Ethanol: Immortal & Immoral

It looks like the President and the Lame Duck Democrats have cut a deal with Republicans. The country can breathe a sigh of relief that taxes won't go up across the board on January 1^st. Another sigh of relief is coming from the ethanol industry. From the Washington Post:

The White House and key lawmakers cleared the way Thursday night for swift Senate action to avert a Jan. 1 spike in income taxes for nearly all Americans, agreeing to extend breaks for ethanol and other forms of alternative energy as part of the deal.

I don't find a lot to cheer in this. It is widely assumed that a significant tax increase would be another shock to an already weak economy. That might well be true, but maybe it would have done more good for Congress to show that it was serious about getting our fiscal house in order.

As for extending the ethanol subsides, I'm all for it. I live in South Dakota and work for the state. We have a lot more ethanol plants than beach volleyball courts. I figure what floats the state economy floats me, and I am worried about the sinking of fiscal real estate hereabouts.

Of course, ethanol subsidies make no sense on any other grounds. Ethanol production doesn't increase our "energy independence", whatever that might mean. It takes more energy to produce a gallon of ethanol than the gallon actually contains. That extra energy isn't coming from wind towers. Over the next five years, these subsides will cost us over $25 billion dollars.

Ethanol production doesn't yield any environmental benefit and certainly none at a reasonable cost. From Forbes:

Australian academic Robert Niven found that ethanol gasoline lets out more harmful air toxins than regular gasoline. The Congressional Budget Office finds that taxpayers are shelling out $750 for every metric ton (2,205 pounds) of carbon kept out of our atmosphere. To put that in perspective, the carbon-offset company Terrapass values the reduction of 1,000 pounds of emissions at a mere $5.95.

When you add up the environmental costs of corn production, the equation looks much worse. Virgin prairie has been plowed up to produce corn for fuel. The machines that work the fields aren't solar powered. From Pajamas Media:

A gallon of ethanol emits less carbon dioxide (CO2) than a gallon of gasoline when combusted. However, CO2-emitting fossil fuels are used to make fertilizer, operate farm equipment, power ethanol distilleries, and transport the ethanol to market. In addition, when farmers plow grasslands and clear forests to expand corn acreage, or to grow food crops displaced elsewhere by energy crop production, they release carbon previously locked up in soils and trees. For several decades, such land use changes can generate more CO2 than is avoided by substituting ethanol for gasoline.

Ethanol production raises the price of gasoline and it raises the price of food. Tariffs keep cheaper ethanol produced south of the border out of the U.S. market, which makes the system all the more expensive but is probably an act of Christian charity. Diverting corn to ethanol production raises the price of tortillas which results in hungrier children.

But hey, as long as it brings money to the Dakotas and Barry's own Illinois, why should I complain? The issue has made odd bedfellows of conservatives and environmentalists, who have united in opposing the subsidies. That's amusing, since it was the green lobby that gave us ethanol in the first place.

I can't help pointing out that subsidies for wind and solar power differ from the above only in so far as they currently do much less damage. But they are no more economically or environmentally advantageous.

The ethanol regime is what you get when you base your energy on beautiful ideas like "renewable energy" or "green jobs," and not on any rational estimate of the costs and benefits of energy technologies.

Comments

[William]

South Dakota needs to prepare for a "rollback" and the ultimate elimination of ethanol subsidies. As you say, ethanol subsidies make no economic sense outside of the direct benefit to "Ag States" and they're becoming increasingly unpopular outside of them.

[Chris]

This post contains blatantly false information. "It takes more energy to produce a gallon of ethanol than the gallon actually contains." That's a tired, old argument that was proven false years ago. Please, do some research before throwing out false claims. Read this, it's from the USDA: http://www.ethanol.org/pdf/contentmgmt/Net_Energy_Balance_of_Ethanol.pdf

If you didn't want to read the whole report, it shows clearly that ethanol's output/input ratio is 1.67. That was a couple of years ago. Ethanol plants have gotten even more efficient since, so I would think that number would go up.

Ethanol's a cleaner burning fuel, less CO2 emissions (you did get that right) less Benzine toxins than gasoline. And I don't know if I'm going to trust what you say is an "Australian Academic." What kind of academic? High school math teacher?

[duggersd]

Regardless of whose numbers you use, the fact is ethanol does not appear to be able to stand on its own feet. I still say if the subsidy cannot be removed (it should be), at least get rid of the tariff on imported ethanol. I hope KB, your tongue is in your cheek when you say you support it.

[Jon S]

Notice that Chris cites ethanol industry numbers. Independent research has shown that ethanol is, at best, a marginal net gain in energy output. Also, there are multiple studies, for example from the University of Minnesota and Georgia Tech, that demonstrate that ethanol plays a significant role in starvation in the world. The IMF has concluded that western subsidies for ethanol are a significant contributor to rising food prices worldwide. Also, it is of note that Al Gore has recently stated that his past support for ethanol was a mistake. The results are in and, for the reasons Ken outlines, ethanol is not good for the environment. The best evidence that ethanol subsidies are about interest group payoffs rather than sound policy is the fact that our tariffs on imported ethanol remain very high. If we really want to clean the environment and become independent from foreign oil, then it seems we'd take ethanol from wherever we can get it. But, no, ethanol policy is intended to prop up the farm economy. That might be a good justification for the policy, but one should be clear that ethanol has little to no benefit either for the environment or energy independence and likely hurts the world's poor.

[Michael (Constant Conservative)]

Well stated, Ken. This issue is indeed leading to some strange bedfellows, but I'm glad to see it finally getting some time in the press.

It is not popular to bring up truthful data about ethanol and how efficient it is not--since we live in an ethanol-producing state, but we it is time to carefully disassemble the subsidy structure for ethanol before it comes down and hurts us all. If the industry is able to stand without subsidies, then we can have a further discussion on relative harm to the environment vis a vis gasoline, etc.

[larry kurtz]

There is no ethanol industry without an agrichemical industry: http://switchboard.nrdc.org/blogs/ngreene/hell_hath_no_fury_like_the_cor.html

Plan to plant something other than corn in the Spring...like ducks: http://madvilletimes.blogspot.com/2010/12/quack-if-you-like-prairie-potholes.html

[KB]

Chris: my information may be wrong or not. It is certainly not blatantly false. Almost all of the studies are biased in one direction or another, but the best journals have pieces supporting my position.

The problem that biofuel supporters have is this: if biofuels are really cost effective, then wouldn't ethanol be cheap? Wouldn't the industry be able to stand on its own feet, as dugger says, and not depend on government subsidies for its very survival?

[Donald Pay]

You make a lot of snarky comments that aren't based in reality, or they are based in a very simplictic and incomplete understanding of reality. Let's examine one.

"The issue has made odd bedfellows of conservatives and environmentalists, who have united in opposing the subsidies. That's amusing, since it was the green lobby that gave us ethanol in the first place."

This statement is exceedingly simplistic, so much so that it can't even approach reality. We have to deal with "the green lobby," whatever that is. The first fact to understand is environmental groups never had the power to develop an industry from the bottom up. The people who developed the technologies, processes and business plans were based in engineering schools and biochem departments and in small companies and coops. Many environmentalists in the Midwest, however, saw the promise of ethanol to substitute a cleaner burning fuel in automobiles, which would help with smog issues in urban areas. In general Midwest environmental groups supported the start-up ethanol industry in seeking subsidies. However, Midwest environmentalists often were opposed in this by other environemntalists. In short, national environmental groups have been split on the issue of ethanol for decades.

The industry was going to develop from corn-based beginning because that's where the greatest understanding of the biochemistry was. Environmentalists have always recognized the draw backs of a corn-based ethanol industry. The goal was never to end at a corn-based industry, but to move toward cellulosic-based industry, and that is beginning to happen. I'm not sure that now is the right time to phase out subsidies for corn-based ethanol, because we probably want that industry to help lead us into the cellulosic future.

[Donald Pay]

A second discussion needs to occur over the point that environmentalists and conservatives being on the same side on an issue is novel. Historically, the early conservation movement and much of the early environmental regulatory structure was developed by people associated with the Republican Party. Environmentalists and conservatives have worked together on many issues over the years. Aldo Leopold was a notable conservative who is credited with restarting the modern environmental movement. In South Dakota the opposition to the Oahe Irrigation Project melded together liberals, environmentalists and conservatives. On air quality issues, market-based approaches (such as cap and trade) were developed by conservative or libertarian economists and later adopted by environmentalists. On issues involving forest roads and timber cutting, fiscal conservatives and environmentalists are usually on the same side. Some fiscal conservatives and environmentalists are on the same page in opposing subsidies to the coal, oil, and nuclear industries.

[Jhe]

If we were to harvest sea pntals, not just algae, from areas of the oceans that are called dead zones, areas that produce so much vegetation that the decomposing vegetation cause death of all animal life, we would have hundreds of times more biofuels than all we currently manufacture,Blue-green algae have a special value in that they manufacture their own nitrate fertilizer, and enough to fertilize large volumes of other pntals. We need to harvest the algae along with the other plant matter.These masses of algae are a problem because they are not being harvested in appropriate volumes. We seem to have lost most or all of our baleen whales that at one time ate so much of it.

[Celal]

i definitely think water would be a good srocue, but I heard from somewhere that if we were to become dependent on water as fuel, then we would run out of water (don't know if this is true). BUT I believe the answer lies in variance. We should alternate between the different biofuels and other srocues particularly ethanols and electricity. I also really think that the US should invest more money into butanol. In my opinion, butanol is the closest alternative to gasoline.

[Talat]

Your on to something there. Chinese ofliicafs belive there is 260 million tones of the stuff in the race area. Bio fuel has been made from algae with success. I don't know how much bio fuel the chinese algae would make but it would have to be better than making it out of the crops of poor countries.