stating that "lifting
this tariff would be counter-productive to the widely supported goal of
promoting home-grown renewable sources of energy."

Over many
decades, the company has been the recipient of government largesse in
the form of federal and state corn and ethanol subsidies that have
totaled billions of dollars, prompting the libertarian Cato Institute to
declare ADM the biggest recipient of corporate welfare in the U.S. in
1995. ADM has been a prime beneficiary of the federal tax credit on
ethanol, which the refiner can apply to the tax it pays on corporate
income. First implemented in 1978, the tax credit currently stands at
51 cents per gallon of ethanol sold. The Government Accounting Office
estimates the subsidies to the ethanol industry from 1980-2000 at $11
billion. As the biggest ethanol producer in the US, ADM has received
the largest portion of the government's generosity.

Recent
legislation has further greased the tracks of the ethanol gravy train.
The Energy Policy Act of 2005's Renewable Fuel Standard stipulates that
gasoline sold in the US must include a certain percentage of ethanol or
biodiesel, starting at 4 billion gallons this year and rising to 7.5
billion gallons by 2012. ADM got another boost when the federal
government mandated that oil companies replace MTBE, a
cancer-causing gasoline additive, with ethanol. 45 states have
adopted policies to encourage the production and use of the fuel. ADM
has responded with plans to increase its output of ethanol by 42
percent over the next three years.

When Corn is King

Subsidies
and tax incentives might make public policy sense - even when they flow
into the coffers of a Fortune 500 company with mega-profits - but only if
corn ethanol delivers on the promise that its boosters claim: to
significantly cut greenhouse emissions, protect the environment, and slow
global warming.

Debate has raged for years over whether
ethanol made from corn generates more energy than the amount of fossil
fuel that is used to produce it. UC Berkeley's Alexander Farrell
recently co-authored a comprehensive study, published in Science, on
the energy and greenhouse gas output of various sources of ethanol. His
group found that corn ethanol reduces greenhouse gases by only 13
percent, which compares unfavorably with ethanol made from vegetable
cellulose such as switchgrass. "Our best guess," says Farrell, "is that
using corn ethanol today results in a modest decline of greenhouse gas
emissions."

Yet the enormous amounts of corn that ADM and other
ethanol processors buy from Midwestern farmers wreak damage on the
environment in a multiplicity of ways. Modern corn hybrids require more
nitrogen fertilizer, herbicides, and insecticides than any other crop,
while causing the most extensive erosion of top soil. Pesticide and
fertilizer runoff from the vast expanses of corn in the U.S. prairies
bleed into groundwater and rivers as far as the Gulf of Mexico. The
nitrogen runoff flowing into the Mississippi River has fostered a vast bloom
of dead algae in the Gulf that starves fish and other aquatic life of
oxygen.

To understand the hidden costs of corn-based ethanol
requires factoring in "the huge, monstrous costs of cleaning up
polluted water in the Mississippi River drainage basin and also trying
to remedy the negative effects of poisoning the Gulf of Mexico," says
Tad Patzek of the University of California's Civil and Environmental
Engineering department.

"These are not abstract environmental
effects," Patzek asserts, "these are effects that impact the drinking
water all over the Corn Belt, that impact also the poison that people
ingest when they eat their food, from the various pesticides and
herbicides." Corn farming substantially tops all crops in total
application of pesticides, according to the US Department of
Agriculture, and is the crop most likely to leach pesticides into
drinking water.

While banned by the European Union, atrazine is
the most heavily used herbicide in the United States - primarily applied
to cornfields - and the EPA rates it as the second most common pesticide
in drinking wells. The EPA has set maximum safe levels of atrazine in
drinking water at 3 parts per billion, but scientists with the U.S.
Geological Survey have found up to 224 parts per billion in Midwestern
streams and 2,300 parts per billion in Corn Belt irrigation reservoirs.

Then there is the question of how practical it is to replace petroleum
with corn-based ethanol. "There are conflicting figures on how much
land would be needed to meet all of our petroleum demand from ethanol,"
says Energy Justice Network's Ewall, "and those range from some portion
of what we currently have as available crop land to as much as five
times as the amount of crop land in the US." The Department of
Agriculture estimates that the Corn Belt has lost 90 percent of its
original wetlands, two thirds of which has taken place since draining for agriculture began mid-century.

"No one who's looked at this issue
[from an environmental perspective] talks about using corn kernels as
the only, or even major component, of the long term solution," counters
Nathanael Greene, senior policy analyst with the Natural Resources
Defense Council. "Everyone assumes we'll evolve the industry from its
current technology to the advanced technologies."

If that
happens, it will be a marked reversal of many decades of government
policy in support of Archer Daniels Midland - and the company may well
wonder what it's getting for its unceasingly ample gifts to both
political parties. But with the "full-throated support of the Bush
Administration," in the words of the Renewable Fuels Association, a
corn ethanol-dominated, ADM-led trade group, that day doesn't seem to be approaching any
time soon.

Sasha Lilley is a writer for CorpWatch and producer of the program Against the Grain on Pacifica Radio.

Listen to an interview with Sasha Lilley on CorpWatch Radio. 

• 106 Money & Politics
• 181 Food and Agriculture
• 183 Environment