Breaking Up Big Corn

The Administration's new biofueld strategy was better than it looked at first glance, especially if it means the death of ethanol subsidies.

The Obama administration on Tuesday proposed renewable-fuel standards that could reduce the $3 billion a year in federal tax breaks given to producers of corn-based ethanol. The move sets the stage for a major battle between Midwest grain producers and environmentalists who say the gasoline additive actually worsens global warming.

For much of the last decade, federal officials have touted the potential of corn ethanol as a substitute for gasoline and a tool for reducing global warming and foreign oil dependence.

However, environmentalists and others have questioned the wisdom of that support.

A recent Congressional Budget Office study found that increased ethanol production was responsible for 10% to 15% of last year's increased U.S. food costs. And the rush to produce more corn for fuel has had a global environmental impact as forests and other vegetation have been cleared to make way for cropland.

I believe in alternative fuels as part of the solution, but not when it competes with that other type of fuel, the food that fuels our bodies. Not only does corn-based ethanol expend more in energy for its production than it saves, but it artificially raises food prices globally and impedes efforts to reduce world hunger. If the President is serious about following the science, he will allow the EPA tests on emissions of biofuels to show that corn and soy-based biodiesel do not meet the test. Already the Energy Department has used stimulus money to boost the cellulosic ethanol industry.

Speaking of following the science, watch Mike Pence stumble his way through an interview where he denies global warming, questions stem cell research and equivocates on evolution, and then claim not to be "anti-science." Fun stuff.

I Am A Scientist

(apologies to Thers for borrowing his shtick)

Here's the expected energy team for President-elect Obama:

Obama will name Steven Chu his choice for Energy secretary, Lisa Jackson for EPA administrator and Carol Browner as energy "czar" reporting to the president.

It is unclear whether the Browner position is cabinet level.

This will not be officially announced this week.

No Blagojevich in there? Proof that he was all set to hire him before the scandal broke. When will Obama resign???!!one!?questionmark???

Carol Browner is a former regulator who administrated at the EPA under Bill Clinton, and believes that government action to regulate the climate can create economic opportunity. Lisa Jackson was New Jersey's environmental protection head and then chief of staff to Gov. Jon Corzine.

But I want to focus on Steven Chu because he's something quite novel for Cabinet-level government work: a scientist.

If you look at the history of the Department of Energy, you'll find that there's never been a Secretary who actually was an expert on energy. The closest we've ever gotten was Charles Duncan who had a chemical engineering degree and had a cup of coffee out of school at Humble (later Exxon). For some reason it just never occurred to the President to install a person who was qualified for the position.

Instead we've been subjected to a long line of career politicians, military men and folks that were as far away from energy as you could get (Reagan's first Secretary of Energy was an oral surgeon) . Is it any wonder that our energy policy is set by industry since the person who is supposed to do that doesn't have a clue?

Not only does Chu have a clue, he's a Nobel-prize winning scientist and is already working under the auspices of the Department of Energy at Lawrence Berkeley National Lab. A scientist, ya'll. As the Secretary of Energy. Oh. My. Gawd.

He moved from the arena of quantum physics to political advocacy for admirable reasons.

Consider this. There’s about a 50 percent chance, the climate experts tell us, that in this century we will go up in temperature by three degrees Centigrade. Now, three degrees Centigrade doesn’t seem a lot to you, that’s 11° F. Chicago changes by 30° F in half a day. But 5° C means that … it’s the difference between where we are today and where we were in the last ice age. What did that mean? Canada, the United States down to Ohio and Pennsylvania, was covered in ice year round.

Five degrees Centigrade.

So think about what 5° C will mean going the other way. A very different world. So if you’d want that for your kids and grandkids, we can continue what we’re doing. Climate change of that scale will cause enormous resource wars, over water, arable land, and massive population displacements. We’re not talking about ten thousand people. We’re not talking about ten million people, we’re talking about hundreds of millions to billions of people being flooded out, permanently.

And he is optimistic about what we can do about this crisis, through energy efficiency, through developing new technologies for fuel, through building a new energy economy at home. This is a guy who is rooting around in bug entrails looking for new sources of energy, with decent results. And this is a godsend of a quote:

Applause broke out when he described how companies, after claiming efficiency gains and lowered costs were impossible, “miraculously” achieved them once they “had to assign the jobs from the lobbyists to the engineers.”

There has been no greater sea change in Obama's cabinet selections than this choice of an engineer, a scientist, to head the Department of Energy, after eight years of an Administration that waged war on science. It's the difference between having a serious conversation with the American people about a new Apollo Project for renewable energy and a post-carbon future and "Frosty the Coalman."



Yes, that's real. Go ahead and look.

Starvation, Hunger, And The Downside of a Globalized World

Finally waking up to the global challenge we face with rising food and fuel prices and the imminent starvation of millions, the Washington Post is committing some responsible journalism, maybe a tad late, by running a series dedicated to the global food crisis. It's a complex issue with a variety of factors and countervailing forces, without an easy cause-effect scenario. So it's beneficial to stretch it out over several days and examine what we can do and how we can prevent future crises.

The first article looks at the statistical reality of food prices, which soared due to increased demand and hoarding, and aren't likely to fall back to 2006-era prices anytime soon. For a billion people living on next to nothing, the article says, "it is a matter of survival."

Interestingly for a consensus media establishment paper like the Post, they actually attribute the problem to market forces.

The root cause of price surges varies from crop to crop. But the crisis is being driven in part by an unprecedented linkage of the food chain.

A big reason for higher wheat prices, for instance, is the multiyear drought in Australia, something that scientists say may become persistent because of global warming. But wheat prices are also rising because U.S. farmers have been planting less of it, or moving wheat to less fertile ground. That is partly because they are planting more corn to capitalize on the biofuel frenzy.

This year, at least a fifth and perhaps a quarter of the U.S. corn crop will be fed to ethanol plants. As food and fuel fuse, it has presented a boon to American farmers after years of stable prices. But it has also helped spark the broader food-price shock.

"If you didn't have ethanol, you would not have the prices we have today," said Bruce Babcock, a professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State University. "It doesn't mean it's the sole driver. Prices would be higher than we saw earlier in this decade because world grain supplies are tighter now than earlier in the decade. But we've introduced a new demand into the market."

They shrink back into blaming protectionist markets for the problem, but I think the paper stepped over a kernel of truth. It's not just about biofuels - it's been known for a while that they could contribute to starving the poor - it's about market forces driving types of farm production, subsidies making it more profitable, not to mention political forces (Iowa being the first primary state certainly drives the corn ethanol boom domestically). And this is a symbol for how markets work with respect to producing and distributing resources around the planet. Devilstower at Kos wrote the finest post on this topic I've ever seen, and I wish I could excerpt it all but I'll just give you a piece and urge you to follow the link and read it yourself:

Whether it's a bridge in Minnesota or body armor in Iraq, we live in a world constructed by low bid. That's not just true for items built by government contract. For decades, business has focused on efficiency, on the elimination of all redundancy, on "right sizing," on "just in time" on "zero inventory." One of the economic indicators we've been trained to look for each month is the measure of labor productivity, the amount of output achieved for each man-hour of input. In the United States, productivity has soared over the last decade, as automation, outsourcing, and just-in-time have worked together to make US workers much much more productive.

Want to know why corporations are able to sit on huge sums of money, but the average worker's pay hasn't increased? It's because they can get by with fewer of us and still get what they need. Not more than they need, of course. Just enough. Corporations have been proudly "cutting the fat." Flexibility and robustness are not the goals for a corporate society that rarely glances beyond the end of the current quarter.

The trouble is, fat does something other than cause unsightly bulges in your favorite outfit. Fat is storage. If bears were to "cut the fat" before heading into hibernation, they'd be really thin -- as in skeletons -- come spring.

We've promoted this vision of business that's right on the edge, pushing supply out right to the margin, getting everything done expending the precise resources needed, and with respect to this food crisis, a market that works that way is left unprepared. We've globalized and interlocked and paralleled these production and distribution systems so earnestly, that when some farmers decide to switch to growing biofuels instead of food, or when some Chinese and Indian people decide to eat a bit more meat than grain in their diet, or when a few monsoons and hurricanes wipe out some crops, there's no excess supply to which to revert.

The crisis is not necessarily borne out of production, but economics, and in particular the current form of capitalism. The second part of the Washington Post series focuses on the real-world cost of this perversion of production and distribution as it relates to the poor in Mauritania. The problem is this easy reliance on a globalized market that will unquestionably produce whatever bounty is needed. That dismisses human greed. And it has led us down this path.

Major World Hunger Crisis

We get tunnel vision on superdelegates and stump speeches and credentials committees, all of which have their own level of importance. When I see a headline that millions are in danger of starvation I stop thinking about all that and pay attention.

Meteoric food and fuel prices, a slumping dollar, the demand for biofuels and a string of poor harvests have combined to abruptly multiply WFP's (the UN's World Food Program) operating costs, even as needs increase. In other words, if the number of needy people stayed constant, it would take much more money to feed them. But the number of people needing help is surging dramatically. It is what WFP Executive Director Josette Sheeran calls "a perfect storm" hitting the world's hungry.

The agency last month issued an emergency appeal for money to cover a shortfall tallied at more than half a billion dollars and growing. It said it might have to reduce food rations or cut people off altogether.

The most vulnerable are people like those in Sudan, whom Joannes is struggling to feed and who rely heavily, perhaps exclusively, on the aid. But at least as alarming, WFP officials say, is the emerging community of newly needy.

There are weather-related reasons: flooding in Australia and Indonesia which lowered rice harvests. There are problems of increasing demand as the population increases. There are of course problems with rising fuel prices, which impact food production and distribution. Increases in demand for biofuels raise prices for staples like corn, as well. And there are war zones like Afghanistan, where Hamid Karzai has asked the WFP to help feed 7.5 million people, up from 5 million, a consequences of wheat prices rising 2/3 in the last year. Add this all up and you have 40 nations at risk of serious hunger out of the 121 that the WFP monitors.

The ability of individuals to feed themselves simply affects everything else. You cannot improve health care, establish a working education system, or increase economic output without food security. This is a far more urgent problem than the American financial crisis, although the plunging dollar contributes to it.

The Financial Times has more.

Governments across the developing world are scrambling to boost farm imports and restrict exports in an attempt to forestall rising food prices and social unrest [...]

Saudi Arabia cut import taxes across a range of food products on Tuesday, slashing its wheat tariff from 25 per cent to zero and reducing tariffs on poultry, dairy produce and vegetable oils.

On Monday, India scrapped tariffs on edible oil and maize and banned exports of all rice except the high-value basmati variety, while Vietnam, the world’s third biggest rice exporter, said it would cut rice exports by 11 per cent this year.

The moves mark a rapid shift away from protecting farmers, who are generally the beneficiaries of food import tariffs, towards cushioning consumers from food shortages and rising prices.

The social unrest potential is great. We have already seen "tortilla riots" in Mexico and "pasta riots" in Italy. Restricting exports is going to decimate countries in the developing world as the richer nations try to cushion the blow in their own countries. Food stocks are as low as at any time in recent memory.

This goes well beyond any political issue. Over the past week we've all received urgent calls for money from candidates for state and federal office. Poor people worldwide don't have a flashy email they can send you. Yet they need your support more than ever.

WFP's Fill the Cup program has for small amounts that can feed the hungry for a week or more. That's probably the best way to get resources into the hands of those who need them.

Global Giving has programs that feed children in Niger and India, for example.

World Hunger Year tackles community-based solutions to hunger and poverty.

CARE has a World Hunger Campaign.

Do the research, see which organization fits with your comfort level, and give. Millions of people are at risk and our financial mess has at least a little to do with it. The other thing you can do is DEMAND that your Congresscritter raise US donations to the World Food Program. Global poverty is an economic and national security issue. It's also, as John Edwards called it, the moral test of our generation.

Sen. Boxer, Don't Reward Polluters

I have the greatest respect for Barbara Boxer and the work she's doing on the issue of global warming. However, I think it's a shortsighted approach for working to pass a bill that she thinks George Bush can sign, a climate change bill that would set up a cap and trade system and just give carbon credits away to polluting industries. There's been a simmering battle between environmental groups on this bill, and now it's exploded into the open, with the Sierra Club coming out against the bill, known as Lieberman-Warner (which should tell you something).

Fast-forward to present day: the carbon industries are lobbying to get a deal done this year that would give away carbon permits free of charge to existing polluters -- bribing the sluggish, and slowing down innovation. And politicians are telling us that while it would be better to auction these permits and make polluters pay for putting carbon dioxide into our atmosphere, creating that market unfortunately gets in the way of the politics.

We are being urged to compromise -- to put a system in place quickly, even if it is the wrong system. Given that we only have one chance to get this right before it's too late, our top priority must be to make sure that we do not settle prematurely and sign a weak bill into law in the name of doing something about global warming. With momentum for strong action and a friendlier Congress and White House building every day, it's no coincidence that some wish to settle their accounts now.

This will tie the hands of the Presidential candidates on the Democratic side, who have far better proposals for their cap and trade system, including selling the carbon credits at a 100% auction, using the funds to promote green energy and research for renewables. It's the wrong bill at the wrong time.

I know that Sen. Boxer wants to use her status as the head of the Environment Committee to push this compromise bill forward. But the political calculus next year could be excellent for a real bill with real teeth, and Boxer would be leaving that on the table. As I mentioned earlier this week, Sens. Obama and Clinton are co-sponsors of this Lieberman-Warner bill, which was initially authored by John McCain, and so this has the potential to totally take global warming as an issue off the table for the 2008 elections. As Matt Stoller writes:

...it's the huge number of new liberal anti-carbon energy voters out there that are going to allow the public to get a sustainable deal on climate change next Congress. There's some evidence that Obama might make global warming his highest priority, having promised to begin negotiating a new Kyoto-style treaty even before taking office.

All of this is excellent and game-changing news that we've seen happen in the last week or so. As a reminder, here's what Boxer said just two weeks ago about Friends of the Earth, which has waged a campaign called 'Fix it or Ditch it' about the massive Lieberman-Warner bill to subsidize polluting industries.

"They're sort of the defeatist group out there," she said. "They've been defeatists from day one. And it's unfortunate. They're isolated among the environmental groups."

This nasty slur, while not true at the time (Greenpeace was opposing the bill), is now silly. At least one big green group has moved in response to Wynn's loss to get a better deal, and the business right, the coal producers, the nuclear industry, and the oil guys know they will have to deal soon. The Sierra Club and Friends of the Earth have said that we must work on global warming, but that it must be done smart and sustainably.

We've been down this road before. The rising cost of gasoline and worries about peak oil led everyone to go running toward biofuels in a desire to "just do something," and now we're learning that the production of biofuels costs more energy than the savings from biofuels themselves. So now we've created this giant windfall for agribusiness, and nobody wants to reverse the ship because it'd be politically unpopular to enact what some would see as an "anti-environmental" initiative.

A "deal" on a bad cap and trade bill would have the same effect. It would lock in a giveaway to polluters on the order of trillions, and make it very difficult for the next President to do anything about it. If you care about the environment, I think you need to let Sen. Boxer know that only a real climate change bill that hits the necessary targets is sufficient. Otherwise, she has to walk away from this.

UPDATE: I should note that the CBO came out with a report showing that a carbon tax is CLEARLY the best option for reducing emissions, the easiest to implement, and arguably the most cost-effective. Unfortunately, that's a dead letter as we continue to use the subprime carbon market.