Biofuel

Ethanol in The Wall Street Journal

by Brian McGraw on October 26, 2010 · 1 comment

in Energy, Ethanol

The editorial staff at The Wall Street Journal have not been kind to ethanol over the past months. They ran two editorials (one in July — “Survival of the Fattest“, one last week — “The Ethanol Bailout“) criticizing U.S. biofuel policy.

The most recent editorial sparked a letter to the editor from Agriculture Secretary Tom Vilsack. The letter reiterates many of the talking points Vilsack made in his recent address. The title, “Ethanol is a Step to More Biofuels,” almost implicitly acknowledges that corn ethanol itself is not the tell-tale solution the ethanol industry markets it as. Though his letter isn’t as bad as much of the propaganda put forth by the industry recently, his ending comment is misleading:

Don’t forget, the petroleum industry receives billions of dollars in tax breaks each year from the federal government.

I don’t think anyone has forgotten that. But two wrongs don’t make a right. Furthermore, a significant portion of the tax breaks received by the petroleum industry are part of a larger portion of the tax code that is not industry specific. You can credibly argue about the inefficiencies created by the U.S. tax code, but you can’t demonize the petroleum industry for taking advantage of credits available to a large portion of businesses in the U.S. (though there are also petroleum specific subsidies).

Additionally, as summarized (.pdf) by the EIA in 2007, while petroleum subsidies look BIG, on a BTU (subsidy per unit of energy provided) basis they’re miniscule in comparison to biofuel subsidies. The report calculates subsidies at $0.03 per million BTU’s for natural gas/petroleum compared to $5.72 per million BTU’s for ethanol/biofuels. Biofuel subsidies are 190 times larger than natural gas/petroleum subsidies on a per unit of energy basis (not sure why they couldn’t separate these out).

And then onto the commentators. Commentators on the Internet are generally known for their thoughtfulness and accuracy. Just kidding. But the WSJ letter includes comments from real live employee’s of the ethanol industry.

Ben Butterfield writes:

I work for Growth Energy, the coalition of ethanol supporters that filed the E15 waiver with the EPA. I agree with Secretary Vilsack that the EPA’s decision is the right step in the right direction. Moving to E15 is the first crack the blend wall – that artificial limit on the ethanol market. It is the one step we can take today to reduce our dependence on foreign oil, create jobs here in the US and improve our environment.

These types of comments are frustrating because they’re so incredibly misleading. The ethanol industry as a whole relies on government mandated biofuel production. Are they being “artificially limited” by restrictions on the amount of ethanol that can be blended into fuel? In a way, yes. But they also artificially exist, and will artificially grow, because of the EISA mandates on biofuel production. So they aren’t allowed to complain about all these unfair restrictions the government has placed on their industry. I’m willing to bet they wouldn’t trade unfettered market access (via tossing out the EPA and allowing fuel stations to sell ethanol blends as they desire) in exchange for killing the Renewable Fuel Standard.

Another, from Scott Miller — a bio-blogger:

Growth Energy (and their chief spokesman, Gen. Wesley Clark) champions the Fueling Freedom Plan ( see http://bit.ly/bZho2I ) which promotes the phasing out of ethanol subsidies to invest in the build-out of flexible fuel infrastructure – primarily the installation of blender pumps and ethanol pipelines – to provide a level playing field for market entry. Part of the problem of market entry of ethanol of all types has been that there are few blender pumps, so people have little reason to buy flexible fuel vehicles (FFVs). Conversely, there is little reason to install pumps if there are no FFVs

This isn’t the “phasing out of ethanol subsidies.” It’s the changing of ethanol subsidies from tax credits on production to subsidizing infrastructure and creating yet another artificial market by mandating FFVs. How can anyone take the “level playing field” stuff seriously? The real problem for the market entry of ethanol is that there isn’t any real demand for it because it isn’t consistently price competitive with gasoline. If oil prices rise back to previous highs ethanol will be price competitive again, and individuals will demand FFVs on their own. Though don’t forget the price of corn ethanol is also volatile and heavily tied to the price of corn and natural gas.

Miller was offended that the integrity of the ethanol industry was called into question. I’m not here to assault their integrity, maybe they genuinely believe ethanol is the fuel of the future. But its fair to attack their actions when they’re benefiting from taxpayer money and are fighting like hell to keep Brazilian sugarcane ethanol from reaching the United States.

Bio Jet Fuel — the Real $600 Toilet Seat?

by Marlo Lewis on June 28, 2010

in Ethanol, Global Warming

The custom-designed $600 toilet seat for P-3C Orion antisubmarine aircraft — often depicted as the epitome of government waste — is an urban legend.

The “seat” was actually a plastic molding that fitted over the entire seat, tank, and toilet assembly, for which the contractor charged the Navy $100 apiece.

However, in the subsidy-driven world of biofuels, government can flush lots of your tax dollars down the gurgler.

DOD’s Quadrenniel Defense Review Report (QDR) crows that in 2009, the Navy “tested an F/A-18  engine on camelina-based biofuel” (pp. 87-88). Camelina is a non-edible plant in the mustard family.

On Earth Day 2010, an F/A-18 taking off from the Warfare Center in Patuxent River, Maryland, became the first aircraft to ”demonstrate the performance of a 50-50 blend of camelina-based biojet fuel and traditional petroleum-based jet fuel at supersonic speeds,” enthuses Renewable Energy World.Com.

At the event, Secretary of the Navy Ray Mabus said: “It’s important to emphasize, especially on Earth Day, the Navy’s commitment to reducing dependence on foreign oil as well as safeguarding our environment. Our Navy, alongside industry, the other services and federal agency partners, will continue to be an early adopter of alternative energy sources.”

Renewable Energy World also reports that the Navy ordered 200,000 gallons of camelina-based jet fuel for 2009-2010 and has an option to purchase another 200,000 gallons during 2010-2012. Sounds impressive, but let’s put those numbers in perspective. In just three months in peacetime, the flight crew of a single vessel — the USS NASSAU, a multi-purpose amphibious assault ship – flew more than 2,800 hours and burned over 1 million gallons of jet fuel. 

Neither Renewable Energy World nor the QDR mentions how much camelina-based jet fuel costs. Hold on to your (toilet) seat! According to today’s ClimateWire (subscription required), the price is $65.00 per gallon. That’s about 30 times more expensive than commercial jet fuel.

Those who wonder why government can’t just mandate a transition to a ”beyond petroleum” future should contemplate those numbers.

Hidden EU Analysis: Biofuels Can Produce More CO2 Emissions Than Fossil Fuels

by Marlo Lewis on April 23, 2010

in Ethanol, Global Warming

Reuters reports that it used freedom of information laws to obtain a copy of text that was stripped from a December 2009 European Union study on biofuels. The hidden portion of the study found that biodiesel fuel made from North American soybeans has an indirect carbon footprint of 339.9 kilograms of CO2 per gigajoule — about four times larger than standard diesel from petroleum.

The suppressed analysis jibes with Fargione et a. (2008) and Searchinger et al. (2009), who found that CO2 emissions from the land use changes associated with biofuel production exceed the emissions avoided by combusting biofuels instead of petroleum-based fuels.

“The EU’s executive European Commission said it had not doctored the report to hide the evidence, but only to allow a deeper analysis before publishing,” Reuters reports. Uh huh. And if the analysts had found that biodiesel has a much smaller footprint than standard diesel, the Commission would have deep-sixed that study too pending a “deeper analysis.” Right!

“Given the divergence of views and the level of complexity of the issue … it was considered better to leave the contentious analysis out of the report,” the Commission said in a statement. Well, when it comes to energy — or health care, or financial industry reform, or almost any public policy issue you can think of — when isn’t there a “divergence of views” and a high “level of complexity”?

EU policymakers don’t want to be troubled by the facts — and they don’t want hoi polloi getting hold of information that calls their agenda into question.

And they wonder why public trust in the ‘climate science community’ is waning!

Annual biofuel subsidies will hit $60 billion in 2022 — Earth Track

by Marlo Lewis on May 12, 2009 · 1 comment

in Agriculture, Global Warming

Doug Koplow of Earth Track, assisted by researchers with Friends of the Earth, has produced a new study, A Boon to Bad Biofuels, on the taxpayer cost of federal biofuel tax credits and mandates. The numbers are staggering.

In 2008, federal support for ethanol and biodiesel totalled more than $9.5 billion. The subsidy system has two main components:

  1. The Renewable Fuels Standard (RFS), which mandates increased blending of biofuels into the national motor fuel supply, ramping up from 9 billion gallons in 2008 to 36 billion in 2022.
  2. Tax credits including the Volumetric Ethanol Excise Tax Credit (VEETC), which pays out $0.45 for each gallon of corn ethanol; a parallel program for biodiesel worth $1.00 per gallon; and a production tax credit that pays $1.01 for each gallon of cellulosic ethanol produced.

“In their current form, these tax credits scale linearly with production, without limit,” notes Koplow. This means that the $9.5 billion in subsidies in 2008 increases six-fold to $60 billion in 2022, “due both to more production and to a shift to more heavily subsidized cellulosic fuels.” The cumulative cost from 2008 to 2022: $420 billion, nearly 40% of which will go to the corn industry.

But wait, there may be more. As a candidate, Obama proposed to up the RFS to 60 billion gallons by 2030. If this proposal is adopted, “subsidies would top $120 billion per year by the end of the period, for a cumulative subsidy during the 2008-2030 period of more than $1 trillion.”

Kudos to Koplow and his colleagues at Friends of the Earth for this important contribution.