January 06, 2010
Study Questions Ethanol Subsidies

It has been quite a long time since I last bashed corn ethanol. I tired of this sport years ago. But a report from the Baker Institute gives academic credence to the obvious: Corn ethanol subsidies for energy security amount to bad policy.

The United States needs to fundamentally rethink its policy of promoting ethanol to diversify its energy sources and increase energy security, according to a new policy paper by Rice University’s Baker Institute for Public Policy.

The paper, "Fundamentals of a Sustainable U.S. Biofuels Policy," questions the economic, environmental and logistical basis for the billions of dollars in federal subsidies and protectionist tariffs that go to domestic ethanol producers every year. "We need to set realistic targets for ethanol in the United States instead of just throwing taxpayer money out the window," said Amy Myers Jaffe, one of the report's authors.

Jaffe is a fellow in energy studies at the Baker Institute and associate director of the Rice Energy Program.

Corn ethanol costs a lot. It can't scale.

As an example of the unintended economic consequences of U.S. biofuels policy, the report notes that in 2008 "the U.S. government spent $4 billion in biofuels subsidies to replace roughly 2 percent 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 (i.e., what consumers pay at the pump)." The report questions whether mandated volumes for biofuels can be met and whether biofuels are improving the environment or energy security.

We do not have enough land for corn ethanol to make a big dent in our dependence on oil. Farming takes energy for tractors, fertilizer, and other purposes. Harvesting and transporting the corn to ethanol production facilities takes energy and the conversion process takes energy. According to some analysts one has to use energy equaled to 1 barrel of oil to get ethanol energy equivalent of 1.3 barrels of oil.

Agriculture creates damaging run-off that creates a big dead zone at the mouth of the Mississippi River. The idea that corn ethanol reduces CO2 emissions is in doubt.

The report, which includes analysis by environmental scientists, highlights the environmental threats posed by current biofuels policy. "Increases in corn-based ethanol production in the Midwest could cause an increase in detrimental regional environmental impacts," the study states, "including exacerbating damage to ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico and creating water shortages in some areas experiencing significant increases in fuel crop irrigation." Moreover, the report challenges claims that ethanol use lowers greenhouse gas (GHG) emissions and argues, "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 GHGs when compared to the burning of traditional gasoline."

For a small fraction of the money we spend to subsidize corn ethanol we could fund more researchers to work on genetically engineering algae to excrete oil for diesel fuel. Algae probably have the best prospects for workable biomass energy.

The Baker Institute report on ethanol reminds of another recent report from Stanford researchers critical of ethanol's environmental effect on air quality. Ethanol increases ozone levels, especially in winter.

"What we found is that at the warmer temperatures, with E85, there is a slight increase in ozone compared to what gasoline would produce," said Diana Ginnebaugh, a doctoral candidate in civil and environmental engineering, who worked on the study. She will present the results of the study on Tuesday, Dec. 15, at the American Geophysical Union meeting in San Francisco. "But even a slight increase is a concern, especially in a place like Los Angeles, because you already have episodes of high ozone that you have to be concerned about, so you don't want any increase."

But it was at colder temperatures, below freezing, that it appeared the health impacts of E85 would be felt most strongly.

"We found a pretty substantial increase in ozone production from E85 at cold temperatures, relative to gasoline when emissions and atmospheric chemistry alone were considered," Ginnebaugh said. Although ozone is generally lower under cold-temperature winter conditions, "If you switched to E85, suddenly you could have a place like Denver exceeding ozone health-effects limits and then they would have a health concern that they don't have now."

The problem with cold weather emissions arises because the catalytic converters used on vehicles have to warm up before they reach full efficiency. So until they get warm, a larger proportion of pollutants escapes from the tailpipe into the air.

We subsidize corn ethanol because of the power of the farm lobby and also due to naivete of a portion of the public that thinks anything involving more green plants must be a good idea.

Share |      Randall Parker, 2010 January 06 11:51 PM  Energy Biomass

DC said at January 7, 2010 6:16 AM:

1- Apply same research to cost and enviromental aspects of Gasoline Production- Gasoline procuction costs are FAR Higher than ethanol- offset by other products that come from oil. A true cost analysis needs to take this into consideration.
2- Study Funded by Chevron- look into the 100's of Billions of Energy Subsidies to the Oil companies and the REAL cost of protecting oil supplies (WARS).
3- The science and efficiency of ethanol production is getting better every day as the industry matures- Big oil sees a threat.

random said at January 7, 2010 9:55 AM:

Are there viable sources of ethanol out there? Switch-grass has been proposed, and I know Brazil uses sugar cane.

Hong said at January 7, 2010 12:54 PM:

Sinces it's obvious that ethanol subsidies are a bad thing. Can we all agree now that subsidizing most greenie energy tech is equally bad and wasteful?

BTW Randall, I'd appreciate it if you didn't give out my email to the local internet trolls. It's not nice. Heh

gregharman said at January 7, 2010 1:42 PM:

Ethanol is too tied to Iowa to go away. This last presidential cycle we had about 9 Senators hanging out in Iowa for a year and all of them had to tout the wonders and the need for increased subsidizied production of corn based ethanol. Anyone who didn't could kiss winning that state's primary away.
If the first primary was in Wisconsin, we'd all be bitching about what a boondoggle cheese based ethanol is.

LL said at January 8, 2010 7:11 AM:

You want to increase the use of Ethanol? Then we need to get rid of the tariff on Ethanol imports. All this is doing is artificially increasing the price of Gasoline. We are putting the more expensive enthanol produced at home into our gasoline. In NY it is mandated at 10% and this is higher than the national average which i think is 8 or 9%.

Ethanol of course is not a very good solution....with its lower energy content and the displacement of food production to produce it.

It seems that the best solution may be Butanol (or biobutanol which is the same thing) It has a higher energy content and will support direct addition to gasoline without much or any changes to existing cars.

What we need to do is put together a real fuel stimulus project that works on the following:
-Cellulosic Ethanol
-Algae Biodiesel
-Coal to Liquid Technologies (CTL).
-Improved grid technologies
-Improved battery technologies

A large government program that tries to build out our capabilities in each of the areas above would go a long way to stop the import of foreign oil and have a greener footprint overall.

We can put a lot of these projects in the midwest, specifically Iowa and Illinois(since Chicago is a major consumer).
In a few short years I can see the midwest states completely off foreign oil:
Say in the midwest fuel can be a mix of the following:
Gasoline can be : 50% CTL, 40%BioButanol, 10% Ethanol
E85 : 15% CTL, 85% Ethanol
Diesel : 70% CTL 30% BioDiesel

The above ratios can obviously be changed according to real world conditions, but you can see my point. With realtive ease the Midwest can be Middle East free in terms of oil consumption.

I know the Military is already interested in CTL to keep them protected from Oil volatility.

This would serve a good proving ground to get the entire country off foreign oil.
Remember it doesnt have to be cold turkey since we still produce oil domestically and we have some trade partners we are happy to buy oil from, like Canada and Mexico.

Transportation fuel independence will be aided greatly with other initiatives such as electric cars and plug in hybrids.

This would be a stimulus that would create jobs, make us less dependent on the Middle East AND reduce the Trade deficit. A win win win senario.

Remember the trasition to all renewable is a long term goal, but this can get energy independent along the way.

I'll stop here since I'm obviously rambling on...

Bruce said at January 8, 2010 11:10 AM:

Ethanol can be quite dangerous to some engines too.

It attracts water. It can dissolve plastic components and rust. It gets crappy mileage.

"To see how E85 ethanol stacks up against gasoline, Consumer Reports put one of its test vehicles, a 2007 Chevrolet Tahoe Flexible-Fuel Vehicle, through an array of fuel economy, acceleration, and emissions tests," said a Consumer Reports article. "Overall fuel economy on the Tahoe dropped from an already low 14 mpg overall to 10. In highway driving, gas mileage decreased from 21 to 15 mpg; in city driving, it dropped from 9 mpg to 7."


Bruce said at January 8, 2010 11:16 AM:

Wow. Imagine!!!

It takes an average Tahoe 7 gallons of gas to go 100 miles.
It takes the E85 Tahoe 10 gallons of E85 to go 100 miles.

40% MORE E85!!!!

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