California's decision to launch the nation's first Low Carbon Fuel Standard has been called a definite blow to Midwest ethanol by Donald Hofstrand, co-director of Iowa State University's Agricultural Marketing Resource Center. Hofstrand warns that California will measure indirect land use effects to calculate the greenhouse gas impacts of biofuels and many believe this action unfairly singles out corn. There is also concern that the California ruling may be used as a model for other parts of the country and potentially on a national basis, again hitting corn hard.
Hofstrand insists that California should have included other indirect factors rather than single out the possibility that using corn for ethanol could lead to converting land in other countries to grow crops. He points out that a comprehensive accounting of indirect effects would include food waste. An estimated 27% of the food supply goes into the garbage can rather than feeding people. Hofstrand also notes that turning corn into ethanol is highly efficient in contrast to the inefficiency of feeding corn to cattle to produce beef.
Iowa State University Economics Professor Chad Hart said in terms of corn-based ethanol, the California ruling was a body blow. California by itself is basically the sixth largest economy in the world and California has set out the rules which are not favorable for corn-based ethanol. The California ruling doesn't take effect until 2011, but it already has ramifications as far as investment decisions and growth in the industry.