Al Gore Turns His Back on Ethanol

By Justin Rohrlich  NOV 23, 2010 2:00 PM

Is his startling admission all that startling? Or it is just confirmation that politicians are politicians are politicians?


Al Gore made headlines when, at a green energy conference in Athens yesterday, he called his support for corn-based ethanol a mistake.

“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,” Gore said.

What may be the most newsworthy aspect of this statement is that it marks one of the few times a politician, US or otherwise, has told the un-spun truth.

According to Reuters, the International Energy Industry pegged total 2009 US ethanol subsidies at $7.7 billion.

“It is not a good policy to have these massive subsidies for first-generation (read: corn) ethanol,” Gore continued.

But those subsidies happened to be roundly supported by Gore.

In 1994, as vice-president, Gore cast the deciding vote to continue ethanol tax incentives and later said, “I have not ducked when votes for ... agricultural interests were on the floor.”

In 1998, at the Third Annual Farm Journal Conference, Gore announced, “I was … proud to stand up for the ethanol tax exemption when it was under attack in the Congress -- at one point, supplying a tie-breaking vote in the Senate to save it. The more we can make this home-grown fuel a successful, widely-used product, the better-off our farmers and our environment will be.”{FLIKE}So, what to make of Gore’s comment in Athens stating that “First-generation ethanol I think was a mistake” because “the energy conversion ratios are at best very small” after making corn ethanol a centerpiece of his environmental policy?

As he explained, “It's hard once such a program is put in place to deal with the lobbies that keep it going.”

It is hard to “deal with the lobbies” that can make or break a political candidate.

Craig Holman, a lobbying expert with the Washington, DC consumer advocacy group Public Citizen, tells Minyanville, “I’m from Minnesota, and no one could run for statewide office in Minnesota without supporting the ethanol subsidies. Everyone’s always done that even though it’s inefficient and expensive.”

And, as Bill Maher explained, “No one asked for corn in their gas tank… But I suppose if the first presidential primary was in Vermont, we would all be pouring maple syrup into our gas tanks.”

Goldman Sachs (GS) estimates the US ethanol industry will divert 41% of the American corn crop this year, which, as Al Gore himself says, will further raise food prices at a time that can be called, at best, inopportune.

“It takes around 400 pounds of corn to make 25 gallons of ethanol,” Benjamin Senauer, an applied economics professor at the University of Minnesota, said. “It's not going to be a very good diet but that's roughly enough to keep an adult person alive for a year.”

However, the lobbies whose grip even the second-highest elected official in the country could not escape have put the framework in place that ensures corn ethanol isn’t going anywhere anytime soon.

Here is a projection by the EPA [pdf], detailing the expected breakdown, in billions of gallons, of ethanol sources by 2022:

Switchgrass (perennial grass): 7.9
Soy biodiesel and corn oil: 1.34
Crop residues (corn stover, includes bagasse): 5.5
Woody biomass (forestry residue): 0.1
Corn ethanol: 15.0
Other (municipal solid waste (MSW)): 2.6
Animal fats and yellow grease: 0.38
Algae: 0.1
Imports: 2.2

About twice as much corn will be used for fuel than the runner-up, switchgrass, which, as far as anyone knows, people don’t also eat. However, with the almost-obscene number of federal dollars involved, why wouldn’t the corn lobby fight tooth-and-nail to mandate production of 15 billion gallons of corn ethanol annually? Between 1995 and 2009, the corn subsidy program provided payments of $73,775,277,671 to 1,639,547 recipients, including small, struggling family farms like Archer Daniels Midland (ADM).

Wheat subsidies, the second-largest government agricultural handout, totaled $30,726,213,559 over the same time period -- less than half that of corn.

Some will surely say that any type of alternative fuel is better than continuing our dependence on foreign oil. Unfortunately, it doesn’t work that way, as blender credits have already been built in to US energy policy.

Tim Carney of the Washington Examiner explains:

“Start with this statement by the Congressional Budget Office: ‘In the future, the scheduled rise in mandated volumes would require the production of biofuels in amounts that are probably beyond what the market would produce even if the effects of the tax credits were included.’

“In other words, the ethanol tax credit won't boost ethanol consumption at all in the future, because the mandate will set demand. So the tax credit will simply subsidize the ethanol that blenders -- that is, oil companies -- would have bought anyway. This boosts profit margins for oil companies, and subsidizes fuel consumption -- thus subsidizing driving.”

Think about that. Does ExxonMobil (XOM) really need you to subsidize its operations? How about BP (BP)?

Of course not. But you are.

The second and third-generation alternative fuels that Al Gore is now endorsing are slowly getting off the ground, in spite of the fierce headwinds posed by Big Corn.

In Geismar, Louisiana, Dynamic Fuels LLC, a 50/50 joint venture between Syntroleum (SYNM) and Tyson Foods (TSN), is converting non-food grade animal fats and greases into fuel. A company release says “production began in early October and the volume being produced is 2,500 barrels per day and growing.”

“We're very pleased with the progress at the plant and the quality of the fuel it's producing,” said Jeff Webster, group vice president of Tyson’s Renewable Products Division. “This fuel offers the same benefits of synthetic fuels derived from coal or natural gas, including substantial performance and environmental advantages over petroleum-based fuels.”

Gary Roth, CEO of Syntroleum, said, “Our US plant is producing some of the highest quality diesel fuel in the world, and best of all, it is renewable with a carbon footprint 75% below that of petroleum diesel. We can also make renewable, high value specialty distillate products that can be used in a wide variety of applications such as dry cleaning, ink cartridges and drilling fluids, and we are actively pursuing these markets.”

In San Francisco, the URS Corporation (URS) has begun operation of a wastewater treatment plant that “will process 10,000 gallons per day of trap waste, recovering 300-500 gallons a day of brown grease and converting it to biodiesel.”

Brown grease is used restaurant oil that not only can be converted into fuel, but helps municipalities avoid running afoul of the Clean Water Act by harvesting built-up fats that solidify inside sewer lines, where they constrict water flow and cause back-ups and damage to pipes.

Algae, which converts sunlight and carbon dioxide into diesel fuel, aviation fuel and gasoline, is another non-food source of fuel that is being studied and brought on-line.

In October of this year, the US Navy successfully powered a gunboat with 50% algae and 50% diesel, which the Algal Biomass Organization called an “important milestone.”

The ABO says, “Algae yields up to 20 times more energy per acre than leading biofuel crops like corn, according to estimates. Unlike corn ethanol, algal strains can sprout on marginal lands so they need not gobble up acres used to grow food. Because the slimy organisms suck up CO2, they also have potential to cut climate-altering greenhouse gases.”

"Crop-based biofuels are not part of the solution,” Ben Senauer, the U of M professor, said back in 2008. “They, in fact, add to the problem. Whether Al Gore has caught up with that, somebody ought to ask him.”

It seems that Al Gore has now caught up with it. Problem is, the corn lobby will always outspend the algae lobby. Or the used cooking grease lobby. Or the woodchip lobby. Or the -- well, you get the idea.

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