Posts Tagged ‘ethanol’

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Ethanol comments supply evidence that Al Gore will never again run for office

November 23, 2010

Michael Giberson

I suppose Al Gore is enjoying life and never expects to run for public office.  Clear evidence of this fact? His recent comments on ethanol:

“It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol,” said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.

“First generation ethanol I think was a mistake. The energy conversion ratios are at best very small.

“It’s hard once such a programme is put in place to deal with the lobbies that keep it going.”

He was candid about his reasons for supporting ethanol from Corn:

“One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

But Gore is not willing to throw out the biofuel baby with the corn-sweetened bathwater:

Gore supported so-called second generation technologies which do not compete with food, for example cellulosic technologies which use chemicals or enzymes to extract sugar from fibre for example in wood, waste or grass.

“I do think second and third generation that don’t compete with food prices will play an increasing role, certainly with aviation fuels.”

I’m a less able than Mr. Gore to believe that high-value fuel crops will be grown in a way that doesn’t compete with food production, but if private-citizen Gore wants to invest his own money in technology investment I wish him all the luck.

(HT to Environmental Economics.)

 

Posted in Energy markets, Environmental policy, Politics | Tagged , | Comments Off

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The ethanol industry rises to defend itself

April 15, 2010

Lynne Kiesling

We were in Columbus, Ohio over the weekend and early this week and, not surprisingly, the airwaves were full of news of a new ad campaign to rehabilitate ethanol and, in the words of one of the news stories we heard, “correct myths about ethanol”. So are they saying that it’s a myth that the ethanol production that receives generous federal taxpayer subsidies raises the prices of corn and other grains while not reducing greenhouse gases? No, that’s true, so Growth Energy is having to deflect these criticisms by steering inside-the-Beltway attention to other effects of ethanol that in truth are economically specious but potentially politically potent, such as “Ethanol has not shipped a single job overseas. America’s economic fuel.”

This one really made me laugh: “No beaches have been closed due to ethanol spills. America’s clean fuel.” Why? Because ethanol is incredibly hydrophilic and corrosive, so if it spills it absorbs all water in its reach, and it can’t be shipped long distance in existing pipelines, so the federal ethanol mandates and subsidies mean that we employ trucks to transport ethanol nearer to the point of consumption to blend it with gasoline. Yeah, that’s clean! How’s that for some truthiness for you?

I prefer the list of advertising tag lines that Ron Bailey devised yesterday, although I doubt that the ethanol industry would! You should check them all out because they are funny, but my favorite is “No carbon dioxide emissions have been cut due to ethanol subsidies. America’s greenhouse fuel.” That really hits at the heart of the boondoggle that is the perverse bootleggers-and-Baptists energy-agriculture policy in the U.S.

Why all of this action right now? Congress appears to be working on a new energy bill, and some of the federal ethanol subsidies are set to expire soon. As noted in this New York Times article on Tuesday,

Domestic ethanol producers are facing the expiration at the end of this year of the Volumetric Ethanol Excise Tax Credit, also known as VEETC and the blender’s tax credit. The federal benefit that started in 2005 gives a tax credit of 51 cents for every gallon of pure ethanol blended into gasoline. Reps. Earl Pomeroy (D-N.D.) and John Shimkus (R-Ill.) have introduced legislation with a five-year extension of the benefit.

The tax credit could be worth plenty in the future. The 2007 energy bill created a requirement that the United States use 36 billion gallons a year of biofuels by 2022.

The NYT also reports a new ad campaign in support of Brazilian cane sugar ethanol imports, arguing for elimination of the 54-cent import tariff per gallon of cane sugar ethanol, which is more energy-efficient through its life cycle than corn ethanol. Clearly the elimination of the import tariff is the economically sensible policy … for everyone except the politically powerful corn and sugar industries. Sadly, as Mancur Olson pointed out in The Logic of Collective Action, those folks with their concentrated benefits will vote on the basis of this issue, but the rest of us will not, even if we see its costs and despise its cravenness.

The way to avoid this inferior outcome is to lower government spending and the size of government overall, which gives all lobbyists and special interests less of a target.

Posted in Economics, Energy markets, Environmental policy | Tagged , , | 5 Comments »

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POET, ethanol, independence and the flag

February 13, 2010

Michael Giberson

Cellulosic ethanol is purportedly the future of biofuels, at least if you listen to ethanol’s supporters.  While the topic of cellulosic ethanol is a subject of some interesting research, digging around the internet for information mostly turns up flag-waving lobbyists seeking more help from the federal government.

In a recent news release, ethanol producer POET Energy announced that the director of it’s Project LIBERTY would be giving a project status update on the planned cellulosic ethanol plant at a pair of Iowa-based events. (Project LIBERTY has its own website which talks a lot about energy dependence and independence and includes a lot of stars and stripes, red-white-and-blue imagery.)

The news release included a link to “a documentary about POET’s pilot cellulosic ethanol plant“, which I thought might be interesting.  As it turns out it was interesting, though more for what it revealed about the reliability of its content than for what it said about ethanol.

About one-third of the way through the POET video, in the context of discussing criticism of ethanol policies and specifically when discussing the effect of grain ethanol on food prices, it said, “Many claimed the diversion of corn to make fuel drove up food costs, a myth later disproved by independent economists.”

As the narrator read the bolded phrase, the video flashed an image that looked like a newspaper column.  It went by so fast the first time I couldn’t read more than the first few words of the headline: “Big Food’s Smear Campaign….”

Curious who these independent economists were, I stopped the video and scrolled back to the image (at about the 3:41 minute mark).  The full headline said, “Big Food’s Smear Campaign Exposed by New Group of Ethanol Producers.”  The subhead said, “Growth Energy formed to promote clean, green, high-tech, homegrown biofuels.”  Turns out the column was just a Growth Energy news release.

Growth Energy also has a website, which sports more flag-waving imagery, and describes the group in more detail.  Is this group the source of the purported “independent economists”?  The Washington, D.C., based group was, as advertised, formed and funded by the subsidized ethanol industry.  I don’t think “independent” means what POET thinks it means.

For a little more insight into how ethanol is grown in Washington, D.C., and perhaps insight into the current administration’s commitment to science-based public policy, read Timothy Carney’s column in the Washington Examiner: “Obama EPA’s ‘science’ pleases powerful ethanol lobby.”

Growth Energy has a video, too.  It begins with a flag, fades to a baseball stadium, and soon enough the Statue of Liberty.  If I would have stuck with it a little longer I’m sure I would have got a picture of apple pie, Mom, and probably a boy scout or ten marching in a Fourth of July parade somewhere in America’s heartland.  But I had had enough.

Flag-waving by lobbyists in pursuit of government-granted privileges always turns my stomach.

Posted in Energy markets, Environmental policy, Liberty, Politics | Tagged , | 4 Comments »

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Will ethanol become an environmentally-friendly fuel some day?

September 16, 2009

Michael Giberson

A Reuters story on an ethanol techology advancement is titled, “UK technology could turn U.S. ethanol industry green.” The essence of the process is a composting bacteria that can take distillers’ grain, a by-product of ethanol production, and extract more ethanol from it.  Because the process works while the distillers’ grain is still wet, it can reduce the drying expense needed before the remaining by-product is sold for animal feed.

Robert Rapier examines the claims, observes that it could be possible, but points out that the net result is not as clear as technology proponents suggest.  He sums up, “This new bacteria may giveth, but it also taketh away a story that the ethanol lobby has come to rely heavily upon.”

Posted in Energy markets, Environmental policy | Tagged | Comments Off

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If the E-Fuel MicroFueler sounds too good to be true…

August 24, 2009

Michael Giberson

Robert Rapier draws attention to a Los Angeles Times story on a home-based ethanol system. Here are the first two lines from the story:

It sounds too good to be true: A residential system that allows people to make fuel from old beer, leftover wine and other waste products and use it to run their vehicles.

That’s what inventors of the E-Fuel MicroFueler claim, and there’s support for the idea in government, industry and pop culture.

Then Rapier begins the smackdown: Another Journalist Fails Due Diligence 101.

Actually, the Rapier smackdown begins immediately after “It sounds too good to be true” — he is a diligent applier of the maxim, “If it sounds too good to be true, it probably is.” — but I wanted to draw attention to the three pillars of support for the home-based ethanol machine that the article relies upon: “government, industry, and pop culture” (italics added).

I guess having the support of pop culture gets you pretty far in L.A., but out here, a little further away from the sparkling lights and Malibu breezes, we typically seek out a somewhat more substantial foundation.

Rapier mentions an 18-month old story on the company in the New York Times, which while also a bit excited by the company’s project, manages to inject a moderating opinion or two.  Daniel M. Kammen, of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, is quoted as saying about the project “skepticism is a virtue.”

The LA Times notes that Shaquille O’Neal in an investor in the distribution company for the product.  Maybe that is part of the “pop culture” support.  He seems to have plenty of money to play with, so why not?  The company’s plans seem to rely heavily on the idea of a $5,000 federal tax credit for buyers.  But since the federal government doesn’t have plenty of money to play with, I’d say here is another place that skepticism would be a virtue.

What public benefit, exactly, are taxpayers paying for when one of us buys one of these systems?

Posted in Economics, Environmental policy, Politics | Tagged , | Comments Off

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Will wind energy follow ethanol’s path?

June 11, 2009

Michael Giberson

The ethanol industry is suffering and The Wichita Eagle asks, “Will wind energy follow ethanol’s path?“

The answer is: Possibly. It depends on politics, the health of the credit markets and the price of coal, oil and natural gas.

Oil prices are moving up, recently exceeding $70 bbl in NYMEX trading, but gas and coal prices haven’t followed. For ethanol, oil prices are more important; for wind, gas and coal.  Credit markets seem to be opening up a bit, but slowly.  What about politics?

“[Wind power] polls extremely well,” [AWEA policy director Rob Gramlich] said. “Both Republicans and Democrats support it.”

I guess if you can’t be good, it is good to be popular.

HT to the Caprock Plains Wind Energy Association.

Posted in Electricity, Energy markets, Politics | Tagged , | 4 Comments »

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On ethanol’s subsidy and related

June 7, 2009

Michael Giberson

Robert Rapier explains a few ins and outs of ethanol.  For example, he observes that ethanol producers like to claim that it is the oil company which blends ethanol into gasoline that is subsidized, not the ethanol producer itself (since the blender gets a credit against federal taxes — in fact, I just heard this claim at a Lubbock chamber of commerce energy program two days ago.) Not so fast, says Rapier:

The way the blender’s credit works is that gasoline blenders get a credit – recently reduced to $0.45/gal – against the federal gasoline taxes they have to pay for each gallon of ethanol blended into the gasoline pool. However, it is not true that this subsidy actually benefits the oil companies. Ethanol proponents like to make that claim, but any time there is talk of getting rid of the credit, they are the ones who scream loudly. You won’t hear oil companies lobbying to keep it. Thus, it should be clear who really benefits.

Rapier also explains one of the economic traps that bedevils corn-based ethanol – its heavy reliance on fossil fuel imputs for fertilizer and process heat. As a partial substitute for gasoline, when gasoline prices go up, ethanol prices also go up. But at gasoline prices are generally correlated with natural gas prices, ethanol producers find their costs going up at the same time, limiting the benefit they gain from higher ethanol prices.

(Natural gas supply conditions in the U.S. have pushed domestic natural gas prices to the low end of the traditional relationship between natural gas and oil prices, perhaps offering some temporary breathing space to ethanol producers.)

Also check out Rapier’s recent review of a book on the potential for algae-based biofuels.

Posted in Energy markets, Politics | Tagged , | Comments Off

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New CBO study on ethanol

April 13, 2009

Lynne Kiesling

If you are interested in the ongoing scientific, economic, and political sturm und drang around ethanol, fossil fuels, and food, this WSJ Environmental Capital post alerts us to a new study from the Congressional Budget Office claiming that ethanol production was only responsible for 10-15% of the increase in food prices in 2007-2008. Increasing energy prices are responsible for a larger share of the price increase, according to the study. Other interesting tidbits in the post.

Posted in Economics, Energy markets, Environmental policy | Tagged , , | 2 Comments »

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The ethanol drag on consumer value and government revenue

March 6, 2009

Michael Giberson

As usual, Geoff Styles is worth reading:

Since the administration has apparently ruled out an increase in the gasoline tax to cover declining Highway Trust Fund revenues, it’s surprising that it appears to be giving serious consideration to a proposal that would raise a hidden tax on gasoline. This is even more perplexing, when you realize that this increase would actually reduce the government’s net take on every gallon of gasoline sold, while simultaneously diminishing the value of the product for consumers.

That “hidden tax”? A push by the U.S. ethanol industry to increase the percentage of ethanol allowable in gasoline from 10 percent to 15.  The effect, according to Styles, will be to “effectively raise the price by 3.4 cents per gallon, while reducing federal tax revenue by 2.2 cents.”

(Via The Energy Collective.)

Posted in Economics | Tagged , , | 3 Comments »

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Current status of bio-diesel from algae: “Your fishtank is not a goldmine.”

February 5, 2009

Michael Giberson

Reporting from the National Biodiesel Conference this week in San Fransisco, Michael Kanellos writes:

You can grow algae with carbon dioxide and sunlight, but that doesn’t mean it’s free.

Although many believe that algae will become one of the chief feedstocks for diesel and even hydrocarbon-like fuels, growing large amounts of algae and then converting the single-celled creatures remains expensive, said experts at the National Biodiesel Conference taking place in San Francisco on Tuesday.

Algae biofuel startup Solix, for instance, can produce biofuel from algae right now, but it costs about $32.81 a gallon, said Bryan Wilson, a co-founder of the company and a professor at Colorado State University.

Various refinements in the production process are projected to reduce the cost to about $3.50 a gallon, but as the article observes, that is still the equivalent of $150 a barrel of oil.  Or, as the story subtitle has it, “Drying, breeding and growing algae – particularly in large quantities – isn’t there yet, which means your fishtank is not a gold mine.”

While many biodiesel analysts see algae at the ultimate base for generating large quantities of biofuel, at least until the technological wrinkles are worked out, other feedstocks are also being pursued.  From Texas Tech University (where I teach), plant science professor Dick Auld was promoting use of castor at the biodiesel conference.

Closer to home, last night at the Tech Renewable Energy Society meeting chemical engineering professor Nazmul Karim discussed his research on cellulosic ethanol, which promises ways to reduce costs and increase productivity.  (Algae biofuel researchers take note: Karim has an opening for a post doc in his research group to work on algae issues.)

Posted in Energy markets, Technology | Tagged , , | Comments Off

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