Ethanol Under Pressure

by Richard T. Stuebi

A good friend of mine sent me a provocative email the other day:

“Last year, your government spent more than $8 billion of your tax dollars to achieve the following results:

  • Dramatically increase the emissions of carbon dioxide and other greenhouse gases into the atmosphere
  • Accelerate the destruction of the Amazon rainforest
  • Raise the price of milk, bread, beef and other grain-dependent products by more than 20%
  • Increase world hunger

How did they do this? Two words: ethanol subsidies. Did I mention that the amount of corn it takes to produce enough ethanol to fill the tank of your typical SUV one time could feed the average person for one year (350 days)?”

This is one person’s “grabber” for an April 7 article by Michael Grunwald in Time magazine entitled “The Clean Energy Scam”. It presents yet another negative portrait of corn-based ethanol as a flawed technology — and flawed policies to support it.

However, to avoid throwing the baby out with the bathwater, it’s important to emphasize to the phrase “corn-based”. While it’s increasingly clear that corn-based ethanol is of dubious merit except to the major agri-businesses like ADM (NYSE: ADM) and Cargill that benefit from the government’s largesse, that’s not to say that the potential future emergence of cellulosic ethanol wouldn’t be a good thing all-around.

The only debate is whether the current push for corn-based ethanol is really a useful bridge to — or even a propelling force for — the advancement of cellulosic ethanol. Certainly, ethanol proponents like uber-VC Vinod Khosla (see some of his papers and presentations) think that corn-based ethanol is helping pave the way to a cellulosic future, by helping change the fueling infrastructure from gasoline to ethanol. Meanwhile, a growing chorus of contrary voices doesn’t see the cellulosic promise at all, and focus their angst on the real and present problems generated by corn-based ethanol.

If cellulosic ethanol never makes it out of the lab and into the market, then the rush for corn-based ethanol will indeed have been an expensive dead-end — and will provide more food for the fodder of those who claim that government policy involving preferential subsidies should not pick technology winners.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

3 replies
  1. GMBiofuelsGuy
    GMBiofuelsGuy says:

    I work in Biofuels Communications at General Motors where we have 3 million E85 ethanol-capable vehicles on the road. On subsidies, the $8 billion sounds like a lot until you consider that the oil and gas industry hauled in more than $52 billion in the same period. Context always matters, but especially when it comes to the sport of ethanol bashing.

  2. pwikoff
    pwikoff says:

    Please check your facts. Ethanol production causes a 3% increase in food prices, while the rest is due to marketing and transportation costs. The value of the corn in a box of corn flakes is less than a dime. Egg producers are now forced by animal activist groups to produce their eggs much more expensively, and pass that price on to consumers. The world is demanding more food and more energy-intensive foods, and that is driving the price up far more than ethanol. Shut down ethanol production, and you will end up with higher gasoline prices, along with similarly high food prices. Plus you're more dependent on imported oil. Pretty easy to see these facts!

  3. MattKelly
    MattKelly says:

    Lifeline Foods in Missouri has a method of separating the ethanol from the meal in every kernel of corn, proving thee is in fact enough corn for food and fuel. Also, don’t forget the role bio-organisms will play in the development of ethanol. Coskata in Warrenville, IL has patented an organism that eats any carbon based product including tires, diapers and even plastics, and exhales ethanol. The company is building their first production facility and in my mind, once online, will be a game changer as it will fundamentally change the way we recycle and produce fuel.

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