Blather about ethanol
[Comments to NewMobilityCafe@yahoogroups.com]
1) No one has a clue how the 15% lower than otherwise oil price is figured- By their own admission “savings” of oil in the US is 2/3 million barrels per day, about 1% of world oil demand. It is inconceivable that a 1% drop in demand from otherwise means a 15% lowering of the world price. The implied supply side elasticity is just beyond anyone’s belief;
2) Archer Daniels Midland in the last letter claims there are GHG benefits. From Corn Ethanol there seem to be none, i.e., from about 15% less GHG than burning the oil replaced to somewhat more than burning the oil. Two recent articles in Science magazine confirmed many of our worst fears here.
3) Economists have pleaded over and over again – don’t subsidize or earmark a particular “solution” (corn ethanol, or even biofuels), tax the bad stuff (oil and CO2) so that ALL possible solutions compete, not just earmarked ethanol.
My letter on this subject was published a few weeks ago, so I won’t resend one now, but the appearance of these letters suggests how low the discourse in the USA has become, particularly from the two authors below with enormous stakes in preserving ethanol subsidies. Hopefully writers and blogs in the times will explore these issues in greater detail.
Ethanol and the Energy Question
Editorial: Rethinking Ethanol (May 11, 2008)
Waiving the renewable fuel standard and killing ethanol tax credits would be similar to eating seed corn. With no seed, there is no crop. The renewable fuel standard and tax credits are the seed we need to stimulate the next generation of cellulosic biofuels.
It is unlikely that waiving the requirements of the renewable fuel standard would cause any reduction in corn prices, let alone food costs. Corn prices mainly affect consumer prices through livestock production, and the marginal price effects would take several months, even years, to work their way through to the consumer.
A good portion of the corn freed up by a waiver of the renewable fuel standard would very likely be snapped up by the export markets, and the price response would probably be limited to 10 to 20 cents per bushel.
The renewable fuel standard lowers our current gas prices by as much as 15 percent, saving consumers roughly 50 cents a gallon. The production of 6.5 billion gallons of ethanol in 2007 displaced the need for 228 million barrels of oil.
Experts never said ethanol would replace petroleum, but it is important. And it brings us one step closer to cellulosic biofuel, and that means greater energy independence.
American Farm Bureau Federation
Washington, May 12, 2008
To the Editor:
There is an ethanol alternative that does not use food as a feedstock. It uses a negative-cost feedstock that we have plenty of: garbage.
The municipal and industrial waste generated in the United States could provide up to 50 billion gallons per year of clean transportation fuels through the use of plasma gasification. It could also provide a substantial reduction in greenhouse gas emissions by eliminating methane gas from landfills.
Building on progress over the last two decades, waste conversion using plasma gasification has become a commercial reality as an environmentally friendly and economical way to transform waste material into clean energy.
Daniel R. Cohn
Cambridge, Mass., May 12, 2008
The writer, a senior research scientist at M.I.T., is a co-founder of a plasma gasification technology company.
To the Editor:
While you urge Congress not to “give up on biofuels” to help “reduce the country’s dependence on imported oil and reduce greenhouse gas emissions,” your policy prescriptions would undercut this vital national goal.
The current corn-based ethanol industry is not only keeping gasoline prices lower than they otherwise would be — Merrill Lynch estimates gasoline prices would be 15 percent higher without biofuels — but also only minimally contributing to higher food prices.
Curiously, The Times itself has reported that the major factors behind rising world food prices — which some self-interested parties want to blame on ethanol — are sky-high oil prices, growing demand in China and other developing nations, droughts in Australia and elsewhere, commodity speculation and the falling dollar.
Finally, there are many studies that document the global warming benefits of burning ethanol versus gasoline. How is it that you would rather support a policy that would result in more, rather than less, oil consumption?
John R. Block
Washington, May 14, 2008
The writer was secretary of agriculture, 1981-86.
To the Editor:
“Rethinking Ethanol” misses an important point about the continued importance of support for corn-based ethanol, a point that Congress understood when crafting the Energy Independence and Security Act of 2007.
Congress wisely recognized the direct relationship between advancing today’s corn-based ethanol and supporting the development of second-generation biofuels. Your editorial calls for an approach that, if followed, would undermine the very goals you support.
Ensuring demand for today’s ethanol creates the conditions necessary for the large-scale investments in infrastructure and technology required to realize the promise of tomorrow’s even better biofuels.
We understand that people are looking for solutions to today’s higher food prices. You are right to point out that spiraling energy costs and increased demand are the primary drivers of these costs and that ethanol plays only a small role.
So, retreat from current policies would not meaningfully reduce food costs; it would, however, increase gas prices, tailpipe emissions and our dependence on foreign oil.
We see a bright future where policies that advance ethanol production today also drive investments that speed our progress to the next generation of biofuels. We hope that future is not undermined by shortsighted approaches that penalize consumers and discourage investment. Patricia A. Woertz
Chairman and Chief Executive
Archer Daniels Midland Company
Decatur, Ill., May 13, 2008