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Fwd: Ethanol's a Big Scam

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  • thanksfornothing@planet-save.com
    Ethanol s a Big Scam, and Bush Has Fallen for It By Kevin A. Hassett In his State of the Union address, George W. Bush called for an intense effort to develop
    Message 1 of 1 , Jun 29, 2006
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      Ethanol's a Big Scam, and Bush Has Fallen for It

      By Kevin A. Hassett



      In his State of the Union address, George W. Bush called for an
      intense effort to develop more efficient alternative fuel
      sources. "We will also fund additional research in cutting-edge
      methods of producing ethanol, not just from corn but from wood chips
      and stalks or switch grass," the president said. "Our goal is to make
      this new kind of ethanol practical and competitive within six years."

      Bush should have known better. In a capital city that is full of
      shameless political scams, ethanol is perhaps the most egregious.
      There has probably never been a specific topic around which so much
      disinformation is spread. Ethanol lowers our reliance on fossil
      fuels! Ethanol helps clean the environment! Ethanol will save the
      family farm!

      Such sound bites work wonders when it comes to raising money. And the
      amount involved is mind-boggling. The federal government subsidizes
      ethanol producers with a tax credit of 51 cents per gallon of fuel
      ethanol; those subsidies will total about $1.4 billion this year.

      Corn Money

      The Energy Department and the Agriculture Department spend tens of
      millions of dollars every year on biomass-based energy research and
      development. This is in addition to the billions of dollars--more
      than $4 billion in 2004--the U.S. provides in subsidies for the
      production of corn, from which most domestically produced ethanol is
      derived.

      If you look at the facts, the spending makes no sense whatsoever.

      Consider how ethanol is produced. Corn is grown, harvested, and
      delivered to an ethanol plant. There the corn is finely ground and
      mixed with water. After fermentation, a mixture that is about 8
      percent ethanol must be repeatedly distilled until it is 99.5 percent
      pure ethanol.

      Growing and harvesting the corn, and heating and reheating the
      fermented corn to produce ethanol of a high enough quality to replace
      some of the gasoline in your car requires an enormous amount of
      energy. How much?

      Adding It Up

      A recent careful study by Cornell University's David Pimentel and the
      University of California at Berkeley's Tad Patzek added up all the
      energy consumption that goes into ethanol production. They took
      account of the energy it takes to build and run tractors. They added
      in the energy embodied in the other inputs and irrigation. They
      parsed out how much is used at the ethanol plant.

      Putting it all together, they found that it takes 29 percent more
      energy to make ethanol from corn than is contained in the ethanol
      itself.

      It's not that corn is a bad source for ethanol. The other sources
      mentioned by the president look even worse. Wood biomass takes 57
      percent more energy to produce than it contains. Switch grass takes
      about 50 percent more.

      Ethanol is just a highly uneconomical product. Some other authors
      have disputed these findings, but they invariably come up with more
      favorable calculations by excluding some of the costs.

      Absurd Waste

      Indeed, no matter how expensive fossil fuels become, ethanol will
      never be economical because it takes so much fossil fuel to produce.
      It might be possible that someday technological processes will emerge
      that make production of ethanol less reliant on fossil fuels, but the
      billions in subsidies to this point have left us with a process that
      is still a disgrace and an absurd waste of energy and taxpayers'
      money.

      At least ethanol reduces pollution, right? Maybe the subsidies are
      worthwhile because they will buy us a cleaner environment.

      Guess again. First, corn production, according to Pimentel and
      Patzek, "uses more herbicides and insecticides than any other crop
      produced in the U.S."

      And the Environmental Protection Agency has cited ethanol plants
      themselves for air pollution. In a letter to the industry's trade
      group, the EPA noted that pollution was a problem in "most, if not
      all, ethanol facilities." These plants produce large quantities of
      waste water as well.

      Ethanol Cash

      Ethanol itself contributes to air pollution. Cars emit more air
      pollution when they run on gasoline containing ethanol than they do
      when running on gasoline alone. Our environment would be greener if
      we stopped relying on ethanol.

      The arguments against ethanol are so persuasive you have to ask
      yourself: Why does Congress keep throwing money at it?

      The answer appears to be that elected officials from corn- growing
      states such as Iowa and Illinois see it as a cash cow for their
      constituents.

      The ethanol business is a pretty good source of cash for the
      lawmakers too. The political action committee of Archer Daniels
      Midland Co., the world's largest producer of corn-based ethanol fuel,
      gave $69,000 to federal candidates for the 2004 elections, according
      to the Center for Responsive Politics.

      In 2002, before such unlimited "soft money" donations were outlawed,
      ADM gave $1.8 million to political parties. Its political action
      committee gave close to $200,000 to individual campaigns and
      committees.

      ADM spread the money around wisely that year, to beneficiaries
      ranging from Republican House Speaker Dennis Hastert of Illinois to
      Democratic Senator Tom Harkin from Iowa. Beneficiaries in 2004
      included Hastert as well as Democratic Senator Kent Conrad of North
      Dakota.

      Where's the Race?

      Let's summarize the economics this way. Exxon Mobil Corp. had $36
      billion in net income last year. If an alternative fuel source could
      be developed that would compete for that business, the potential
      rewards would be enormous. There would be a race to get there first,
      and firms would be lining up to do ethanol research. We wouldn't need
      a subsidy.

      But even with decades of federal subsidies, private companies still
      haven't developed an economical ethanol, and public sector progress
      is minimal.

      Bush's speech holds out hope that finally, after all those wasted
      billions, we are just six years away from a quality product. But it
      seems unlikely that the magic formula will soon be discovered. Folks
      have been distilling things for years. How much technical progress
      could the process possibly undergo?

      The fact is, ethanol is a scam that allows farm states to extract
      resources from everybody else and pretend to be virtuous while doing
      so. We would all be better off if Congress just wrote these states a
      check with no strings attached. At least then we wouldn't be wasting
      all that energy.

      Kevin A. Hassett is a resident scholar and the director of economic
      policy studies at American Enterprise Institute.


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