“I originally wrote this article about an year ago. I lost it during the process of moving my blog engine from DotNetNuke to wordpress. I am publishing here the original text”
While I was researching for my usual stock picks today, I ran into a great article in the Bloomberg news about Ethanol based fuels. The author of this article is Kevin Hassett who happens to be the economic adviser for the McCain campaign back in 2000. He exposes this great scam perpetrated upon the American public by the farm lobby and the congressmen who want to appease their big funding constituents. The president of the nation, knowingly or unknowingly, fell for this trap when he mentioned Ethanol fuel as a promising and viable alternate to the hydrocarbons. This is very far from reality because of the following reasons. I am excerpting a few lines directly from the article, which I might have to take out if the author orders me to.
The reason why Ethanol, which is currently extracted from soy and corn, is not an efficient fuel is because of the hidden costs that go into producing it. The alcohol( ethanol is actually nothing but ethyl alcohol) which is only about 9% after the first distillation, requires 10 such distillations before it becomes fuel grade ethanol. Anyone familiar with the process of distillation knows how much heat goes into that process. If you add all the synthetic fertilizers used to produce the corn and the associated farming process like irrigation and harvesting, it turns out that, more energy is pumped into Ethanol than extracted from it. Essentially the energy spent on producing ethanol is more than we get from burring it. This doesn’t make any economic sense. The US government is giving a subsidy of 50 cents on each gallon of ethanol fuel. This is on top of the billions of dollars of farm subsidies. So the US taxpayer is paying for something which is neither solving the energy crisis nor the pollution problem( ethanol also happens to be a bigger pollutant than gasoline). The highly influential farm lobbies are making sure they are the ones who are profiting from this new fad. The sad part is the that the ill informed American public is supporting this. I was a big proponent of ethanol before I read this. Now I changed my mind.
The full article can be found on Bloomberg’s website at the following URL.
{ 4 comments… read them below or add one }
Biofulesimon:
http://www.icis.com/blogs/biofuels/archives/2007/09/the-energy-needed-to-produce-e.html
I didn’t quite get the gist of what you meant by “displacing gasoline instead of replacing it”. Would you care to explain?
Hi
there is very little spoken about fuel efficiency, and it is ironic that many of the first autos in the US which have been sold as being capable of running on biofuels are MPVs, which typically have very low fuel efficiency. We need to get away from a situation where ethanol production is effectively keeping expensive oil in the ground by displacing gasoline instead of replacing it.
Mr Steenblik:
Let me first thank you for taking the time to read my blog and leaving comments here. It feels good to know that someone is taking an interest in what I have to say.
I am a tree hugger, but not a democrat. I believe that energy consumption is getting out of control not only in this country but also in the emerging markets. This is going to exert an enormous amount of pressure on the oil supplies and would lead to increasing global conflicts. I know that all sorts of alternatives should be explored carefully.
Unfortunately, corn based ethanol is exacerbating the very problem it is supposed to solve. And it pains me to see well meaning people jump on this bandwagon and become innocent enablers of the farm lobby and other crafty businessmen. The money we are spending on this, compounded with the import tariffs imposed on imported cane-based ethanol is effectively killing the truly useful alternative. The recent fall in sugar prices means that countries like India and Brazil, the biggest producers of sugar in the world would love to produce Ethanol instead and temper the energy problem. But, they are being discouraged because of the import restrictions on the cane-based ethanol.
It is good to see organizations such as your’s are trying to educate the people of facts and initiate the dialogs. Please keep up the good work.
Dear Mr. Valluri,
Government experts continue to maintain that there is a net positive energy balance from corn ethanol. To arrive at that conclusion, they must apportion some of the input energy to co-products, chiefly distillers’ grain. What that means, however, is that the energy value of corn is not counted on the input side, but the energy value of the outputs is. To put it simplistically: by that logic, if one starts with 1 GJ worth of corn, spends another 1 GJ of fossil energy transforming it into a different product that (like the corn one started with) still contains only 1 GJ, the process is said to have a net energy balance of zero.
By the way, the volumetric ethanol excise tax credit is 51 cents per gallon, not 50 cents per gallon. And there are many more subsidies provided to the industry than just that, in particular by state governments. Last year we published a major study on government support to ethanol and biodiesel in the United States. We estimated that total government support for ethanol in 2006 was at least $5 billion — i.e., at least $1.00 per gallon. A copy of the report can be downloaded for free from our web site:
http://www.globalsubsidies.org/article.php3?id_article=6