If America follows through on its biofuel aspirations and creates an "OPEC of ethanol," Iowa could well become one of its most energy-rich emirates. The Hawkeye State already leads the nation in the production of ethanol (with 1.5 billion gallons last year) as well as biodiesel (with 60 million gallons) - and this is only the start. During a weeklong visit to my native state, I could see that the biofuel boom is already changing Iowa - for good and potentially for ill.
Take the corner gas station, for example: The pump offers regular gasoline at $2.499 a gallon as well as a premium blend - but the premium costs 4 cents less. The reason? It's clearly because the high-test stuff is actually "gasahol," a 10 percent ethanol blend. And the biofuel benefit is likely to become more pronounced in the future, thanks to additional tax breaks enacted in Iowa last year.
The state's love affair with ethanol has a lot to do with Iowa's status as the nation's biggest corn producer. Right now, corn is the primary raw material for ethanol production, and because of the buzz over biofuels, prices have risen well over $4 a bushel. That's brought smiles to the faces of grain producers - although the farmers who have to buy that corn for feeding livestock aren't so much in the mood for celebration.
The higher prices have led some farmers to boost the acreage they'll be devoting to corn when the planting season begins - and the federal government just might give farmers an "early out" from conservation set-aside contracts to boost the land put into production. There's also evidence that crop rotations might be tweaked to favor corn.
That sort of talk raises concerns for some experts on agriculture, even in Iowa. And then there's the whole food vs. fuel debate. The bottom line is that no energy economy can live on corn alone.
So researchers in Iowa and elsewhere are focusing on other ways to squeeze fuel out of biomass. The prime candidates are cellulosic sources ranging from corn stover (the corncobs, husks, leaves, stalks and other leftovers from harvesting) to the perennial prairie grasses that once covered much of the Midwest.
Robert Anex, associate director of the Office of Biorenewable Programs at Iowa State University in Ames, envisions a time when portable cellulose processors work right alongside the corn combines, manufacturing "bio-oil" that can be trucked out to the refineries. He's also a proponent of double-crop sequences - for example, planting a relative of wheat known as triticale in the winter, then harvesting that and planting short-season corn in the spring. Both crops could provide food as well as the raw material for ethanol.
"Now there's an economic incentive to plant a cover crop," Anex explained.
If Iowans do it wrong, the land will pay the price: Anex estimated that soil erosion could create a situation in which the state loses a pound of topsoil for every gallon of ethanol gained. But if the state does it right, we could see the rise of an energy emirate that capitalizes on a wide variety of biofuel technologies - ranging from biomass syngas to new synergies with livestock operations (which can produce the methane to power ethanol distilleries).
"It's very hard at this point to say exactly which technologies will win," Anex said. "But I think that that's not really the right question. A lot of people ask, 'Well, is it going to be thermochemical? Are we just going to get gasification, or are we just going to do sugars?' It depends on the feedstock, it depends on what region you're in, it depends on the company that's putting this on the ground. ... There's not one solution."
Update for 10:35 p.m. March 9: Obviously, ethanol benefits from all the tax breaks and subsidies currently in place - and some researchers have questioned whether ethanol production is really a net plus for the energy economy. Anex says the real benefit kicks in when biofuel production takes advantage of the whole plant - for example, using the leftovers from the process as fertilizer or lignin-derived fuel to be burned.
In addition to distorting energy markets, the subsidies are a sore point when it comes to working with Brazil, the other big player in the ethanol economy. It's an issue that came up during President Bush's visit to Sao Paulo today. Many see the federal 54-cent-a-gallon tariff on ethanol from Brazil as an impediment to the rise of biofuels - although here in Iowa, farmers see the "credit offset" merely as a way to keep the foreigners from cashing in on support from the American taxpayer.
As the United States encourages more nations to get into the biofuel game - thus reducing dependence on Middle East oil - it seems to me that the subsidies will have to be reduced as well. If we're going to create a true market for biofuels, they'll have to stand on their own, without a taxpayer-funded crutch.