The question of corn ethanol, food (and Mexico) has become emotional and confusing. One element deals with the US subsidy of corn and the effect it has on trade, and the other is the fundamental value of corn ethanol versus other sources of ethanol.We are in violation of WTO with our ag subsidies, and it is because of them that the Doha round of trade talks failed. (Not just us, though, as
the EU equally subsidizes its farmers.) This has two results:
continued on the "flip"
1. Farmers in third world countries must compete against the more efficient and subsidized US corn farmer. In Mexico this has meant that many Mexican farmers have gone out of business and, not incidentally, has led to the increase of illegal immigration as farm workers can no longer make a living. As long as the US corn was coming south Mexican consumers got low prices even though farmers were suffering... Since ethanol production has increased the demand for US corn, prices have increased in Mexico as well -- hence the "crisis". I think that Mexican farmers will increase their planting of corn and in a short while there will be plenty of corn, albeit perhaps at a higher price. If the mexican government had maintained some reserves of this vital foodstuff they would have eased the transition.2. Because we are subsidizing corn prices it is attractive to use corn for ethanol production even with gasoline at $2/gallon. We are also subsidizing the actual production of ethanol, increasing the demand for corn (as the easiest source of fermentable sugars) and prices overall.
The portion of Lowell's blog that deals with the inefficiencies of "corn" ethanol are largely correct...One simple measure: using corn as a feeedstock for ethanol yields 25% more btu's energy out than is required to produce the fuel. Using cellulosic materials yields 325% more btu's. You can see that this would mean less land, less plowing, less fertilizer and less water. Corn ethanol, in my view, will be gone in ten years. In fact, many corn ethanol refineries are installing technology that will allow them to convert stover to fuel and the switch entirely to something like perennial switchgrass will be easy as the supply of that crop increases.
I feel that once the factories are in place new processes will come along and those factories can update their equipment with tax write offs. That type of steps is what made us great in the past. One step at a time.
I am for tax incentives for our national interest. The problem is our legislators let them in place too long. Like the incentives for the oil industry that were put in place in the 1910's and are still on the books today.
It is time to take those oil/gasoline tax incentives and put them into ethanol production incentives.
Have I missed something in the Ethanol fuel discussion?
Say like are there plants now that are producing Ethanol from items other then corn in this country and sugar in Brazil. I have not heard of any, Have you?
If there is not, then why not produce what we can till something better comes along?
I was at meetings, where quite a few people in Nelson County and the surrounding counties are running their vehicles off Bio Diesel. I suppose they are not suppose to do that, and wait till something better comes along?
Lowell's remarks about the EROEI [Energy-Returned-On-Energy-Invested] of corn ethanol are not correct, because he worded them to imply that the EROEI of order 1.3 characteristic of most current corn ethanol production is inherent and immutable. Not so. Indeed, when the expert Lowell quotes above says
many corn ethanol refineries are installing technology that will allow them to convert stover to fuelthe expert is implicitly asserting that the EROEI of corn ethanol will be much larger in the future. This is because almost all current refineries use cheap natural gas as the fuel for distillation, and such fossil fuels are counted as the EI (Energy Invested), the denominator of the EROEI calculation. If biomass, such as stover, is used as fuel, that part of the EI will be counted as zero, and the EROEI quotient will be far larger. The unnamed expert is correct: a number of refineries are already installing equipment to use biomss instead of natural gas. Other refineries are installing new equipment to enable them to produce cellulosic ethanol in addition to the cornstarch-based ethanol production. This will increase the ER (numerator), which will also increase EROEI. Because of these ongoing changes to the industry, it appears to me that corn-based ethanol production may become effectively sustainable, with high EROEI, in the long run. Also, do not assume, as many ignorant people do, that ammonia fertilizer requires natural gas to produce (thereby increasing EI and decreasing EROEI). Already, there is talk in Minnesota of using windmills to produce ammonia (with low EI). And don't tell us that fossil fuel is needed for tractors in the fields and the trucks that haul the corn to the refineries. Currently fossil fuel is cheaper for this purpose, but ultimately we will operate such equipment on renewable fuels (the most advanced ethanol operations in Brazil already do this).
I conclude that the ethanol subsidy was a reasonable, rational public policy in recent decades. It stimulated and sustained the ethanol industry when petroleum prices were low. However, petroleum prices are no longer low, and the subsidy is hardly needed now. (Some ethanol refineries have been achieving 30% Return-On-Investment in recent years, and there are stories of a few that experienced 50% ROI! Gains of that magnitude are not due to the subsidy.) My opinion is that the ethanol subsidy rule should be changed from a constant amount to become inversely related to the current price of petroleum, with the subsidy going to zero somewhere around $65-70 per barrel.