Bioethanol Boondoggle - Political viability is more important than commercial viability

Congress is finalizing an energy bill that should come to a vote before the end of 2007. Although all the details of the newly negotiated bill are not yet public, an earlier draft mandated that refiners annually blend 20.5 billion gallons of ethanol into transport fuels by 2015, with 5.5 billion gallons of that coming from non-food sources like cellulosic ethanol. The mandate would rise to 36 billion gallons by 2022. This more than quadruples the 2005 directive of 7.5 billion gallons by 2012.

Promoters of the ethanol mandate assert that it would help the United States achieve energy independence and slow the accumulation of greenhouse gases that are driving climate change. Evaluating the scientific and economic claims being made for bioethanol can be vexing, but a few urgent questions come to mind: if bioethanol is such a good energy deal, why must refiners and consumers be forced to use it? Again, if it's such a great idea economically, why does the federal government offer a tax credit of 51 cents per gallon for blending ethanol into gasoline?

In fact, the subsidies are probably higher than that. For example, a 2006 report by the International Institute for Sustainable Development estimated that if one took into account state renewable fuel tax breaks and direct agricultural subsidies that reduce other costs, the total amount of the ethanol subsidy rises from $1.05 to $1.38 per gallon of ethanol

Another big concern is that fuel is now competing with food. A new study from AEI/Brookings Joint Center points out that in 2005, the ethanol program consumed about 15% of U.S. corn production but displaced less than 2% of gasoline use. The International Food Policy Research Institute (IFPRI) just issued a report projecting that if countries simply pursue their current biofuel expansion plans the global price of corn will increase by 26 percent and the price for oilseeds will rise by 18 percent. If biofuel production doubles over current projections, the price of corn rises by 72 percent and oilseeds by 44 percent. The IFPRI report notes that "The increase in crop prices resulting from expanded biofuel production is also accompanied by a net decrease in the availability of and access to food." Even in North America, access to food calories drops by between 2 to almost 5 percent depending on which biofuel production scenario plays out. In food stressed sub-Saharan Africa, available food calories drop by between 4 and 8 percent.

Even cellulosic ethanol produced using waste products like wood chips and corn stalks, or fuel crops like switchgrass or hybrid poplars do not solve the food/fuel conundrum. "The trade-offs between food and fuel will actually be accelerated when biofuels become more competitive relative to food and when, consequently, more land, water, and capital are diverted to biofuel production," concludes the IFPRI report. And there is no avoiding the trade-off between conservation and ethanol production. Already, U.S. farmers have taken 4.6 million acres out of the 36 million acres of farmland put aside in the Conservation Reserve Program (CRP) to raise fuel crops. Switching land from the CRP to ethanol production will obviously effect wildlife, water usage, and soil erosion.

The most vexing question: Does corn bioethanol actually reduce greenhouse gas emissions? A study last year by Cornell University biologist David Pimentel and University of California at Berkeley engineer Ted Patzek says no. According to the study, "Ethanol production using corn grain required 29 percent more fossil energy than the ethanol fuel produced." And the news was even worse for cellulosic ethanol using switchgrass, which requires 50 percent more fossil energy than it displaces; woodchips needed 57 percent more; and biodiesel burnd 27 percent more fossil fuel than it displaces. On the other hand, the researchers at University of Minnesota offer a much sunnier analysis of the net energy benefits of bioethanol. They find, "Ethanol yields 25 percent more energy than the energy invested in itsproduction, whereas biodiesel yields 93 percent more."

This technical dispute over the net energy balance of biofuels will be resolved some day. In the meantime, a new study from the Oregon State University asks if biofuels are commercially viable? The study finds that they are commercially viable in Oregon if one takes current government incentives into account. Translation: biofuels are not really commercially viable without subsidies. In addition, the Oregon study analyzes the effectiveness of biofuels in promoting energy independence. The researchers find "for all three biofuels evaluated, energy independence is achieved at costs that are 6 to 28 times higher than for other policy options such as raising the gas tax or increasing corporate average fuel economy (CAFE) standards." The AEI/Brookings study estimates that in meeting the current ethanol mandate the costs will exceed the benefits by about $1 billion a year.

Biofuels are commercially questionable, do not materially advance energy independence, and may not even help reduce greenhouse gas emissions. Naturally, Congress wants to mandate them. Why? Well, Iowa caucus voters win; Archer Daniels Midland wins; and special interest contributors to political campaigns win. Bioethanol is just a subsidy boondoggle masquerading as a solution to America's energy problems. But it does help get some politicians elected.

Pimentel is a known and proven liar using out of date data to deceive people about the mass energy balance of ethanol.

Nor does ethanol take much out of the food chain. Half of all corn is used as animal feed, the food value of the DDG’s is still there after processing. The main problem is that they put the stillage back in with the DDG’s, which gives it too high of a fat content to be fed in large quantities.

Short but good article from the Dept of Energy on ethanol mass/energy balance:

http://www1.eere.energy.gov/biomass/net_energy_balance.html

Net Energy Balance for Bioethanol Production and Use
Bioethanol production for transportation fuel is not without environmental concerns. Current U.S. fuel ethanol production is based almost entirely on starch from corn grain. To achieve its tremendous production levels, modern U.S. corn farming makes relatively intense use of energy and chemicals. Early ethanol plants were also energy intensive, raising concerns as to whether the transportation fuel being produced was worth the energy going into making it. American agriculture, however, has made great efficiency gains in recent years, as has the fuel ethanol industry.

The most official study of the issue, which also reviews other studies, concludes that the “net energy balance” of making fuel ethanol from corn grain is 1.34; that is, for every unit of energy that goes into growing corn and turning it into ethanol, we get back about one-third more energy as automotive fuel. That may not sound impressive, but bear in mind that while the gasoline that ethanol displaces is largely imported and a high-level pollution source, the mix of energy inputs for producing bioethanol includes much domestic and relatively cleaner energy. On the basis of liquid fuels alone, the net balance is 6.34 (USDA Office of Energy Policy and New Uses, The Energy Balance of Corn Ethanol: An Update).

A public interest environmental organization study (Institute for Local Self Reliance), 1995 shows how much net energy balance can improve. Calculating the current balance at 1.38, it goes on to calculate a ratio of 2.09, if you base it on corn grown in the most efficient farming state and ethanol produced in the most efficient existing facilities. That is, if the industry averages move to the current industry bests, as you would expect them to tend toward, there would be more than twice as much energy in the fuel ethanol as went into making it.

For cellulosic bioethanol—the focus of the Biomass Program—that study projects an energy balance of 2.62. That is based on growing and harvesting energy crops such as fast-growing trees, so bioethanol from corn stover or other residue that requires no production effort would have an even more favorable energy balance. A Biomass Program life-cycle analysis of producing ethanol from stover, now underway, is expected to show a very impressive net energy ratio of more than 5. It should be noted, though, that much of the energy gain comes from generating electricity by burning the co-product lignin, rather than from the ethanol itself.

One of the most persistent critics of fuel ethanol [David Pimentel, Cornell University, (see for example Journal of Agricultural and Environmental Ethics, vol. 4, no. 1, pp. 1-13. 1991.)] asserts that it takes about 70% more energy to grow corn and make ethanol from it than goes into the ethanol. Among other things, however, his analysis is based on old data and does not give any credit for the energy value of the animal feed co-product of making ethanol (both dry-mill- and wet-mill-ethanol plants produce high-protein animal feeds as a major co-product, a key economic element of the production processes). The use of old data is significant because the modern ethanol industry is only about 20 years old and plants today are far more efficient than the first ones built. Productivity of corn production has also increased dramatically.

Ethanol critics also question the wisdom of growing fuel instead of food, but corn (field corn, not to be confused with sweet corn) is used mostly for livestock feed and for products such as beverage sweeteners, rather than direct human consumption. As the largest U.S. agricultural crop, it is generally in surplus, requiring price supports, so to whatever extent ethanol supports corn prices, taxpayer costs are reduced. Cellulosic bioethanol production would have even less impact on food supplies. It would use either residues such as stover that are produced as a byproduct of producing other crops or dedicated energy crops grown on land not economically suitable for food crops.

With lower fertilizer requirements for soybeans than corn and simpler processing, biodiesel production and use has a net energy balance of 3.2.

re: post 3

soooooooo the logical thing to do is not to make it out of corn then....right?

“After nearly three decades of work, Brazil has succeeded where much of the industrialized world has failed: It has developed a cost-effective alternative to gasoline. Along with new offshore oil discoveries, that’s a big reason Brazil expects to become energy independent this year.

To see how, take a look at Gildo Ferreira, a 39-year-old real-estate executive, who pulled his VW Fox into a filling station one recent afternoon. Instead of reaching for the gasoline, he spent $29 to fill up his car on ethanol made from sugar cane, an option that’s available at 29,000 gas stations from Rio to the Amazon. A comparable tank of gasoline would have cost him $36. “It’s cheaper and it’s made here in Brazil,” Mr. Ferreira says of ethanol. If the price of oil stays at current levels, he can expect to save about $350 a year. “

http://yaleglobal.yale.edu/display.article?id=6817

Mandates?

Yes, they’re weaning brazil off of terror-dollars spent with OPEC.

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“Yet countries wanting to follow Brazil’s example may be leery about following its methods. Military and civilian leaders laid the groundwork by mandating ethanol use and dictating production levels. They bankrolled technology projects costing billions of dollars, despite criticism they were wasting money. Brazil ended most government support for its sugar industry in the late 1990s, forcing sugar producers to become more efficient and helping lower the cost of ethanol’s raw material. That’s something Western countries are loath to do, preferring to support domestic farmers.

With government support, sugar companies and auto makers’ local units delivered cost-saving breakthroughs. “Flexible fuel” cars running ethanol, gasoline or a mixture of both, have become a hit. Car buyers no longer have to worry about fluctuating prices for either fuel because flex-fuel cars allow them to hedge their bets at the pump. Seven out of every 10 new cars sold in Brazil are flex-fuel.”

Corn ethanol is not a good long range solution, but should help in the short run. I think I will see cellulosic in my lifetime and I am 69. Lots of people are working on it and the government has pledged over 300 million dollars to 6 experimental projects scattered throughout the country using everything from orange juice wastes in Florida to wood chips in our nothern states.

Secondly, why can’t the auto manufacturers produce cars that get far higher miles per gallon? There seems to be a significant drop in purchase of gas hogs like SUVs and RVs, so perhaps they will get the message. It will be interesting to see how the new Fortwo (sp?) auto set to debut in January is accepted and purchased.

Third, I was surprised to discover the the building sector uses a lot more energy than the transportation sector, so what is Congress doing to promote superinsulation in their energy bills? If people are going to get tax rebates for buying special windows, solar panels, and hybrid cars, they should get similar benefits for increasing insulation in attics and in new construction.

Nonsense. Canada imposes price controls on drugs. You want price controls on drugs here also. Price controls always lead to shortages. In the long run, imposing price controls on drugs will lead to a shortage of new miracle drugs.

You misunderstand the opposition of the pharmaceutical industry (and also conservatives) to importing of Canadian drugs. Canada would have stopped the practice because US importation would have led to drug shortages in Canada. Canadian officials threatened to stop importation. However, after importation was stopped, the rats and rinos would have demanded price controls. The rats wanted price controls in the Medicare prescription bill passed in 2004. The real fear of the the pharmaceutical industry (and conservatives) is price controls.

The US administration should bring a case in the WTC against every country imposing price controls on drugs. It is ridiculous that the rest of the world imposes price controls at the threat of stealth of intellectual property.

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