What's So Great About Ethanol?

I don’t know how many years I have been hearing how great ethanol is as a gasoline additive. I mostly thought of it as a boon to farmers who raise corn and other crops that are converted into this form of alcohol. The energy bill, a mishmash of giveaways to all kinds of energy interests, mandated more use of ethanol and biodiesel. Then the President gave his State of the Union speech and talked about using woodchips and who knows what else to make it.

Ethanol has some significant incentives going for it. It receives a 51-cent-a-gallon federal subsidy. Biodiesel gets a $1-a-gallon federal tax credit. Politicians love ethanol, particularly if they are from farm states, but some farmers are not as thrilled. In the February issue of Wheat Life, a magazine published by the Washington Association of Wheat Growers, the president of the Association of Washington Business, Don C. Brunell, had some words of caution.

“Washington State seems poised to jump on the biofuel bandwagon, but before we do, it may be wise to look before we leap.” Brunell pointed out that the concept of biofuel has been around for more than a century, but “the idea faded because making gasoline from crude oil was cheaper and easier to refine.”

Brunell is far from alone is raising a warning. In a recent article in the San Francisco Chronicle noted, “Ethanol, touted as an alternative fuel of the future, may eat up more energy during its creation than it winds up giving back, according to research by a UC Berkeley scientist that raises questions about the nation’s move toward its widespread use.”

Geoengineering professor, Tad Patzek, was published in the journal, Critical Reviews in Plant Sciences. His view was that “up to six times more energy is used to make ethanol than the finished fuel actually contains.” Patzek is cited as believing that “those who think using the ‘green’ fuel will reduce fossil fuel consumption are deluding themselves—and the federal government’s practice of subsidizing ethanol by offering tax exemptions to oil refiners who buy it is a waste of money.”

Prof. Patzek is not alone. A Cornell University ecologist, David Pimentel, came to a similar conclusion. “There is just no energy benefit to using plant biomass for liquid fuel. These strategies are not sustainable.”

Together with Patzek, the two conducted a detailed analysis of the energy input-yield ratios of producing ethanol from corn, switch grass, and wood biomass, as well as for producing biodiesel from soybean and sunflower plants. Their report was published in Natural Resources Research. Corn requires 29 percent more fossil energy than the fuel produced, switch grass requires 45 percent more, and wood biomass requires 57 percent more.

Prof. Pimentel concluded that, “The United States desperately needs a liquid fuel replacement for oil in the near future, but producing ethanol or biodiesel from plant biomass is going down the wrong road.” He noted that the government “spends more than $3 billion a year to subsidize ethanol production when it does not provide a net energy balance or gain, is not a renewable energy source or an economical fuel.”

Meanwhile, in Washington, D.C., on February 20, the chief economist for the U.S. Agriculture Department, Keith Collins, announced that the United States, the longtime number one corn exporter in the world, will soon distill more corn to make ethanol than it sells abroad. Does this make any sense at all?

According to the USDA, United States corn exports are projected to rise to 2.0 billion bushels in the 2006/07 marketing year, while ethanol production is forecast to consume 2.15 billion bushels. Despite those large numbers, corn-based ethanol is now used in only three percent of U.S. gasoline, while consuming fourteen percent of the nation’s corn crop this marketing year.

The United States is the largest ethanol producer in the world, producing 4.3 billion gallons in 2005. According to the Renewable Fuels Association, production is expected to climb to 5.1 billion gallons this year and 6 billion by 2007.

The question is why? Why would the United States throw billions in tax subsidies at a gasoline additive that requires more energy to produce than the energy it generates? On that basis alone, using petroleum-derivative fertilizers and fuel energy to produce ethanol is idiotic.

Once again, environmental hype has triumphed over reality when it comes to addressing the problem of a finite amount of oil. Between being told that the Earth is running out of oil and being told that we are polluting whenever we drive our cars and trucks, ethanol seems like some kind of answer, but in terms of the energy it saves, the answer is none.

We are decades and maybe even centuries away from running out of oil. Known, as yet untapped reserves exist and technology to exploit them exists. It is far too soon to push the panic button, but not too soon to stop wasting money and energy producing a useless panacea.

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We are definitely not centuries away from running out of oil - we are probably thousands of years, for what it is worth, which isn't much. The important thing is the peak, and in trying to figure out when that will arrive, use the terminology that we used in the army, where the U.S. was often referred to as The World. After examining carefully how things worked in 'The World', use what you find out as an analogy for thinking about what is likely to happen in the lesser world - you know, the one with places like Monte Carlo and St Moritz.

On the other hand, as economists are always saying, this is a very interesting and useful article. I await the comments on it.

Ferdinand E. Banks