corn ethanol

Bill Clinton Enters the Food vs. Fuel Debate Regarding Corn Ethanol

by Fran Smith on February 25, 2011 · 5 comments

in Agenda for Congress, Agriculture, Energy, Ethanol

Post image for Bill Clinton Enters the Food vs. Fuel Debate Regarding Corn Ethanol

Another convert to the food vs. fuel debate on corn ethanol — former President Bill Clinton. In his speech on Thursday before the U.S. Department of Agriculture’s annual Agricultural Outlook Forum, Clinton said that farmers shouldn’t be putting so much of their corn crop into ethanol production rather than food. He cautioned that the diversion of the food and feed crop could increase food prices and lead to food riots in developing countries and urged farmers to look to the needs of the poor countries of the world.

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Al Gore Backtracks on Corn Ethanol

by Brian McGraw on November 22, 2010 · 3 comments

in Energy, Ethanol

Whoops. Turns out Gore thinks he made a mistake; it wasn’t such a good policy in the first place. Who would have known that politicians, even ones as concerned with “saving” the world as Mr. Gore is, do not excel at picking technology winners and are subject to capture by special interests?

Via Reuters.

Though Mr. Gore cast the tie-breaking vote in support of the RFS, he can’t wave the same magic wand and undo the damage:

With a tie-breaking vote by Vice President Al Gore, the Senate upheld today an Environmental Protection Agency rule requiring that ethanol and other renewable fuels get a share of the gasoline additives market.

And here we are, 16 years later, with a still-increasing corn ethanol mandate and tax credit.

Gore makes a number of candid remarks about his intentions and the effect that lobbies have on “green” energy subsidies:

It’s hard once such a programme is put in place to deal with the lobbies that keep it going.

One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.

One wonders if President Obama, given his tacit support, will make similar remarks in a few years.

Willfull Ignorance from Ethanol Proponents

by Brian McGraw on November 2, 2010

in Energy, Ethanol

A study soon to be released by the Department of Energy, titled “Empirical Data and Decomposition Analysis of U.S. Corn Use for Ethanol Production from 2001-2008.” A presentation summarizing the results of the study was given in California to encourage the eligibility of corn ethanol in California’s low carbon fuel standards. The abstract concludes:

The results of this study provide little support for estimates that assume large land use conversion or diversion of corn exports due to ethanol production in the U.S. over the past decade.

And a bullet point from p. 12:

The analysis suggests minimal to zero indirect land use change was induced by use of corn for ethanol over the last decade.

The study is laughably incomplete as it doesn’t look at a comparative baseline analysis of what would have happened without the increased demand for corn. As NRDC’s Nathaniel Greene notes:

ORNL’s own conclusions acknowledge the limitations of their study. But despite this, they willfully bury these key caveats and misstate what can be reasonably concluded based on their study. While they reiterate that analysis of empirical data over the period 2001-2008 has led them to certain conclusions, they acknowledge that “understanding the interactions of policy with baseline trends”, they say, “is crucial to improve estimates of policy effect on land use”. They then go on to say that while analysis of this data can illustrate how the economy actually adjusted to biofuel policies that increased demand (and supply) of corn for ethanol [in the past], “more detailed analysis of policy effects on prices is needed”.

What they should have said is that since they didn’t look at any baseline without policy or any price-demand interactions, they actually can’t say anything meaningful about the land-use change induced by US policies.

Unfortunately in this case the willful ignorance is being pushed by the Department of Energy in order to support Obama’s biofuel policies. So much for his claims to govern by science. The Renewable Fuels Association quickly touted the study and attacked other studies which came to less flattering conclusions.

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.

Ethanol and Energy Efficiency

by Brian McGraw on October 21, 2010

in Energy, Ethanol

The U.S. Agriculture Secretary Tom Vilsack spoke today at the National Press Club on the future of biofuels in the United States. His remarks contained the expected boilerplate that the White House had previously blogged about here.

Growth Energy, the cheerleader of the ethanol industry, were very supportive of his remarks. But both Vilsack and Growth Energy got one thing wrong — the efficiency of ethanol production.

Growth Energy wrote:

During the Secretary’s speech, he mentioned that there have been efficiency gains in ethanol production. In fact, according to a new report out of the Office of Energy Policy and New Uses at the USDA, there have been significant net energy gains from converting corn into ethanol over the last two decades that have made ethanol one of the cleanest burning fuels on the market. For every Btu put into creating ethanol, we get 2.3 Btu’s in return—a significant increase from the 1.76 BTUs produced in 2004.

Robert Rapier, who writes an excellent energy related blog, explained the creative accounting employed by the USDA in these efficiency “gains” in a post titled “Fun With Numbers: The New USDA Report on Corn Ethanol. Incidentally, Rapier is the CTO of a bioenergy holding company and has a healthy respect for biofuels, but is quick to call BS when he sees it.

The post is long (worth the read if you’re interested in things like the methodology used by the USDA to calculate the amount of energy it takes to produce ethanol), but the cliff notes are that the USDA takes residuals from ethanol production, mainly grain, and subtracts that energy from the denominator of the energy return on energy invested equation. This is a misleading metric , it subtracts residual energy from the input rather than counting it as an output. It’s especially misleading as this wasn’t the methodology they used in some earlier reports, so the casual reader might believe that huge efficiency gains were achieved when most of these gains came from changing the methodology used to calculate the energy return.

Two excerpts from his post:

Imagine if financial returns were calculated in this manner. Say you invested $100, and got a return of $35 cash plus goods (byproduct) that you valued at $30. What is the return on investment? Most people would say that you got a total return of $65 on the investment of $100, for a total return of 65%. Or we could say the cash return is 35%. But if we utilize the USDA’s ethanol accounting, we would use the $30 co-credit to offset our initial investment. We could then argue that we only “really” invested $70 to get a cash return of $35, for a cash return of 50%. So, the answer to the question – “When can a $35 return on a $100 investment amount to a 50% return on investment?” – is “Whenever we apply the rules the USDA uses for ethanol accounting.”

That’s not to say it’s the “wrong” way to do it, but it is certainly a method that inflates the energy returns for ethanol. In the example above, the $35 cash return is analogous to ethanol production, and you can see how a 35% return gets inflated to 50%.

And

So if we keep the accounting methodologies consistent, here are the ethanol-only energy returns (ethanol output/total energy input) from the raw data in the USDA reports:

2002 – 1.09
2004 – 1.06
2010 – 1.42

Here are the ethanol plus byproduct energy returns (ethanol plus byproduct output/total energy input):

2002 – 1.27
2004 – 1.26
2010 – 1.69

Here are the ratios from utilizing the USDA’s 2002 methodology (subtracting byproducts from the inputs) across all three reports:

2002 – 1.34
2004 – 1.32
2010 – 1.93

Finally, the ratios that the USDA highlighted and reported across all three reports:

2002 – 1.34
2004 – 1.67
2010 – 2.34

Yes, the ethanol industry has made efficiency gains, but not nearly to the extent that they’d like you to believe.

Be Careful What You Wish For…

by Iain Murray on March 16, 2010

in Agriculture, Energy, Environment, Ethanol, Global Warming, Politics as Usual

For many years, the climate alarmist movement pushed the development of corn ethanol as the “fuel of the future” on the grounds that it would decrease fossil fuel emissions. As I detail in my book, The Really Inconvenient Truths, massive efforts were devoted to promoting this technology, with a textbook baptist-bootlegger alliance between green groups and Big Corn (most notably Archer Daniels Midland).  Politicians joined in happily, with Al Gore stumping for Minnesota Senator Amy Klobuchar because of her support for ethanol and countless Presidential candidates in Iowa talking up the fuel.

The result of that push has, it seems, been an increase in fossil fuels.  For the latest on this, see Corned grief: biofuels may increase CO2 at Watts Up With That?

The indirect effects of increasing production of maize ethanol were first addressed in 2008 by Timothy Searchinger and his coauthors, who presented a simpler calculation in Science. Searchinger concluded that burning maize ethanol led to greenhouse gas emissions twice as large as if gasoline had been burned instead. The question assumed global importance because the 2007 Energy Independence and Security Act mandates a steep increase in US production of biofuels over the next dozen years, and certifications about life-cycle greenhouse gas emissions are needed for some of this increase. In addition, the California Air Resources Board’s Low Carbon Fuel Standard requires including estimates of the effects of indirect land-use change on greenhouse gas emissions. The board’s approach is based on the work reported in BioScience.

Hertel and colleagues’ analysis incorporates some effects that could lessen the impact of land-use conversion, but their bottom line, though only one-quarter as large as the earlier estimate of Searchinger and his coauthors, still indicates that the maize ethanol now being produced in the United States will not significantly reduce total greenhouse gas emissions, compared with burning gasoline. The authors acknowledge that some game-changing technical or economic development could render their estimates moot, but sensitivity analyses undertaken in their study suggest that the findings are quite robust.

Promotion of technologies based on theory rather than practice has been a hallmark of the green movement. Every indication seems to be that their foolish promotion of ethanol has been written out of their history, rather than being treated as a cautionary tale to learn from.