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Ethanol: Such a Bargain

Been a while since we bashed ethanol.

But the Congressional Budget Office (CBO) is now doing it for us.  The Wall Street Journal explains in an unsigned editorial:

CBO also estimates that cutting carbon emissions by one metric ton via ethanol runs to $754. To put that number in perspective, the budget gnomes estimate that the price for a ton of carbon under the cap-and-tax program that the House passed last summer would be about $26 in 2019.

(Some reports say it doesn't reduce carbon emissions at all.)

Which, of course, begs the question, why do we subsidize ethanol  (and require its use) at all?

And the answer is: Powerful farm-state Senators and the EthanolIowa caucus.

Time like these I think a benevolent dictatorship would be preferable to what we have now.  Or maybe just following the Constitution.

EPA Deciding Whether to Pollute the Gulf of Mexico More

As we have established, biofuels are bad for the Gulf of Mexico.  Just to jog your memory:

Before the first gallon gushed from Deepwater Horizon, there existed an 8,500 square mile "dead zone" below the Mississippi River Delta, roughly the size of Connecticut and Delaware combined.

Hypoxia, or oxygen depletion, caused by agricultural runoff in the Mississippi River Basin varies from year to year, but it has been on an upward trend as acreage for corn destined to become ethanol increases.

As Steven Hayward reports in the Weekly Standard, a 2008 study by the National Academy of Sciences (NAS) found that "nitrogen leaching from fertilized cornfields in the Mississippi-Atchafalaya River system is a primary cause of the bottom-water hypoxia that develops on the continental shelf of the northern Gulf of Mexico each summer."

And if we increase the use of corn-based ethanol, the dead zone will only get bigger and the hypoxia more prevalent.

But the EPA, supposedly the protector of all things environmental, is thinking about increasing the amount of ethanol allowed in gasoline from 10% to 15% but has put off the decision until at least the fall.  The Wall Street Journal reports (sub required, I'm sure):

An EPA statement, provided to Dow Jones Newswires, said more testing still needs to be conducted on cars to see how they run on a 15% ethanol blend, but preliminary results "look good," and U.S. Department of Agriculture officials called that good news for the ethanol industry.

A spokesman for the Renewable Fuels Association said the EPA's delay—the second since the EPA was petitioned about a year ago to push the limit up to 15%—was "disappointing."

One problem is, can cars handle the corrosiveness of E15 (as it would be called).  Newer cars don't seem to be a problem but older cars might have difficulties.  So problems might only not be in the Gulf of Mexico, but in your driveway:

An EPA spokesman said Thursday the agency has not decided whether only newer car models or older ones as well would be approved to run on E15, but a Renewable Fuels Association spokesman said the group expects the EPA to exclude many cars from using the higher-ethanol blend.

Which means you might have trouble finding E10 for your older car if it's excluded.  As the owner of an 11-year-old muscle car, I really don't relish that possibility.

And E15 also means: more dead fish in the Gulf of Mexico.  So why are we doing this?  Because Iowa grows a lot of corn and has an early presidential caucus, is the reason as far as I can tell.  It won't help anyone to go to E15 except ADM and other large agribusinesses, who spend millions lobbying.

But what can you expect: the more power government has, the more people will try to influence that government.

Biofuels Worse Than BP

President Barack Obama is hoping to leverage the disaster in the Gulf of Mexico to push his energy policies down the throat of the American people.  But as Investors' Business Daily points out, those policies are more of an environmental disaster than the oil spill:

Before the first gallon gushed from Deepwater Horizon, there existed an 8,500 square mile "dead zone" below the Mississippi River Delta, roughly the size of Connecticut and Delaware combined.

Hypoxia, or oxygen depletion, caused by agricultural runoff in the Mississippi River Basin varies from year to year, but it has been on an upward trend as acreage for corn destined to become ethanol increases.

As Steven Hayward reports in the Weekly Standard, a 2008 study by the National Academy of Sciences (NAS) found that "nitrogen leaching from fertilized cornfields in the Mississippi-Atchafalaya River system is a primary cause of the bottom-water hypoxia that develops on the continental shelf of the northern Gulf of Mexico each summer."

(Atchafalaya?)

So moving more toward biofuels to replace oil will cause more environmental damage in the Gulf.  And with more ethanol, it'll get worse:

It takes 4,000 gallons of fresh water per acre per day to replace evaporation in a cornfield. Each acre requires about 130 pounds of nitrogen and 55 pounds of phosphorous. That produces a lot of runoff. The NAS study concludes that current ethanol production goals will increase dissolved inorganic nitrogen flowing into the Gulf by as much as 34%.

Add to that the devastation of tropical forests to make palm oil for biodiesel and the CO₂ released by converting forest and grassland to farms and you're not even helping stop global warming climate change.

Drilling oil is by far the best, safest, cheapest, and most environmentally friendly way to power our economy.

Ethanol Poses Economic and Environmental Risks

Been a while since this blog has bashed ethanol.

Time to correct that.

A new study out today indicates that ethanol, at least the way the U.S. is doing it, poses economic and environmental risks.  The DowJones Newswire reports (sub required):

The report by the Rice University's Baker Institute for Public Policy notes that in 2008 the U.S. government spent $4 billion in biofuel subsidies to replace 2% of the U.S. gasoline supply. The average cost to the taxpayer of those substituted barrels of gasoline was roughly $82 a barrel, or $1.95 per gallon on top of the retail gasoline price, according to the study.

That's $82 a barrel (or $1.95 a gallon) in subsidies on top of the cost of the ethanol.  Doesn't sound too efficient to me.

But in addition to eating up taxpayer dollars, ethanol is damaging to the environment:

Increases in corn-based ethanol production in the Midwest could increase environmental problems, such as damaging ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico, according to the report. The report also challenges the idea that ethanol use lowers greenhouse-gas emissions and said that there is "no scientific consensus on the climate-friendly nature of U.S.-produced corn-based ethanol, and it should not be credited with reducing [greenhouse gases] when compared to the burning of traditional gasoline," according to the report.

So it's a great deal all around: increases taxes and is bad for the environment.  Sounds like the optimum government program.

The ethanol subsidy needs to be killed.  Let ethanol compete in the marketplace.  It may be able to someday with algae or cellulosic ethanol.  But the current program is ridiculous.

Ethanol Increases Grocery Bills While Doing Nothing for Carbon Emissions

One of the first posts on this blog was about how stupid burning ethanol in cars is (ethanol in a martini, that's another matter).  And so it continues . . .

Today in the Wall Street Journal in an unsigned editorial, the folly of ethanol is brought up once again.  It seems the Congressional Budget Office (CBO and run by Democrats these days) says that growing food to burn in your car increases the cost of food to eat:

Ethanol raises food prices because millions of acres of farmland and three billion bushels of corn were diverted to ethanol from food production. Americans spend about $1.1 trillion a year on food, so in 2007 the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery bills.

And keep in mind, the Obama Administration want to increase the amount of ethanol produced so expect those grocery bills to get even higher.

And while making food more expensive, ethanol is doing nothing or even hurting carbon emissions:

 A second study -- by the Environmental Protection Agency's Office of Transportation and Air Quality -- explains that the reduction in CO2 [sic] emissions from burning ethanol are minimal and maybe negative.

All this while raking in billions of dollars in subsidies and protectism:

The biofuels industry already receives a 45 cent tax credit for every gallon of ethanol produced, or about $3 billion a year. Meanwhile, import tariffs of 54 cents a gallon and an ad valorem tariff of four to seven cents a gallon keep out sugar-based ethanol from Brazil and the Caribbean.

Which helps keep your taxes high.

I said it in October 2006 and I'm saying it now:  Morally and ethically, it's a legal mugging . . . and for no gain environmentally. 

Better to Burn Crops than Make Biofuels From Them?

Growing plants to make ethanol is not the most efficient way to get energy from them.  Burning them is.  That according to a study published in Science.  The Scientific American website reports:

[F]ermenting corn into ethanol delivers less liquid fuel energy for internal combustion engines than does burning the kernels to generate power for electric motors.

Then that energy could be used to power electric vehicles, according to the article (electric vehicles that have their own problems).  But according to the study, that is more energy efficient than making biofuels, even out of cellulosic plants (links original):

The new study shows that burning biomass to produce electricity rather than converting it to ethanol (made from corn kernels or the other parts of the plant, so-called cellulosic ethanol) delivers 81 percent more miles per acre of transportation in electric vehicles than ethanol burned in internal combustion, even taking into account the lifetime costs of the expensive batteries available today.

Of course, the U.S. is going full bore with ethanol and very very expensive subsidies for it.  This study won't change that.  But you'd think even farm-state senators wouldn't mind burning corn, as long as their farmer constituents got to grow lots and lots of it.  And burning the crops is "carbon neutral" because the CO₂ released originally came from the environment.

Biofuels: Burning Precious Water

We've discussed the problems with ethanol before (see here and here for example).  Now there's another problem with ethanol.  It consumes lots of water.  And some are calling water "the new oil."

There is no more fresh water on Earth today than there was a million years ago. Yet today, 6 billion people share it. Since 1950, the world population has doubled, but water use has tripled.

According to Reuters first of all, it takes 20 inches of water per acre to grow a crop of corn:

"Biofuels are off the charts in water consumption. We're definitely looking at something where the cure may be worse than the disease," said Brooke Barton, a manager of corporate accountability for Ceres, a group backed by institutional investors focused on the financial risks of climate change.

Corn is a particularly thirsty plant, requiring about 20 inches of soil moisture per acre to grow a decent crop, but most corn is grown with rain, not irrigation. Manufacturing plants that convert corn's starch into fuel are a far bigger draw on water sources.

Twenty inches per acre is (according to my calculations) 543,085 gallons of water.  And that's just for starters.  The real water usage comes when the corn is converted to ethanol:

Water consumption by ethanol plants largely comes from evaporation during cooling and wastewater discharge. A typical plant uses about 4.2 gallons of water to make one gallon of ethanol, according to the Institute for Agriculture and Trade Policy.

So for the 7.5 billion gallon ethanol mandate for 2012, that's 31,500,000,000 gallons of water (31.5 billion).

So when you burn ethanol in your vehicle, you're really burning water that we can ill-afford to waste.

More Biofuel: More Dead Fish or Less Meat

A study has shown that meeting the 2015 Federal government mandate for biofuel production will mean a bigger dead zone in the Gulf of Mexico . . . unless you eat less meat.

The Wall Street Journal Environmental Capitol blog reports (links original):

To hit the 2015 ethanol mandate, a lot of land currently set aside in conservation programs and other land used for soybean cultivation would need to be converted to corn. Growing all that corn means more fertilizer, which will feed into the Mississippi River and end up in the Gulf of Mexico.

The increased use of nutrient-enriched crop production is a key cause of “harmful algal blooms … oxygen depletion … and overall fisheries habitat decline,” the authors point out. In other words, to grow enough corn to meet renewable fuel standards will mean increasing the “dead zone” in the Gulf of Mexico.

But there is a way to offset this increased dead zone.  According to another scientific paper, if Americans cut their red meat consumption in half, then land used to grow grains for cattle can be turned over to growing crops for biofuels and the dead zone won't increase.

Of course, how do you get Americans to eat less red meat?  Mandatory meatless Mondays (and Tuesdays and Wednesdays . . .)?

Or we could drill dead dinosaurs out of the ground and save the fish in the Gulf of Mexico without forcing changes to our lifestyle.  Just a thought.

Ethanol: Everyone Hates It

In this corner: the ethanol industry, looking for more subsidies and more mandates from government.  In the other corner: everyone else.

You see, it seems Congress' ethanol mandate is in trouble.  As the Wall Street Journal explains in an unsigned editorial:

[T]he recession is hammering demand for gas. The Energy Information Administration notes that U.S. consumption fell nearly 7% in 2008 and expects another 2.2% drop this year. That comes as great news for President Obama, who is achieving his carbon-reduction goals even without a new carbon tax, but the irony is that the ethanol industry is part of the wider collateral damage.

Americans are unlikely to use enough gas next year to absorb the 13 billion gallons of ethanol that Congress mandated, because current regulations limit the ethanol content in each gallon of gas at 10%. The industry is asking that this cap be lifted to 15% or even 20%. That way, more ethanol can be mixed with less gas, and producers won't end up with a glut that the government does not require anyone to buy.

Problem is, most cars can't handle more than 10% ethanol without damage, including damage to pollution-control devices on the cars.  And then there's lawnmowers, boats, chainsaws, etc. that run on gasoline that can't take more ethanol either.  And environmentalists are finally coming to the conclusion that corn-based ethanol does little or nothing or even hurts the environment.  So the lobby against increasing the ethanol percentage is huge:

 The Alliance of Automobile Manufacturers, the Motorcycle Industry Council and the Outdoor Power Equipment Institute, among others, are opposed, since raising the blend limit will ruin their products. The left-leaning American Lung Association and the Union of Concerned Scientists are opposed too, since it will increase auto emissions. The Natural Resources Defense Council and the Sierra Club agree, on top of growing scientific evidence that corn ethanol provides little or no net reduction in CO2 [sic] over the gasoline it displaces.

But the problem is, U.S. refiners are going to face big fines for not meeting the ethanol mandate, including the up and coming cellulosic ethanol mandate.  So refiners are going to be punished for not buying a product that doesn't exist despite billions of dollars of taxpayer money thrown at it.

Which is a lot like government: pass a law, and when it doesn't work out, pass another one to try to fix it.  And when that doesn't work out, pass another law and so on and so forth.

Cellulosic Biofuels Pipe Dream

As I'm sure you remember, the Energy Independence and Security Act of 2007 requires that wholesalers use 1 billion gallons of cellulosic ethanol in gasoline by 2013.  Great.  Only problem is, no one is making cellulosic ethanol on an industrial scale, yet.  BP and Verenium Corp are doing a joint venture to build a commercial scale cellulosic ethanol plant.  But here's the bad news according to The Environmental Capitol Blog over at the Wall Street Journal (links original):

The BP-Verenium facility in Florida will likely be the first–or second–full-sized next-gen biofuels refinery built in the U.S. It will churn out 36 million gallons a year of cellulosic ethanol – and it won’t produce the first gallon until 2012. To hit the 1 billion mark would require industry to build another 28 refineries of the same size.

In four years.  And we'd have to start building them within the next year or so.  That while credit has dried up and the government is hemorrhaging debt.  Oh, and the technology is untested and corn ethanol producers are going broke.

And, as I'm sure you remember, that same said 2007 law requires 16 billion gallons of cellulosic ethanol in the U.S. transportation fuel mix by 2022.  Good luck with that:

To get there, the industry would need to build 444 refineries the size of the BP-Verenium collaboration. These biofuels refineries can’t get too big because then they would outgrow their feedstock supply.

Or about nine per state.  So where will they build them?  You can bet NYMBYism will keep them tied up in the permitting process for month.

Wait, there's more:

What about the economics? The BP-Verenium facility will cost between $250 million and $300 million to build and create 140 fulltime jobs in the refinery and farm. That’s pretty pricey – about $7 to $8 to build each gallon of capacity, more than three times the cost of ethanol refineries.It will also take 20,000 acres to grow enough plants to turn out 36 million gallons of ethanol.

If the BP-Verednium refinery serves as a template—and it’s likely costs will fall and yields will rise over time—the industry would create 50,000 jobs and sprawl across 13,600 square miles. That’s not far shy of two New Jerseys covered in grass. Oh yeah, and it’ll cost somewhere around $100 billion to build it all.

So where you going to get all that land?

Yet another example of politicians pulling a number out of their . . . ear, and the unintended consequences thereof.