What Happened to Ethanol?

With all the talk about “renewable” energy, have you wondered what happened to ethanol? Touted as the energy savior during the Bush administration, we don’t even hear a whimper about it under Obama’s leadership. It seemed to just go away.

But it’s baaack.

Read what CARE Energy Council Member Paul Driessen has to say about ethanol. We believe you’ll be shocked and outraged at what has been quietly happening behind the scenes while all the talk centers around wind and solar. Surprise: if these plans go through, energy will cost all of us more!

Dumb energy policies just keep coming
E15 ethanol mandates would bring huge benefits – for the few, at the expense of the many
If 10% ethanol in gasoline is good, 15% (E15) will be even better. At least for some folks.

We’re certainly heading in that direction--thanks to animosity toward oil, natural gas and coal, fear-mongering about global warming, and superlative lobbying for “alternative,” “affordable,” “eco-friendly” biofuels. Whether the trend continues, and what unintended consequences will be unleashed, will depend on Corn Belt versus consumer politics and whether more people recognize the downsides of ethanol.

Federal laws currently require that fuel suppliers blend more and more ethanol into gasoline, until the annual total rises from 9 billion gallons of EtOH in 2008 to 36 billion in 2022. The national Renewable Fuel Standard (RFS) also mandates that corn-based ethanol tops out at 15 billion gallons a year, and the rest comes from “advanced biofuels”--fuels produced from switchgrass, forest products and other non-corn feedstocks, and having 50% lower lifecycle greenhouse gas emissions than petroleum.

These “advanced biofuels” thus far exist only on paper or in laboratories and demonstration projects. But Congress apparently believes passing a law will turn wishes into horses and mandates into reality.

Create the demand, say ethanol activists, and the supply will follow. In plain-spoken English: Impose the mandates and provide sufficient subsidies, and ethanol producers will gladly “earn” billions growing crops, building facilities and distilling fuel.

Thus, ADM, Cargill, POET bio-energy and the Growth Energy coalition will benefit from RFS and other mandates, loan guarantees, tax credits and direct subsidies. Automobile and other manufacturers will sell new lines of vehicles and equipment to replace soon-to-be-obsolete models that cannot handle E15 blends. Lawmakers who nourish the arrangement will continue receiving hefty campaign contributions from Big Farma.

However, voter anger over subsidies and deficits bode ill for the status quo. So POET doubled its Capital Hill lobbying budget in 2010, and the ethanol industry has launched a full-court press to have the Senate, Congress and Environmental Protection Agency raise the ethanol-in-gasoline limit to 15% ASAP. As their anxiety levels have risen, some lobbyists are suggesting a compromise at 12% (E12).

Not surprisingly, ethanol activism is resisted by people on the other side of the ledger--those who will pay the tab, and those who worry about the environmental impacts of ethanol production and use.

• Taxpayer and free market advocates point to the billions being transferred from one class of citizens to another, while legislators and regulators lock up billions of barrels of oil, trillions of cubic feet of natural gas, and vast additional energy resources in onshore and offshore America. They note that ethanol costs 3.5 times as much as gasoline to produce, but contains only 65% as much energy per gallon as gasoline.
  
• Motorists, boaters, snowmobilers and outdoor power equipment users worry about safety and cost. The more ethanol there is in gasoline, the more often consumers have to fill up their tanks, the less value they get, and the more they must deal with repairs, replacements, lost earnings and productivity, and malfunctions that are inconvenient or even dangerous.

Ethanol burns hotter than gasoline. It collects water and corrodes plastic,
rubber and soft metal parts. Older engines and systems may not be able to handle
E15 or even E12, which could also increase emissions and adversely affect
engine, fuel pump and sensor durability.

Home owners, landscapers and yard care workers who use 200 million lawn mowers, chainsaws, trimmers, blowers and other outdoor power gear want proof that parts won’t deteriorate and equipment won’t stall out, start inadvertently or catch fire. Drivers want proof that their car or motorcycle won’t conk out on congested highways or in the middle of nowhere, boat engines won’t die miles from land or in the face of a storm, and snowmobiles won’t sputter to a stop in some frigid wilderness.

All these people have a simple request: test E12 and E15 blends first. Wait until the Department of Energy and private sector assess these risks sufficiently, and issue a clean bill of health, before imposing new fuel standards. Safety first. Working stiff livelihoods second. Bigger profits for Big Farma and Mega Ethanol can wait. Some unexpected parties recently offered their support for more testing.

Representatives Henry Waxman (D-CA), Ed Markey (D-MA), Joe Barton (R-TX) and Fred Upton (R-MI) wrote to EPA Administrator Lisa Jackson, advising her that
“Allowing the sale of renewable fuel … that damages equipment, shortens its life
or requires costly repairs will likely cause a backlash against renewable fuels.
It could also seriously undermine the agency’s credibility in addressing engine
fuel and engine issues in the future.”

Corn growers will benefit from a higher ethanol RFS. However, government
mandates mean higher prices for corn – and other grains, as corn and switchgrass
incentives reduce farmland planted in wheat or rye. Thus, beef, pork, poultry
and egg producers must pay more for corn-based feed; grocery manufacturers face
higher prices for grains, eggs, meat and corn syrup; and folks who simply like
affordable food cringe as their grocery bills go higher.

• Whether the issue is food, vehicles or equipment, blue collar, minority, elderly and middle class families would be disproportionately affected, Affordable Power Alliance co-chairman Harry Jackson, Jr. points out. They have to pay a larger portion of their smaller incomes for food, and own older cars and power equipment that would be particularly vulnerable to E15 fuels.
• Ethanol mandates also drive up the cost of food aid – so fewer malnourished, destitute people can be fed via USAID and World Food Organization programs.
  Biotechnology will certainly help, by enabling farmers to produce more biofuel crops per acre, using fewer pesticides and utilizing no-till methods that reduce soil erosion, even under drought conditions. If only Greenpeace and other radical groups would cease battling this technology. However, there are legitimate environmental concerns.
• Oil, gas, coal and uranium extraction produces large quantities of high-density fuel for vehicles, equipment and power plants (to recharge batteries) from relatively small tracts of land. We could produce 670 billion gallons of oil from Arctic land equal to 1/20 of Washington, DC, if ANWR weren’t off limits.

By contrast, 15 billion gallons of corn-based ethanol requires cropland and
wildlife habitat the size of Georgia, and for 21 billion gallons of advanced
biofuel we’d need South Carolina planted in switchgrass.

• Ethanol has only two-thirds the energy value of gasoline--and it takes 70% more energy to grow and harvest corn and turn it into EtOH than what it yields as a fuel. There is a “net energy loss,” says Cornell University agriculture professor David Pimental.
• Pimental and other analysts also calculate that growing and processing corn into ethanol requires over 8,000 gallons of water per gallon of alcohol fuel. Much of the water comes from already stressed aquifers--and growing the crops results in significant pesticide, herbicide and fertilizer runoff.
• Ethanol blends do little to reduce smog, and in fact result in more pollutants evaporating from gas tanks, says the National Academy of Sciences. As to preventing climate change, thousands of scientists doubt the human role, climate “crisis” claims and efficacy of biofuels in addressing the speculative problem.

Meanwhile, Congress remains intent on mandating low-water toilets and washing machines, and steadily expanding ethanol diktats. And EPA wants to crack down on dust from livestock, combine operations and tractors in farm fields.

“With Congress,” Will Rogers observed, “every time they make a joke it’s a law, and every time they make a law it’s a joke.” If it had been around in 1934, he would have added EPA. Let’s hope for some change.

Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow (http://www.cfact.org/) and author of Eco-Imperialism: Green power – black death.

The Biofuel Backlash

A plethora of possible postings has arrived in CARE’s in box in the last couple of weeks. Regrettably, other projects and deadlines have prevented us from making the blog a priority. Today, faced with a window of time to get to reviewing, editing, writing an opening, and posting these delicious new tidbits, we are presented with a different predicament: “Do we post them all now? Do we post one or two today and a couple more tomorrow or later in the week? Which ones should we select first? Should we arrange the postings thematically, or vary the topics?” What to do, what to do?

Because we have a couple items on biofuels are in our collection of articles awaiting posting—and the last posting was on biofuel, today, we offer you fodder for this ongoing discussion. The first has been edited for brevity—though it is still long. We have cut some of the text that we perceive will be less relevant to our audience. If you have an interest in biofuels in Europe, we encourage you to check out the full article at: Stratfor.com.

If you have wondered why biofuels have taken such prominent position in the energy security debate—especially when they seem to have such negative baggage, you will find this report looking at the agriculture sector to be insightful.

The Organization for Economic Cooperation and Development (OECD) released a scathing report Sept. 11 calling for a dramatic drawdown in the subsidies and preferential trade laws granted to biofuel producers in OECD countries. Libertarian groups on both sides of the Atlantic applauded its call for a reduction in subsidies.

The report is one of a number of efforts designed to deflate support for biofuels in the United States and Europe. Increasing numbers of groups, especially in Europe, are beginning to question the wisdom of the current move toward biofuels as a replacement, at least in part, for gasoline and diesel in vehicles.

The critics, however, are running head on into the powerful agricultural lobbies in the United States and Europe that so successfully championed the issue in the first place. These advocates say that ethanol, biodiesel and other nonpetroleum-based transportation fuels reduce pollution, help fight climate change and improve national security by reducing dependence on foreign oil. Though many policymakers find these arguments compelling, the biofuels issue would not have achieved the political momentum it has without the intense lobbying by the agricultural sector.

In fact, the fate of the current wave of biofuel mandates and the pace at which industrialized countries offer biofuels at the pumps will largely be determined by agriculture interests. The implications are as strong and lasting for developing countries as for the industrialized countries involved.

Plant-based Fuels
The term "biofuels" refers to any number of combustible liquids derived from plants that can be used to create energy. Most biofuel development is directed at use in transportation, where biofuels are envisioned as a replacement for gasoline or diesel fuel. The most prevalent sources of biofuel now are corn ethanol (predominantly in the United States), sugar ethanol (mostly from Brazil) and rapeseed oil for biodiesel in Europe. Among the other current sources are palm and soy oil and various waste products (such as cooking waste) for diesel. In the future, researchers hope to make ethanol from unused portions of agriculture produce--cellulosic ethanol from corn stalks and waste from wood processing.

The creation of biofuels produces dramatically different levels of pollution, depending on the plant used. Ethanol is the same and burns similarly regardless of its source, but the pollution and emissions associated with the specific plant's production cycle vary widely. Corn ethanol, for instance, produces 0 percent to 3 percent less greenhouse gas emissions than gasoline when the factors of planting, fertilizing and harvesting the corn are taken into consideration along with the processing and transportation of the fuel, which in the best case requires dedicated pipelines and currently requires overland transportation.

In the United States and Europe, corn currently provides the bulk of ethanol. Europe has recently adopted a stringent biofuel mandate that calls for an escalating percentage of biofuel in its transportation fuel mix.

Politics of Ethanol
The energy bill that passed the U.S. House of Representatives in August includes a call for more than 7.5 billion gallons of biofuels to be sold in the United States by 2009 and for the amount to escalate to 36 billion gallons by 2022. The catch is that most of the ethanol in 2022 will have to be from "advanced" sources, which is to say from next-generation cellulosic processes. (Europe's emerging policy has a similar clause.) The U.S. numbers will likely be scaled back in the conference committee, but some requirement to increase the use of biofuels will go forward. Once passed and signed, biofuels will be cemented in the national energy mix.

Environmentalists' support for biofuels is tied directly to their support for action on climate change. For environmentalists, imposing a cap on greenhouse gas emissions on the United States is their primary objective. They see a carbon cap as the prize, and they figure that anything done in the process of achieving that goal can be fixed later.

To achieve a carbon cap, supporters recognized that they needed not just the political backing of lawmakers from the West Coast and Northeast, but that they also needed a certain amount of political support from the middle of the country. Policymakers in Michigan, West Virginia and Colorado seemed unlikely to come on board because of the stake their states have in the automobile and coal industries. States such as Iowa, Nebraska and South Dakota, however, have no clear stake in the climate issue so those battling for a carbon cap offered billions of dollars in subsidies and a guaranteed market for corn ethanol. That was something a farm-state senator could support.

The political support for biofuels already is paying dividends in both Europe and the United States. Corn prices are now more than 40 percent higher than they were a year ago, despite a 15 percent increase in planting. The rising price of corn meant reduced acreage of wheat planting, and this has coincided with a terrible drought in Australia and a falling dollar. As a result, wheat prices have doubled in the past year, to $9 per bushel for the first time ever (more than $10 in France). These are good times for farmers, and ethanol is playing a role in it.

Brazil's Challenge
For Brazil, the existing or proposed barriers to the importation of its biofuels present a severe challenge. It invested heavily in research and development of biofuels and has perfected a system that provides a replacement for gasoline at a competitive price and with a significant reduction in greenhouse gas emissions (corn-based ethanol offers little to no greenhouse gas benefits). Brazil is moving its vehicle fleet to ethanol, which will take most of the country's output, but it has developed capacity to export ethanol as well.

Seeing its ethanol exports blocked by the United States and Europe, Brazil is learning that energy security and climate change were only a part of the reason countries looked to biofuels. Certainly, these arguments were important, but biofuel mandates would not have happened if not for the power of agriculture in both the United States and Europe.

Brazil's problem, then, is that it merely solved the problem politicians talked about--it has developed a fuel that reduces greenhouse gas emissions and comes from a place that is politically stable and friendly to both the European Union and United States. In solving the rhetorical problem without offering a political fix, it has placed U.S. environmental activists and EU politicians in a difficult position, and has not necessarily won markets. The larger problem, a problem that the OECD suggests but does not explicitly state, is that there is little interest in either the United States or Europe in staring down the agricultural interests.

Bart Mongoven is Vice President, Public Policy for Stratfor

Are Biofuels Really The Right Choice?

With all the talk about biofuels—which includes ethanol, one would have to assume that they are the better choice for the environment; that they are “green.” The prevailing thought seems to be that all oil and gas is wrong and all biofuels are right. In fact many environmental extremist groups are actively working to halt all oil and gas production in America. Startlingly, they have had initial legislative success in their campaign. While most everyone agrees that we need to reduce our dependence on foreign oil, completely eliminating oil and gas from the energy mix and replacing it biomass fuels is an exercise in destruction, not conservation. (Maybe it would conserve, but it would conserve oil and gas making them available once the biomass proponents have discovered the error of their ways and spent huge sums of money generating these new production facilities and infrastructure.) Read this interesting piece and think it through to its possible end game. Once you think about, please share your thoughts here.

Ecologist: “Increased Use of Biomass Fuels Criminal”

Our fear of global warming has now become the biggest threat to the world’s wildlife and forests, warns Jesse Ausubel, one of the nation’s pioneer ecologists.

American farmers are clearing trees and draining wetlands to grow millions more acres of corn for ethanol, even though the United States would need to plant corn on virtually all of its 1.9 billion acres of land area to “grow” our gasoline supply. That would wipe out our forests and wild species.

Europe is importing massive amounts of palm oil for biodiesel from steep Indonesian slopes that used to be covered with tropical forest and endangered wild species—and where the annual monsoon rains deliver 100 inches of massively erosive rainfall in three months each fall. This is conservation? Of what?

New York City would have to turn all of Connecticut into wind farms to power its furnaces, air conditioners, computers and plug-in phones. The U.S. would need wind farms covering the land area of Texas—312,000 square miles—even under the false assumption that the wind would always blow at the right speed to generate power. Allowing for wind variability, would we need 640,000 square miles of windmill farms?

Canada would have to dam the land area of Ontario—360,000 square miles—behind concrete walls 60 feet high, to get from hydropower just 80 percent of the electricity that currently flows from its 25 nuclear power stations. How many species would be drowned out?

We’d have to take 150 square kilometers from nature, and “paint them black” with photovoltaic cells to match the output from a single 1000-megawatt nuclear station. Wouldn’t these massive solar arrays change the ecology?

“Renewable fuels may be renewable, but they are not Green,” says Ausubel. “As a Green, one of my credos is ‘no new structures’ but renewables all involve ten times or more [structures] per kilowatt than natural gas or nuclear,” he laments. “Increased use of biomass fuels in any form is criminal.”

Getting the electrical equivalent of one nuclear power plant would require corn from 2500 square kilometers of prime Iowa farmland, says the Rockefeller University researcher. That’s because an acre of corn yields only about 50 gallons worth of gasoline per acres per year, against the annual gasoline demand of 134 billion gallons.

That’s why Ausubel says building enough wind farms, damming enough rivers and growing enough biomass to meet global energy demands will wreck the environment.

This from a man who helped organize the first UN World Climate Conference in 1979. He is a fellow of both the Woods Hole Oceanographic Institute and Resources for the Future.

Ausubel notes that power sources such as natural gas and nuclear power gain from economies of scale. Renewable fuels, he says, are just the opposite: the best land for wind, hydropower, biomass and solar power will be used up first, leaving land without much sunlight for more solar panels, and non-windy areas for additional windmills.


DENNIS T. AVERYFormer senior policy analyst for the U.S. State Department, co-author Unstoppable Global Warming--Every 1500 Years