Cellulosic Ethanol Test Plant Opens; Future of Ethanol Lies With This Technology
The largest ethanol producer in the world, Poet, has announced the opening of an $8 million cellulosic ethanol plant in Scotland, South Dakota. This biorefinery is a pilot plant that is a precursor to a $200 million commercial-scale plant scheduled to open in 2011 in Iowa.
The Scotland Plant will generate ethanol from plant waste, like corn cobs, that would normally be discarded. Although it currently costs about a $1 more per gallon to make fuel from corn cobs than kernels, Poet aims to eventually make cellulosic ethanol competitive with food-based ethanol.
With heightened criticism being levied upon ethanol lately, it will be important for the industry to produce evidence in the near future that biofuels can actually reduce greenhouse gas emissions, decrease oil consumption, and not materially damage global food supplies. While it remains to be seen if this is possible, cellulosic technologies are likely that industry’s best bet.
In 2007, 75% of Renewable Tax Benefits Went To Corn-Based Ethanol Industry
Generally, the two biggest criticisms of corn-based ethanol have been that it is actually bad for the environment and increases pressure on the world’s food supplies. However, in spite of these facts, U.S. renewable energy policy has been skewed greatly in-favor of ethanol.
Highlighting this fact, Environmental Working Group (EWG) recently released an analysis of U.S. ethanol policy that finds the following incredible conclusions (among others):
- Corn-based ethanol has accounted for fully three-quarters of the tax benefits and two-thirds of all federal subsidies allotted for renewable energy sources in 2007.
NASA Uses Satellites To Track Health of Nation’s Cropland
NASA is directing its satellites to look downwards at the American Midwest, in order to analyze crop productivity and to measure the effects of shifting croplands to biofuel production.
Christopher Potter, a research scientist at NASA’s Ames Research Center, described this program at the American Geophysical Union meeting last month. His team’s research uses satellite data and computer models to track changes in greenhouse gas emissions and carbon pools resulting from the widespread agricultural transformation towards biofuels.
The satellite data is used to map the shifting vegetation cover and carbon pools in croplands. There is concern that biofuel production utilizes more crop waste, such as corn stalks, which previously would have been left in the field as fertilizer. This could result in the soil becoming less fertile for growing. READ MORE
Ethanol stations coming online as gas prices sit well below E85
By the end of February, there will be 29 new E85 ethanol stations open near Sacramento, CA. These stations are part of a $3.5 million project by the state to make the relatively scarce alternative fuel more available to drivers. The intent of the plan was to create an “ethanol island” where enough E85 would be regionally available to encourage drivers to use flex-fuel cars and fill up with E85.
However, now that these E85 pumps are opening, the price of gas has plummeted below ethanol and station owners are concerned that drivers will opt for the less expensive choice. With ethanol nearly twice as expensive as gas right now, it is unlikely drivers will choose to fill their flex-fuel cars with E85.
The original intent of the government program was to help reduce greenhouse gases and dependency on foreign oil. Of course, even under ideal price conditions, the former is debatable and the latter is unrealistic– since it is unclear whether ethanol is actually good for the environment, and without advancements in cellulosic techniques, we’re replacing one unsustainable situation with another.
Promising work continues on second generation ethanol
A mixture of public and private researchers in Sweden have agreed to work together on the development and large scale implementation of a new process for producing cellulosic ethanol.
Unlike first generation ethanol production, which has been widely criticized for its negative effects on food supplies and questionable carbon footprint, cellulosic ethanol uses agriculture and forestry waste to produce biofuel. According to the researchers, “The [energy] yield [resulting from this process] could be improved up to 40 percent… thereby creating a cheaper and more environmentally friendly fuel.”
Iowa senators and ethanol industry want piece of auto bailout: Is Iowa the new Detroit?
With the automakers on the ropes, and the government getting ready to write a big check, and possibly attach some strings to it, the ethanol industry wants to make sure that they are at the end of those strings.
Of course, merely trying to attach efficiency requirements to any bailout of Detroit is not inherently wrong. In fact, if we do bailout the automakers, there should absolutely be a strict commitment that they must make their cars significantly more fuel efficient going forward.
However, with that said, what the ethanol industry and their local senators are trying to do is just more of the same behavior that got the auto industry into the situation they face today. That is, government policy being influenced by self-interested commercial industry groups that are supported by hometown politicians. READ MORE
US ethanol policy must be based on science, not lobbying
The NY Times editorial board warns that, with respect to ethanol policy, “the issue here is the fate of the planet, not the fate of a particular industry.” This is a question that has come to the forefront in the past year due to concerns that ethanol may be causing more harm to the world than good.
The 2007 federal energy bill mandates that ethanol production should increase from around 7 billion gallons today to 36 billion gallons by 2022. Congress also directed that the ethanol must be cleaner than gasoline, and gave the job of making that calculation to the EPA. READ MORE
McCain seems to abandon position on ethanol
NYT’s The Caucus reported yesterday that McCain, while campaigning in Iowa, inserted an important and powerful word into his remarks, stating, “We’ll invest in all energy alternatives: nuclear, wind, tide, solar, ethanol, biofuels.” His running mate also called for: “harnessing alternative sources like the wind, and the solar and the biomass and the geothermal and the ethanol.” This is a significant policy shift for McCain and his campaign. READ MORE
Rational biofuel policies needed sooner than later
A paper published in the journal Science last week warns that care needs to be taken to ensure that policies surrounding cellulosic biofuel production do not result in environmental harm. The authors of the paper, twenty three leading ecologists, agronomists, conservation biologists and economists, warned that decisions taken now, during the early stages of our biofuel policies, will have dramatic effects on the future environment. READ MORE
EU looks to decrease biofuel targets in light of downsides
We have looked at the potentially vast downside resulting from the push towards biofuels here on ForceChange quite a bit. Given the widespread belief that increased biofuel production is having a strongly negative impact on both world foods supplies, as well as the environment, it should come as no surprise that the EU voted recently to relax its biofuel targets.
The EU’s Industry and Energy Committee called for a substantial cut in biofuel usage in transportation from the 10% target by 2020 to only 5% by 2015, as well as a call to avoid biofuels that compete with food sources. The full EU Parliament, as well as member countries, must still agree to any target before they become law. Unsurprisingly, large biofuel producers are strongly opposing this proposed action. Additionally, the U.S. still appears intent on creating its own addiction to corn.
McCain opposes ethanol subsidies but supports cleaner coal and nuclear subsidies
The concept of unintended consequences is one that we look at frequently on this blog, with ethanol, of course, being one of our biggest discussion topics. Sen. McCain throughout his career and on the campaign trail has claimed that he is opposed to government mandating specific solutions, opting instead for market based answers. He has directed much of this criticism towards Sen. Obama for his support for ethanol subsidies. However, it is not clear that McCain is completely consistent in this approach, since he has recently been advocating subsidies for cleaner coal and nuclear power.
Of course the most obvious criticism of McCain here is for hypocrisy. However, the more interesting question is what role should our government play in promoting alternative energy and clean technology? We generally believe that market based solutions like the proposed cap-and-trade system are most likely to produce the best result. However, tax breaks and subsidies may also play an important role, as they have with solar and wind energy development. The problem is when the government’s directives result in a “solution” that may not be the most efficient or practical (as may be the case with ethanol), and we then are faced with a series of undesirable and unintended consequences. Of course it is easy to judge, in retrospect, which solution was good and which was bad. The hard, if not impossible, part is to do this prospectively, which probably cuts in favor of market based, instead of government mandated, solutions.
Post Office seeks ways to save on fuel costs
The largest operator of a civilian vehicle fleet in the country, the US Postal Service is really feeling the effects of increased gasoline prices. According to the Deputy Postmaster General, the USPS spent $1.7 billion on gasoline and diesel last year, and predicts that number to increase by $600 million this year. As a result, the USPS, which uses 200,000 trucks has been forced to look for alternative means of reducing fuel consumption–some of which have been successful, some of which, not so much.
One strategy, which has not proven very effective, was the purchase of 30,000 alternative fuel vehicles, including flex-fuel (E85), CNG and biodiesel trucks. In particular, the flex-fuel trucks saw a decrease in fuel efficiency by 29% and ended up consuming 1.5 million more gallons of gasoline than before.
Some more effective solutions have included realigning routes so drivers don’t have to make left turns (which require more idling), adding GPS systems to plot more efficient delivery routes and, the most effective solution: having employees deliver more of their route by foot.
Addicted to corn, part II
Despite record high gas prices, it has previously been theorized that without the increase in biofuel use the past few years, gasoline might actually cost 15% more than before the adoption of these alternative fuels. This has led us to wonder whether we have become addicted to corn?
However, now, with the recent floods in the Midwest, another twist with respect to our increased reliance on ethanol has developed. The flooding that has inflicted widespread damage on the ethanol industry–ranging from the destruction of some corn crops, factory closures and transportation line disruptions, may now be responsible for a new spike in the cost of gasoline. This is because the decreased production of ethanol will increase the cost of the supplies that are available to be added to our fuel supplies. Currently, gasoline in the U.S. contains about 7% ethanol.
We may now face a situation where not only are the net environmental benefits of ethanol questioned, but our current reliance on it may also be increasing gasoline prices. If these two assumptions are correct, we may have created a situation that is a net negative. Of course, we are still in the early stages of biofuel adoption and all of its impacts are not fully understood. Nonetheless, this further illustrates the dangers of rapid policy shifts that can result in unintended consequences such as these.
USDA asserts biofuels play only minor role in high global food prices
Having written extensively about the potential downsides of biofuels, we wanted to highlight an announcement by U.S. Agriculture Secretary Ed Schafer, asserting that ethanol is not having a “major” impact on the rapid increase in world food prices. According to the USDA, policies encouraging biofuel use account for only 3% of the more than 40% increase in world food prices last year. The rest of the increase in prices was attributed to things such as widespread drought, an increase in global food demand from booming populations, and high energy costs.
Whether the USDA’s numbers are accurate or not, apparently their analysis was limited to the price of food and did not address the claim that biofuel production and use may actually release more greenhouse gasses than gasoline. Nonetheless, if their analysis is accurate, it does seem to lessen one major argument against increased biofuel development.
Comparison of the candidates’ oil and energy policies
Looking at this comparison by Reuters of the presidential candidates’ energy and oil policies, it is clear that Senators Obama and Clinton are proposing more aggressive legislation than McCain. Nonetheless, the good news is that all three candidates have significantly more pro-environmental policies than the current administration. So at least we know some change is on the way. Whether it will be enough to make a difference, we shall see.
Some of the highlights of the comparison:
On gas prices:
McCain and Clinton want to suspend the federal gas tax this summer.
Obama wants to temporarily stop filling the Strategic Petroleum Reserve.
On fuel economy:
Clinton wants to increase average efficiency standards to 55 miles per gallon by 2030.
Obama wants to double the current standards by 2026.
McCain has not yet released a specific target but indicates he wants to decrease our dependence on foreign oil.
On biofuels:
All three candidates support dramatic increases in biofuel production and distribution.
