The Clean Energy Scam

Ethanol increases global warming, destroys forests and inflates food prices. So why are we subsidizing it?

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John Lee / Aurora Select for TIME

A tiny sliver of transitional rain forest is surrounded by hectares of soybean fields in the Mato Grosso state, Brazil.

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I spent a day in the Amazon with the Kamayura tribe, which has been forced by drought to replant its crops five times this year. The tribesmen I met all complained about hacking coughs and stinging eyes from the constant fires and the disappearance of the native plants they use for food, medicine and rituals. The Kamayura had virtually no contact with whites until the 1960s; now their forest is collapsing around them. Their chief, Kotok, a middle-aged man with an easy smile and Three Stooges hairdo that belie his fierce authority, believes that's no coincidence. "We are people of the forest, and the whites are destroying our home," says Kotok, who wore a ceremonial beaded belt, a digital watch, a pair of flip-flops and nothing else. "It's all because of money."

Kotok knows nothing about biofuels. He's more concerned about his tribe's recent tendency to waste its precious diesel-powered generator watching late-night soap operas. But he's right. Deforestation can be a complex process; for example, land reforms enacted by Brazilian President Luiz InĂ¡cio Lula da Silva have attracted slash-and-burn squatters to the forest, and "use it or lose it" incentives have spurred some landowners to deforest to avoid redistribution.

The basic problem is that the Amazon is worth more deforested than it is intact. Carter, who fell in love with the region after marrying a Brazilian and taking over her father's ranch, says the rate of deforestation closely tracks commodity prices on the Chicago Board of Trade. "It's just exponential right now because the economics are so good," he says. "Everything tillable or grazeable is gouged out and cleared."

That the destruction is taking place in Brazil is sadly ironic, given that the nation is also an exemplar of the allure of biofuels. Sugar growers here have a greener story to tell than do any other biofuel producers. They provide 45% of Brazil's fuel (all cars in the country are able to run on ethanol) on only 1% of its arable land. They've reduced fertilizer use while increasing yields, and they convert leftover biomass into electricity. Marcos Jank, the head of their trade group, urges me not to lump biofuels together: "Grain is good for bread, not for cars. But sugar is different." Jank expects production to double by 2015 with little effect on the Amazon. "You'll see the expansion on cattle pastures and the Cerrado," he says.

So far, he's right. There isn't much sugar in the Amazon. But my next stop was the Cerrado, south of the Amazon, an ecological jewel in its own right. The Amazon gets the ink, but the Cerrado is the world's most biodiverse savanna, with 10,000 species of plants, nearly half of which are found nowhere else on earth, and more mammals than the African bush. In the natural Cerrado, I saw toucans and macaws, puma tracks and a carnivorous flower that lures flies by smelling like manure. The Cerrado's trees aren't as tall or dense as the Amazon's, so they don't store as much carbon, but the region is three times the size of Texas, so it stores its share.

At least it did, before it was transformed by the march of progress--first into pastures, then into sugarcane and soybean fields. In one field I saw an array of ovens cooking trees into charcoal, spewing Cerrado's carbon into the atmosphere; those ovens used to be ubiquitous, but most of the trees are gone. I had to travel hours through converted Cerrado to see a 96-acre (39 hectare) sliver of intact Cerrado, where a former shopkeeper named Lauro Barbosa had spent his life savings for a nature preserve. "The land prices are going up, up, up," Barbosa told me. "My friends say I'm a fool, and my wife almost divorced me. But I wanted to save something before it's all gone."

The environmental cost of this cropland creep is now becoming apparent. One groundbreaking new study in Science concluded that when this deforestation effect is taken into account, corn ethanol and soy biodiesel produce about twice the emissions of gasoline. Sugarcane ethanol is much cleaner, and biofuels created from waste products that don't gobble up land have real potential, but even cellulosic ethanol increases overall emissions when its plant source is grown on good cropland. "People don't want to believe renewable fuels could be bad," says the lead author, Tim Searchinger, a Princeton scholar and former Environmental Defense attorney. "But when you realize we're tearing down rain forests that store loads of carbon to grow crops that store much less carbon, it becomes obvious."

The growing backlash against biofuels is a product of the law of unintended consequences. It may seem obvious now that when biofuels increase demand for crops, prices will rise and farms will expand into nature. But biofuel technology began on a small scale, and grain surpluses were common. Any ripples were inconsequential. When the scale becomes global, the outcome is entirely different, which is causing cheerleaders for biofuels to recalibrate. "We're all looking at the numbers in an entirely new way," says the Natural Resources Defense Council's Nathanael Greene, whose optimistic "Growing Energy" report in 2004 helped galvanize support for biofuels among green groups.

Several of the most widely cited experts on the environmental benefits of biofuels are warning about the environmental costs now that they've recognized the deforestation effect. "The situation is a lot more challenging than a lot of us thought," says University of California, Berkeley, professor Alexander Farrell, whose 2006 Science article calculating the emissions reductions of various ethanols used to be considered the definitive analysis. The experts haven't given up on biofuels; they're calling for better biofuels that won't trigger massive carbon releases by displacing wildland. Robert Watson, the top scientist at the U.K.'s Department for the Environment, recently warned that mandating more biofuel usage--as the European Union is proposing--would be "insane" if it increases greenhouse gases. But the forces that biofuels have unleashed--political, economic, social--may now be too powerful to constrain.

America the Bio-Foolish

The best place to see this is America's biofuel mecca: Iowa. Last year fewer than 2% of U.S. gas stations offered ethanol, and the country produced 7 billion gal. (26.5 billion L) of biofuel, which cost taxpayers at least $8 billion in subsidies. But on Nov. 6, at a biodiesel plant in Newton, Iowa, Hillary Rodham Clinton unveiled an eye-popping plan that would require all stations to offer ethanol by 2017 while mandating 60 billion gal. (227 billion L) by 2030. "This is the fuel for a much brighter future!" she declared. Barack Obama immediately criticized her--not for proposing such an expansive plan but for failing to support ethanol before she started trolling for votes in Iowa's caucuses.

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