Monday, April 7, 2008

Time for a Reality Check on Ethanol

From The Times &
A kernel of truth
Saturday, April 05, 2008

The recent opinion article by Calvin Hoy, "No Subsidies" (March 24), regarding ethanol cries out not for a response, but for a simple statement of the facts.

The sky is not falling because of ethanol. It is time for a reality check.
Although the ethanol industry has only recently attracted significant media attention, the fuel has been part of the American landscape for more than a century. Henry Ford's first automobile in the late 1880s was manufactured to run on either pure ethanol or gasoline. His vision was "to build a vehicle affordable to the working family and powered by a fuel (ethanol) that would boost the rural economy." But the ethanol industry did not begin its rapid expansion until ethanol began to be used as an oxygenate in gasoline in the late 1980s.

From a performance standpoint, ethanol is an unqualified success. Every car sold in the U.S. for the last 20-plus years has performed exceptionally on 10 percent ethanol/90 percent gasoline. We are now producing hundreds of thousands of "flex-fuel" vehicles per year that can use either gasoline or mixtures of ethanol and gasoline up to 85 percent ethanol.

Regarding subsidies, the ethanol blenders credit of 51 cents per gallon cost taxpayers about $3 billion last year, but it reduced crop price supports by about $6 billion and our oil import bill by another $15 billion. Some of that $15 billion for oil would surely end up in the bank accounts of America's enemies.

There has been significant media attention in the last year given to the food-versus-fuel debate. Ethanol production has been linked to a rise in the price of everything from tortillas to gummy bears. Unfortunately, this argument is very nearly ridiculous. The fact is that very little U.S. corn (about 10 percent) is fed directly to people; most of it is fed to animals. About one-third of the corn converted to ethanol remains behind as a high-protein animal feed called distillers grains.

Many factors contribute to rising grain prices: rising wealth and grain demand in China and India, drought in Australia, increased ethanol demand and especially rising energy prices all play a role. But that $3 box of corn flakes on your shelf contains about 10 cents' worth of corn. Even if corn prices double, the price of grain has a small impact on food prices. Rising energy prices have a much greater impact on food prices. Oil prices have nearly tripled in the last five years and are a key part of the increased cost of many goods and services. If there is a single reason for the rapidly rising price of nearly everything, look to the cost of energy, not corn, as the major culprit.

Over time, we will be producing more and more ethanol from cellulosic materials (grasses, straws, wood chips and wood wastes, etc.). "Cellulosic ethanol" does not participate in the food chain at all, and will be produced in sufficient volume and at low enough costs to really compete with gasoline.

There seems to be a collective rush to judgment over two recent reports on the projected carbon emissions of biofuels production. A careful analysis of the facts would have ensured a far more balanced and measured response.

One of the many flaws in those reports is that biofuels are not compared to any appropriate alternatives. We do not have a choice between biofuels and a perfect, imaginary fuel, as the papers seem to believe. In the 2007 Energy Independence and Security Act (EISA), Congress established an annual corn ethanol production cap of 15 billion gallons by 2015. Congress established this cap to help guard against dramatic land- use changes. But the authors of one of these reports based their projections on a model in which U.S. corn ethanol production increased from about 7 billion gallons a year now to 30 billion gallons a year by 2015. Thus, the findings are irrelevant to current and future renewable energy policy.

The facts are clear. Ethanol is a renewable fuel produced from abundant American lands, it generates American jobs, and it is far better for the environment and national security than gasoline. Ethanol is just one element, but a very important one, in our drive to reduce our dependence on ever more expensive imported oil. The ethanol industry, as with many businesses, is evolving and the focus is more and more on efficiency and environmental improvements. New technology allows plants to operate cleaner, and design improvements make them easier to maintain. Ethanol from corn and later the cellulosic ethanol that will come in much larger volumes will help end our oil addiction, give us cheaper and cleaner fuels and provide freer and more stable energy markets.

Bruce E. Dale, Ph.D., is a Distinguished University Professor in the department of chemical engineering and materials science at Michigan State University.

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