Energy policy fact of the day

The tax credit for ethanol is an example of a cost ineffective subsidy.
The cost of reducing CO2 emissions through this subsidy exceeded $1,700
per ton of CO2 avoided in 2006 and the cost of reducing oil consumption
over $85 per barrel.

I am not shocked, but it is worse than I had thought.  Here is the full paper.  But the funny thing is, that’s not even the worse thing I read about biofuels today.  Courtesy of Daniel Akst, try this article:

…a growing body of scientific evidence suggests these gasoline
alternatives will actually boost carbon-dioxide levels and thereby
aggravate the problem of global warming. A study published in
the latest issue of Science finds that corn-based ethanol, instead of
reducing greenhouse-gas emissions by a hoped-for 20%, will nearly
double the output of CO2 and other gases that trap the sun’s heat. A
separate paper in Science concludes that the clearing of native
habitats around the world to grow more biofuel crops will lead to more
carbon emissions.

Or try this ungated version of a similar result.  Wonderful.


I thought the subsidies were purely about energy security? Did anyone ever claim that they reduced GHG emissions?

Most total lifecycle GHG studies show US corn-based ethanol releasing similar amount GHG's as producing and burning petrol. Though Paul Crutzen, Nobel chemistry prize winner claims that corn-based biofuels could in fact be much worse due to the NO2 emissions caused by fertilizer application.

Biofuels from corn are an environmental disaster. Though biofuels can also be generated from waste products economically, at a competive cost, with ~30% of the lifecycle GHG emissions of petrol. But NOT in large enough quantities to quench a nations thirsty SUVs.

Here is some further reading on the topic...

A Life Cycle Assessment of Energy Products: Environmental Impact Assessment of Biofuels

The Royal Society (UK), Sustainable biofuels: prospects and challenges - January 2008

House of Commons, Environmental Audit Committee, Are biofuels sustainable? - January 2008

In all the talk about biofuels, it's important to keep in mind the difference between corn-based ethanol and cellulosic-based ethanol. Just about everything bad you hear about ethanol is really about corn-based ethanol. None of it applies to its much more promising sibling.

But of course the purpose of the subsidy is not just to provide ethanol being manufactured with current technology at a cheap price forever. The purpose (in addition to energy security) is to give the industry a market to develop into to spur technological advances that will lower the cost of production over the medium-term.

I guess this economics-based opposition is what the forces of inertia have moved on to now that the "it uses more energy to produce than it generates" argument has been debunked.

From Cato: "Ethanol will not lead to energy independence. If all the corn produced in America in 2005 were dedicated to ethanol production (and only 14.3 percent of it was), U.S. gasoline consumption would have dropped by only 12 percent. For corn ethanol to completely displace gasoline in this country, we would need to appropriate all U.S. cropland, turn it over to ethanol production, and then find 20 percent more land on top of that."


It does use more energy that it generates... that is, so long as you're referring to the American subsidies and not Brazilian, sugar-based ethanol, which is restricted by quota in both this country and the EU. So where's the mythical debunking to which you refer?

Corn-based ethanol is a strawman. Processes
for going from cellulose to ethanol, propanol,
butanol, and others seem to be getting close
to commercialization. They promise to be
truly carbon-neutral and maybe even cheaper
than fossil fuels.

What use is energy independence if you start being food-dependent?

No single fuel that does not emit CO2. buat I thought the carbon from biofuel is much saver, no?

More GHGs. Finally, a good reason to support bio-fuels!

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That's the observation that gave us initial hope David, that the "burning" part must be co2 neutral. Unfortunately there are "inputs" to the growing and processing part that affect this as well. I assume that is what the current numbers-battle is all about, inputs and such.

Opponents of biofuels have nothing to fear then as it will never be economic to produce, even with the subsidy. I agree it will have little effect as is, and tropical deforestation would be a monumental mistake, but this just shows how little there is to fear from it. Somehow, I just don't think opponents believe it themselves.

Lord said,

"Opponents of biofuels have nothing to fear then as it will never be economic to produce, even with the subsidy."

Opponents don't fear biofuels they want to end the ecologic and economic destruction they are causing.
The destruction is occurring because biofuel mandates and subsidies drive biofuel production even though they are not economic.

Lord in block quotes

It was turned into cropland over a century ago. It is a little late to complain now. As for elsewhere, I agree.

Actually substantial amounts of land in the US was converted into farmground 20-30 years ago, not over a century ago as you state. In the next few years biofuel subsidies and mandates will cause more marginal land in the US to be converted to farmground

Industries aren't built to lose money, breakeven, or even make a little. They must make a lot or they won't even be pursued.

You are missing the fundamental role government subsidies and mandates have in this mess. They make technically ineffective, commercially non viable, biofuel production profitable.

Furthermore, if it were not for the mandates and subsidies most biofuel opponents would not care about biofuel production.

Because without mandates and subsidies ethanol would be used only for useful things like the production of beer, and liquor.

JBJB raises an argument that is frequently used to support the ongoing biofuel boondoggle

However, there is one factor that a lot of people are forgetting when it comes to utilization and implementation of corn ethanol, and I am not sure how to really measure its value. It's essentially a play on the early adopter theory.

This is an interesting argument but it misses a few very important points.

1. We have been subsidizing ethanol for decades.

2. It ignores the ongoing, substantial ecological and economic damage being caused by the current biofuel subsidies and mandates.

3. By sopping up money and attention the current biofuel mania freezes out technology that might be provide more effective and less polluting solutions for transport.

For example plug in hybrids would not require the development of massive new fuels infrastructure. Furthermore plug in hybrid technology might help make renewable electrical generation workable.

If biofuels can't compete without subsidies and mandates they have no chance of ever replacing petroleum as a fuel.

The ethanol subsidy is 50 cents a gallon. Sure it is bad and should be done away with, but if you think that will eliminate ethanol, I think you are mistaken. How much did the price of gasoline vary over the last year? More than that. Eliminating the subsidy would slow ethanol growth, but if oil continues to climb, it won't be subsidies causing the problem. It will be the lack of other alternatives. I don't buy the freezing out of other alternatives. If they also need subsidies, they have problems too.


Totally agree and concede points 1 and 2. However, if I remember correctly, the whole US ethanol surge began due to ground water contamination issues as a result of the use of MTBE as an oxygenate additive in fuel. This effort was driven (rightly or wrongly) by the same environmental regulators now arguing about the destructive effect of corn ethanol. They in a sense got the ball rolling and the politicians have jumped on for the ride.

Also agree that plug in hybrids are a nice option, but the procedures to make Li ion or NiMH batteries (or any battery) at the scale needed for transportation are not exactly going to be the most earth friendly of chemical processes.

I have to say I disagree on point three, there is no want of attention or money for any alternative fuel/technology. There will always be some group of scientists/engineers/politicians clamoring for more money for pet R&D projects, but if anyone has a good proposal for new ideas in energy technology, the money (private or public)will quickly follow.

Thanks for the R squared link, will definitely check that out.


You make some good points.

What congress should have done is just set limits for automotive tailpipe emissions and let the engineers put together the best solution to reach the mandated limit.

However, IIRC what they actually did was to mandate the usage of oxygenates in the hope that the ethanol would be the choice. What the oil companies did was use MTBE which turned out to have problems with easy transport in aquifers if it was spilled or leaked out of filling station gas tanks.

In later bills congress actually mandated the usage of ethanol to ensure corn growers and ethanol producers got the business.

In the midst of all of this it is useful that the original justification for ethanol usage was that it helped combustion in gasoline engines carburetors. In modern fuel injected engines it serves no purpose.

It is probably also useful to recognize that because of its lower (vapor pressure??) that ethanol tends to increase ozone levels and California actually tried to get a waiver from the ethanol requirements because of the increased pollution ethnol blended gasolines were causing.

As an added bonus because of its lower energy density cars get lower mileage when running ethanol blends so consumers have to pay more to get the same mileage they would if they were not using ethanol blended fuels.

I know their are substantial technical hurdles with battery technology. Fortunately (at least until some critical battery component is made out of corn) batteries are not mandated.

That should help make sure that battery technology actually helps the energy situation before it gets to the market.

It is enlightening!

Very grateful to a bunch of much better skills. I look forward to reading more of the future of the subject. Keep the good work. Thanks!

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