But the effect of repealing the mandates on food prices depends strongly on the cost of energy. If oil prices stay around $100 a barrel, ethanol will remain an attractive alternative even without the mandates, Westhoff says. As a result, ethanol production could reach levels as high as those set by the mandates anyway, putting just as much strain on the corn supply. High energy costs increase food prices in other ways, too, says Simla Tokgöz, an economic analyst at the Center for Agricultural and Rural Development at Iowa State University. Growing crops takes energy, and countries that have to import food are now paying a high price for shipping because of fuel costs. Bringing down food prices requires addressing these problems as well.
One thing that could help is reducing or eliminating subsidies that give corn ethanol an economic advantage over ethanol from other sources, such as sugar cane, Runge says. Ethanol can be made from sugar more efficiently than it can from corn, so diversion of sugar to fuel production wouldn’t have as much of an effect on food markets.
Scaling up technology for making ethanol from nonfood sources, such as grass and wood chips, could also help. Federal grants are already starting to make that happen, and certain provisions in the U.S. biofuels mandates call for the use of cellulosic ethanol. But so far, technologies for producing cellulosic ethanol have not been commercially deployed. The jump in food prices “increases the urgency to get them developed,” says Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University.
Here again, reducing subsidies could help. Runge says that corn ethanol is squeezing out cellulosic ethanol. With corn prices at record highs, farmers have no incentive to plant the best cellulosic crops. Reducing or eliminating corn subsidies could help level the playing field. “You’ve got to induce farmers to grow the plants you’re going to use for [cellulosic] feedstocks, rather than corn,” Runge says.
But even if alternative approaches to increasing energy supply catch on, he says, ultimately, people need to use less. “I think the most important thing we could do in the United States would be to develop incentives and regulation encouraging aggressive conservation,” Runge says.
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