Overhyped Products: Corn Ethanol
There’s just one problem with corn-based ethanol: It takes 29% more fossil energy to produce a gallon of ethanol than the ethanol release when burned as fuel.
The disparity between energy input and output makes ethanol the triumph of politics over logic.
Uncle Sam mandates the use of ethanol as a fuel additive and pushes it as an alternative of imported oil. Politicians of both parties have long promoted ethanol as a way to reduce the nation’s dependence on imported oil.
At a public forum in 2007, President Bush made the standard case for ethanol:
“First of all, I'm guilty on promoting ethanol. And the reason is, is because I think it's in our interests to diversify away from oil. And the reason why it's -- I know that's hard for a Texan to say. But the reason why we've got to diversify away from oil is that we end up with dependency on oil from certain parts of the world where people don't particularly like us... And so, I promoted ethanol, and still believe it's important for the future.”
Last March, California Democratic House Speaker Nancy Pelosi said she supported increasing the ethanol-to-gasoline blend rate to 15% from 10% in an effort to reduce dependence on oil imports. “It seems to me we should be able to do that,” Pelosi told reporters after addressing the National Farmers Union in Washington.
What seemed like a foolproof business plan fell flat with investors, who did the math and concluded that corn-based ethanol makes no long-term sense.
VeraSun and Pacific Ethanol (PEIX) have been pounded. Cascade Investment, a firm owned by Microsoft (MSFT) chairman Bill Gates, sold its 21% stake in Pacific Ethanol in 2007. 
Ethanol isn’t fancy or magical. It’s an alcohol produced by a distilling process similar to that used to make hard liquor. Blending ethanol with gasoline allows oil companies to boost octane more cheaply than additional refining.
Despite the hype, ethanol doesn’t produce a net energy gain because corn production requires large amounts of fertilizer, herbicides, and pesticides. The manufacture and application of these chemicals consumes large amounts of energy. The corn must be harvested and hauled to production plants to be distilled into alcohol, which requires more energy. Then the ethanol must be distributed to users by rail and truck. After all that, it’s time to think about the air pollution and wastewater created by ethanol production plus the potential problem of chemical-laden runoff from the cornfields.
Increasing acreage devoted to corn won’t tip the balance in ethanol’s favor because the new land is likely to be less productive than land already cultivated, increasing the cost of production -- especially fertilization. The use of additional energy needed to make marginal land productive would be so great that a study by the Massachusetts Institute of Technology concludes that ethanol production expansion would boost greenhouse gas emissions above current levels. 
Using alcohol as a fuel isn’t new. Nicholas Otto, the German inventor best known for developing the internal combustion engine, used ethanol as the fuel for one of his engines in 1876.
What’s new is the unintended consequence of a federal energy program. The Clean Air Act of 1990, designed to reduce air pollution by replacing MTBE with ethanol, instead shovels money to favored companies such as Archer Daniels Midland (ADM), a diversified agricultural company.
“The Archer Daniels Midland Corporation has been the most prominent recipient of corporate welfare in recent US history,” James Bovard wrote in a report for the Cato Institute, a libertarian think tank based in Washington, DC. “ADM [has] lavishly fertilized both political parties with millions of dollars in handouts and in return [has] reaped billion-dollar windfalls from taxpayers and consumers.”
Ethanol made from cellulose, the fibrous material found in plants, contains less energy than fuel derived from corn. If forest or grassland is cleared to plant crops used to make ethanol, it’s usually done by burning off existing vegetation. This releases large amounts of carbon dioxide.
Some say the problem could be resolved, at least in part, by using agricultural waste as the feedstock for ethanol or by growing grass on marginal land that won’t support commercial crops. But that will require new technology because only sugars and seeds can now be distilled efficiently into alcohol. Chevron (CVX) is working with major universities in an effort to develop plants that make better feedstock for cellulosic ethanol and to improve processing methods.
Oil now provides about 40% of the world’s total energy and from 2000 to 2007, the developing world accounted for 85% of the growth in world demand, the Wall Street Journal reports. Oil will be increasingly important in China and India. This means money will continue to flow to some unsavory characters and manic price swings will persist. Last year, the price of a barrel of oil ranged from $147.27 in July to $32.40 in December. Such fluctuations make it difficult to plan and invest in alternative fuels.
Ethanol supporters say subsidies are needed to level the playing field. But US oil subsidies total about $1 billion a year, or six to eight times less than ethanol subsidies.
For now, politics trumps the market. In March 2008, the US Energy Information Administration estimated that US ethanol production capacity was 7.2 billion gallons per year with an additional 6.2 billion gallons of capacity under construction.
In 2007, the US consumed 6.8 billion gallons of ethanol and 500 million gallons of biodiesel. The Energy Independence and Security Act of 2007 expanded the Renewable Fuels Standard to require that 36 billion gallons of ethanol and other biofuels be blended into gasoline, diesel, and jet fuel by 2022.
So, don’t expect an outbreak of rationality in Washington anytime soon -- especially as long as the Iowa caucus comes first in the presidential nomination process and farm states can swing the election or determine which party holds the majority in Congress.
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Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
"The Clean Air Act of 1990, designed to reduce air pollution by replacing MTBE with ethanol..."
The Clean Air Act required that *an* additive be combined with gasoline to reduce air pollution. Western states used Ethanol and Eastern states used MTBE since it was cheaper and easier to obtain.
After MTBE started showing up in the environment due to leaking gas tanks, most (all?) states have recently outlawed its use, leading Ethanol to be the sole additive that can be used.
Quoting anything from Pimentel at Cornell is laughable. He assumes using the energy costs of a monster tractors and combines on a tiny acreage then scrapping the tractor. Nobody farms like that. Pimentel also assumes a laughably high (non-necessary) grade of alcohol. Brazilian cars run on E96 (4% water); Pimentel demands 100% pure ethanol. Dehydrating that last 4% is extremely energy intensive, and unnecessary. Pimentel assumes the stillage (left over liquid) must be treated as sewage; in fact it should be treated as an net energy credit for methane production and fertilizer. The Pimentel errors can fill pages. Other corn ethanol energy balance studies average the inverse of Pimentel's -25% to +25%. (Balance isn't just for gymnastics, you know.)
Note how the author specifies "corn-based" ethanol. There's no question that there are better alcohol fuel feedstocks than corn, especially in marginally useful agricultural areas. But it's what we have in abundance, thanks to Uncle Scam's policies and taxpayer subsidies. There are many many crops that will yield more gallons per acre. Even the arid southwest can grow mesquite (fruits) and pimelon (wild watermelon) and ocean areas can grow kelp. The "corn sucks" argument is shallow and failed.
Cane-sugar ethanol (such as India and Brazil) is 8:1 energy positive and, FWIW, virtually none of that energy-input is fossil fuel based. And no, they don't clear cut the jungle to grow cane. It's an entirely different region of the country.
Burning off existing vegetation does not release net carbon dioxide into the atmosphere. (Footnote: 4th grade Biology) Sunlight + CO2 + water = plant growth. Burning plants releases CO2 that the plant captured in prior seasons. No net CO2 is being introduced.
(Besides, any modern article that even mentions distress about CO2 levels obviously isn't firmly committed to dealing with the truth. Next I'm going to read Minyanville articles about how we need nationalized health care reform that simultaneously suspends the laws of economics AND pays for itself with rainbow sprinkles and unicorn farts. Oh wait, that was two weeks ago.)
Frankly, modern fuel injected engines can already take ethanol as a fuel. (Even the Model T was a flex-fuel vehicle. It ran on straight alcohol or gasoline or anything in between.) I've been running e85 blends - i.e. 50% E10 gasoline and 50% E85 -- in my own vehicles for the past two years. Their computer controlled timing and injection systems can make adjustments for the ethanol's higher octane and lower cetane (less evaporative pressure & volatiles.) [And no, ethanol doesn't melt your engine parts. Do you really think the trial lawyers would let the automakers see the light of day if modern engines wilted at the fuel molecules available at 90% of the stations in America? ]
I'm glad the author touched on subsidies. I oppose all energy subsidies. Eliminate the distortions adn coercion in the market, and we'll figure out what works. But let's be honest about the true subsidies. How much of the Iraq & Afgan empire efforts are for oil? To settle that oil subsidies are only $1 Billion per year is nonsense.
"Energy independence" is a canard, but the fact that half my fuel comes from 20 miles down the road and half of my car fuel dollars stay in my region instead of instantly being sent overseas is important. Frankly the energy answer for my neighborhood or county or region will likely be different that yours. The fact that east coast intelligentsia from Gomorra-on-the-Potomac or Sodom-on-the-Hudson try to cram down solutions on the rest of the country fully illustrate in point Mises' socialist calculation errors.
You could have started and stopped with 'end the subsidies' because then we wouldn't need to argue about what works...it would be obvious. When was the last time someone in this country grew a bushel of corn that was profitable without subsidies?
There may be better alcohol feedstocks that can be grown in marginally useful agricultural areas without subsidies but I'm not going to jump on the bandwagon until I see it done sustainably on a large scale. Too much of these alternative energy proposals are pie in the sky type concepts. Some of them may end up being practical but right now it appears impossible to predict which ones.
The thing that drives me crazy is that we have a sure-fired cure for all of our energy problems staring us in the face but we refuse to seriously consider it. Its called conservation. I've read that if Americans used the same amount of energy per capita as they did during the 50s and 60s we wouldn't need to import one drop of oil. I grew up in these decades and I saw nothing wrong with the way most people lived. To hear people respond to this idea today would make you believe they found it comparable to living in medieval times.
We need to lower our standard of living so we can increase our quality of life. To continue this illusion of prosperity built on debt and fantasy cheap energy solutions will only dig a deeper hole. There is no perpetual prosperity machine from which we can take out more than we put in forever. Are we so weak and delusional we can't (or won't) see this?
Allow me to emphasize again that what works in your neck of the woods might not work in mine. Some parts of my state use wood fires to create industrial electricity and 150 miles away is are two nuke plants. I don't mind either technology, but I prefer the cheaper one.
The original article even referenced the fact the BigOil can't wait to get its hands on the latest and greatest technology so it can control that too. I want distributed energy production, not centralized.
Yes, end subsidies on corn (grains, colleges, Wall Street, etc etc. ad infinitum) . Please. That'll bankrupt the land barons and decentralize and de-industrialize food production. The politicians won't like it. (Think Ukraine in the 1930s, and you'll understand why the trustbusters in Washington don't really mind Big Ag aggregation.)
Distilling the starch from the corn and feeding the byproduct is profitable on smaller scales, not large scales. Why? By using Soviet-style thinking (that bigger is better) we lose by-products and flexibility of feedstock. A $20 million corn ethanol plant does very well processing corn, but can't process anything else. The scale is so large they have to evaporate off their stillage instead of feeding it out to livestock, algae, mushrooms or fish. For example, one distillery uses discarded fruit wastes AND the waste refrigerant heat from the fruit processing plant. His main inputs (feedstock & energy) are free. In my neck of the woods, available feedstocks are whey from cheese making facilities (surplus is just sprayed onto fields) to potatoes to bakery waste. Each part of the country has its own energy needs and solutions.
I'm not talking about any new fangled pie in the sky technology. There's nothing "alternative" about it. Fermenting alcohol is the world's second oldest profession. And it not patentable. (Sorry Big Oil.)
Godspeed,
Brian
I reject in its entirety,your assertion that ethanol requires 29% more energy to produce that it yields. The number of scientific studies refuting this assertion is at least 10 to 1!
In addition, the federal incentive for ethanol blending cost approximately $3.6 billion while saving a reported $6 billion in Federal farm subsidies. This alone is justifies ethanol's public policy program.
You would do well to research the subject you write about instead of displaying your obvious lack of understanding of the issue and your unabashed bias against ethanol.
Not quite. Ethanol is _identical_ to beverage alcohol! The chemical formula is C2H5OH.
1) you neglect to factor in the value of the cattle feed byproduct, distiller's grain, that represents the profit margin on the product
2) You are incorrect regarding cellulosic. A demonstration plant in Nebraska has been producing cellulosic ethanol for several years and a commercial scale plant is currently under contruction in Hugoton Kansas.
3) Switchgrass is the plant of choice for cellulosic. It is easily grown on marginal land, is drought resisitant and is frequently planted on CRP land.
You really have a problem with your facts. I am no fan of ethanol but critics like yourself do little to advance the cause.
