Now Everyone Hates Ethanol
By Vladimir Posted in Alternative Fuels | Energy | Ethanol — Comments (13) / Email this page » / Leave a comment »
From the Wall Street Journal:
Ethanol Craze Cools As Doubts Multiply
Of course, in my previous diaries "Here Comes Big Corn" (Jan 07) and "Ethanol, the Green Fuel" (Jun 07) I was just shilling for the oil companies.
But it seems that the push for widespread use of ethanol as a motor fuel is a case study in the Law of Unintended Consequences writ large.
more...
A recent study by the Organization for Economic Cooperation and Development concluded that biofuels "offer a cure [for oil dependence] that is worse than the disease." A National Academy of Sciences study said corn-based ethanol could strain water supplies. The American Lung Association expressed concern about a form of air pollution from burning ethanol in gasoline. Political cartoonists have taken to skewering the fuel for raising the price of food to the world's poor.
Last month, an outside expert advising the United Nations on the "right to food" labeled the use of food crops to make biofuels "a crime against humanity," although the U.N. Food and Agriculture Organization later disowned the remark as "regrettable."
[snip]
In the past, livestock farmers supported ethanol because it was good for the overall farm economy. But now they began to complain that the higher corn price cut sharply into their profits. A meat-producer trade group called the American Meat Institute took a stand against federal support for biofuels last December, joined soon after by the National Turkey Federation and the National Cattlemen's Beef Association.
[snip]
Packaged-food companies, too, began pushing back, as one after another blamed biofuels' effect on grain costs for hurting earnings. In June, Dean Foods Co., H.J. Heinz Co., Kellogg Co., Nestle USA, PepsiCo Inc. and Coca-Cola Co. sent a letter to senators saying that requiring greater use of ethanol would affect their "ability to produce competitively available, affordable food."
[snip]
One [study] by the National Research Council said additional ethanol production could strain water supplies and impair water quality. A spring 2007 report by the Environmental Protection Agency said that "ozone levels generally increase with increased ethanol use."
A study coauthored by Nobel-prize-winning chemist Paul Crutzen said corn ethanol might exacerbate climate change as the added fertilizer used to grow corn raised emissions of a very potent greenhouse gas called nitrous oxide.
[snip]
Mexico blamed it in part for contributing to rising prices of corn-based tortillas. China barred new biofuel plants from using corn, and Malaysia trimmed its biofuels production mandates. Cuban President Fidel Castro has called using food crops for fuel a "sinister idea." President Hugo Chávez of Venezuela ordered troops to secure his oil-producing nation's grain supplies, saying corn was to be used for food, not fuel.
Even tinpot dictators are in on the act! How long until we hear "It was all the oil companies' idea!"?
Ahh, but our story ends with sweet irony! As ethanol has become the fuel that nearly everyone loves to hate, Congress is considering mandating wider use of the noxious stuff because investors have built capacity that well outstrips current demand:
New and bigger ethanol plants, spurred by money from investors far from the Corn Belt, have contributed to production capacity that's expected to approach 12 billion gallons next year. But annual U.S. demand stands at just under 7 billion gallons.So it's easy to see why the [ethanol refining] industry supports the Senate version of pending energy legislation, which includes a requirement that gasoline blenders use 36 billion gallons of renewable fuels by 2022. Up to 15 billion gallons of this would come from corn-based ethanol. The rest would come from cellulosic ethanol -- an industry that now barely exists -- or other fuels. A similar bill passed in the House has no such provision. [emphasis added]
Growing and harvesting corn consumes a lot of fuel. As a crop, corn depletes soil nutrients & so requires a lot of natural gas-derived fertilizer. During the alcohol-refining process, they dry the mash, but ethanol is such a poor fuel that they use natural gas to supply the heat.
There is more stupidity than hydrogen in the universe, and it has a longer shelf life. - Frank Zappa
The whole ethanol issue is simply buying votes in states where corn is a voting issue.
We continue to put ourselves at OPEC's mercy by continuing to consume the vast amounts of oil - but we are free country and if want to hostages to the Middle East's commodity we have that right I suppose.
is because Iowa is the first caucus state. Since Iowa has lots of corn, and ethanol can be made from corn, the pols need to pander to that segment. Ethanol couldn't possibly fuel more than 15% or so of our cars. Any savings in terms of fuel emissions and air quality with ethanol burning cars, are more than made up for by the extra fuel costs in making ethanol. The only reason it has taken this long to get this out is because of where Iowa is at in the primary season. (By the way, this isn't my intelligent analysis but rather I heard John Stossel point it out and frankly he is dead on)
Always tell the truth, George; it's the easiest thing to remember.
You hear this again and again but the biggest proponents of ethanol are found in Congress. It is Congress that comes up with the subsidies and imposes the tariffs. And they don't have any reason to care about Iowa, unless they are representing that state.
Ethanol is popular for the same reason farm subsidies are popular. Republicans represent most of the rural districts and states that benefit the most from the subsidies. Democrats like to get people hooked on government checks whenever possible. As a result, they can all agree on ethanol.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
Great Post.
I actually considered writing up a 12 step program for getting off ethanol(As biting satire) but I'm either lazy or....lazy, and have not gotten around to it. (It's the holiday's right?)
Or maybe it's because I'm too busy clearing my 3 acres so I can grow corn on it--wink wink.
Have you noticed that this would mean that we'd be trying to get all of our energy from sunshine and moonshine?
Congress is considering mandating wider use of the noxious stuff because investors have built capacity that well outstrips current demand.
This is probably why Al Gore was handed that partner slot at Kleiner Perkins. They've gotten themselves heavily into energy start-up investments that they can't "exit" - guess the betting is that with Al in the mix they can game the system enough to move their ethanol and other "green" investments.
(N.b. - In the venture world, the object of the game is to get a funded start-up to an "exit" and hopefully quickly - since that's when the payback happens. An "exit" is either an IPO or a sale of the company. If you want to see unhappy venture people, watch them deal with a portfolio company that they can't move to an exit....)
Its really disheartening to hear people speaking of their exit strategy before a company has made its first cent.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
Getting to that exit is all that matters. Revenue and profit are nice to have, but if you can get a good exit without them, so be it. (R/P tend to increase the valuation of the exit, of course.)
Back at the tail end of the 1990s dot-com boom, things were reaching the point of total silliness - dot-coms were being taken from start-up to IPO exit without a penny of revenue in something like six months. As long as the stock market dogs were willing to eat that dog food, the party could keep going. But once the dogs stopped eating....
Of course, a latter-day example of a no-revenue "exit" was YouTube, which basically was a no-revenue something-or-other when Google tossed $1.6B (or whatever it was) at them to do the acquisition. This mostly set off a "new" business model for start-ups as to the "investor exit" that they put into their business plans - the exit strategy was to be bought by Google!
Well, one other sidelight to mention just for "fun" is that these days the mental-positioning for what an eventual exit will look like has shifted much more strongly to "sale of the company" from "initial public offering." There's a lot in that mix, but SarbOx has been a non-insignificant contributor....
Since I have not heard of any tidal wave of sentiment to bring back the 18th Amendment, I suspect the hatred you're alluding to is directed toward ethanol in its motor fuel incarnation as opposed to its beverage incarnation.
:pops cork, humming "John Barleycorn":
Ethanol is nothing but another farm subsidy program. It is the poster child of unintended consequences.
Great posting, Vlad.
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Is self-inflicted. We not only subsidize it but we also have created protectionist laws and rules that keep cheaper crops out of the country.
Ethanol from corn is nice. But I've seen reports that Ethanol from Brazilian sugar would be cheaper. Of course, we can't have Brazilian sugar in the country or the sugar beet farmers would go through the roof.
It's because of sugar protections that we use corn-based sweeteners in most foods. Now those same sugar protections are coupling with corn-ethanol subsidization to drive up prices as corn demand grows (to be used in ethanol).
Also, anybody in the know on ethanol have any info on a story I heard - that you have to expand as much gasoline in the production of ethanol as you are replacing by using ethanol as fuel. I know I've heard that ethanol is too corrosive for present-day pipelines and so requires mostly truck transport. Seems like the process of refining corn into ethanol would also expend energy that we could otherwise be using to better effect. Any truth?