Tom Steyer Takes a Side in Environmentalists' Ethanol Fight

Billionaire climate activist Tom Steyer is in an unfamiliar spot: at odds with many environmentalists on a global-warming policy.

Steyer's NextGen Climate group is embracing the federal biofuels mandate, called the renewable-fuel standard (RFS), as it works to elect Iowa Democrat Bruce Braley in the race to replace retiring Democratic Sen. Tom Harkin.

NextGen's latest Iowa ad, unveiled Tuesday, slams GOP hopeful Joni Ernst for taking money from oil-industry interests that oppose the RFS, a popular policy in farm country that requires increasing amounts of fuels like ethanol and biodiesel in the nation's motor fuel mix.

Yet by alleging Ernst is a poor defender of biofuels—a charge she calls completely false—NextGen is trumpeting a policy that some environmentalists say is bad for the planet.

Assessing the overall, or "lifecycle," climate footprint of growing and transforming crops into fuel and then burning them is tricky. But ethanol's critics like Friends of the Earth and the Environmental Working Group believe traditional corn-based ethanol—which is a substantial share of the mandate—is actually worse for the climate than gasoline when its total lifecycle greenhouse-gas emissions are considered.

But while Steyer spoke critically of ethanol in a 2010 interview with Fortune, on Tuesday his NextGen Climate group praised the RFS. "The Renewable Fuel Standard is an important program that will help transform our carbon intensive oil-dependent transportation sector and increase the development and deployment of biofuels. The RFS supports 73,000 good-paying, clean energy jobs in Iowa and is helping us reduce our dependence on fossil fuels," NextGen said.

Right now the vast majority of U.S. biofuels production is corn-based ethanol. The RFS, under a 2007 law, requires growing use of next-wave biofuels like cellulosic ethanol and requires them to have a sharply lower climate impact that gasoline. But development of those fuels has been far slower than advocates had hoped.