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U.S. eyes shift away from corn ethanol

Worried about high food prices, Congress tries to push the biofuel industry to use nonfood crops.

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Texas Sen. Kay Bailey Hutchison (R) introduced legislation freezing the RFS mandate at current levels. "This is a common-sense measure that will reduce pressure on global food prices and restore balance to America's energy policy," she wrote in an op-ed this week.

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Many experts say that ethanol is an easy scapegoat for a complex problem. The price of corn, they point out, is often only a tiny percentage of the final food product, and many other commodities are also rising in price right now. High energy costs, rising protein demand, labor costs, and market forces have all played a role.

"We're not downplaying the fact that there are folks having a tough time buying groceries, but to scare those folks to death [by saying it's] because we're making ethanol is an injustice," says Jon Doggett, vice president of public policy for the National Corn Growers Association in Washington. Just a couple years ago, he notes, he was taking calls from people angry that the low price of corn was feeding America's obesity. "Now they're accusing us of intentionally starving people to death around the world."

Legislators are giving a nod to the ethanol issue in the tax package that is reportedly a part of the farm bill. It would cut the current 51-cent a gallon ethanol tax credit by 4 to 6 cents and would create a $1.01 a gallon tax credit for cellulosic ethanol.

It's a signal of shifting support from key lawmakers, though critics note that the effect will largely be symbolic, especially since commercial-scale cellulosic ethanol doesn't yet exist.

"They're shifting the credit, but the [ethanol] mandate is still there," says Sandra Schubert, director of government affairs for the Environmental Working Group, a Washington-based environmental group that opposed the rising ethanol-production mandate under RFS. "It doesn't do anything to prevent the food crisis and the environmental and natural-resource effects we're seeing."

In the end, the market may dictate the demand for ethanol production. "Up to 14 billion gallons, corn ethanol is going to grow," predicts Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University in Ames. "Somewhere around there, it will stop because ... the trade-offs will get too severe." Eventually, he adds, cellulosic ethanol will become a major player, and will likely complement the corn-fed production. "But it won't happen overnight, and it won't be on a schedule that Congress dictates."