TURNING AROUND THE CORN ETHANOL BANDWAGON
Not enough recognition has gone to Texas Governor Rick Perry’s stand against AGROfuel.
The Environmental Protection Agency’s (EPA) rejection of Governor Perry’s petition is no discredit to his stand.
The anti-AGROfuels movement, usually at the opposite end of the political spectrum from the Republican Governor, didn't seem to know how to react to Perry's gutsy stand. There very well may be political or extenuating circumstances, but Governor Perry’s overt action was a clear turn in the right direction: Head-on into the corn ethanol juggernaut. It deserves respect.
In petitioning the Environmental Protection Agency (EPA) for cuts in the federal mandates for ethanol production, Governor Perry said this about the corn ethanol requirements in the 2007 energy bill: "It’s doing more harm than good…"
There is a wide consensus about the failures and unintended consequences of corn ethanol. Though once seen as a possible path to domestic energy independence, it is now clear that corn ethanol requires more fossil fuels to grow than it replaces, creates more greenhouse gas emissions than it cuts and could not displace a significant portion of petrofuels without consuming the bulk of the domestic corn crop and driving food prices into the stratosphere.
From the Ft. Worth Star-Telegram: “This should be a grand time for ethanol, with sales climbing and high gasoline prices making every alternative fuel more attractive…But the ethanol push is looking like a noble idea gone bad. Growth of the liquid biofuel pushed up corn prices and feed costs for cattle and poultry, badly damaging the livestock industry…”
Buoyed by the 51 cents/gallon federal subsidy and the rising federal mandates Governor Perry is pushing back against, corn ethanol is now clearly seen as not much more than (at best) a well-intentioned, misguided effort at energy security gone awry and (at worst) a boondoggle on behalf of agrobusiness.
The best the EPA could say, in rejecting Perry’s petition, had little to do with the value of corn ethanol and much to do with the agrobusinesses depending on the subsidy and mandate.
Here’s the question: How does the nation now stop the parade?
Corn ethanol is widely derided in the blogosphere. Books have been written. There was even an episode of the Emmy-winning network hit West Wing that dealt with it. But media noise is little more than glorified complaining while agrobuiness’s parade goes on, fueled by the big bucks subsidizing mandated production in the Bush-administration-ballyhooed 2007 energy bill.
There is a tremendous financial infrastructure now invested in the misguided corn ethanol commitment. Example: LHT Inc., has spent tens of millions of dollars developing delivery pipes for ethanol, based on the mandate. Executive, LHT: “How do we get our money back?”
It could be that Governor Perry has the right answer. His petition to federal regulators at the EPA asked for a waiver on increasing requirements. This would slow the growth of the ethanol establishment and allow a gradual turnaround to develop, a process that wouldn’t necessarily ruin those already heavily invested.
What Perry needed was the kind of support California Governor Arnold Schwartzenegger got when he took his stand for better auto emissions standards to the EPA. What Perry got was rejected by the EPA, the cold shoulder from his fellow governors and skepticism from his political opponents.
Marty Kushler, utilities program director, American Council for an Energy Efficient Economy: "Every day, government takes actions aimed at helping industries…Some pan out, some don’t. It’s how the government reacts and makes adjustments — that’s what matters most."
As a single Governor asking for a postponement, Perry made an admirable profile in courage. What is needed is political leverage. A coalition of governors calling for a reconsideration of corn ethanol - pending the development of a more practical 2nd-generation ethanol if it is ever realized at commercial scale - is a political force to be reckoned with. Schwartzenegger would be an obvious partner because he is not beholden to agrobusiness and obligated to the “ethanol pledge” for his electoral life.
Only Connecticut Governor M. Jodi Rell has so far showed even a tentative endorsement of Perry’s petition.
Some leaders are finally coming around. A coalition of Senators that includes Texas’ Kay Bailey Hutchison and Arizona’s John McCain has signed onto a bill calling for a freeze. Federal Reserve Chairman Ben Bernanke suggested cutting off the 51 cents/gallon subsidy.
One of the really great things about New Energy is it is not a partisan issue. It is not about red states or blue states, it is about green states. Keynote speakers at June’s American Wind Energy Association conference included Kansas Democratic Governor Kathleen Sebelius and Perry as well as former Clinton Chief of Staff John Podesta and former Bush Federal Energy Regulatory Commission Chair Pat Wood.
It is important to stop the corn ethanol juggernaut and cease its drain on vital energy subsidies. It is going to take a big effort to stop it. A bipartisan effort. Governor Perry is absolutely right to stand up against it. He is considering an appeal of the EPA's decision. Allies would surely make a difference.
Perry, on the EPA’s rejection of his petition: "[It] not only goes against common sense but every American’s grocery bill… Any government policy that artificially props up a single industry to the detriment of millions of Americans is bad public policy…"
Footnote: A more aggressive challenge to ethanol can be expected in 2009. Senator McCain, being from a non-corn-growing state, may be in a stronger position to join that challenge than Senator Obama. (Lest that observation be misconstrued as an endorsement, NewEnergyNews must point out that it could also be construed as a reason to return Mr. McCain to the Senate. Like New Energy, NewEnergyNews is neither red nor blue but green.)
click to enlargeOn energy, we need to strike a balance between free markets and government regulation
Mitchell Schnurman, August 17, 2008 (Ft. Worth Star-Telegram)
and
Uprising Against the Ethanol Mandate
David Streitfeld, July 23, 2008 (NY Times)
and
Federal officials reject Gov. Perry’s request to trim ethanol mandate
Dave Michaels, August 7, 2008 (Dallas Morning News)
WHO
Rick Perry, Governor, Texas; Environmental Protection Agency (EPA); Mitchell Schnurman, columnist, Ft. Worth Star-Telegram
WHAT
Governor Perry asked the EPA to consider an emergency response to upward pressure on food and animal feed prices, the unintended consequence of federal mandates for ethanol production.
click to enlargeWHEN
- 2005: 4 billion gallons of corn ethanol produced in U.S.
- 2008: The 2007 energy bill mandates 9 billion gallons. Perry requested the EPA reduce that to 4.5 billion.
- 2009: 10.5 billion gallons mandated. Perry’s request was to keep the requirement at 4.5 billion gallons.
- 2010: 13 billion gallons mandated.
- Texas’ mandate for wind by 2015 has already been met, indicative of a well-designed state policy.
WHERE
Perry petitioned the EPA on behalf of Texas. A coalition should petition it on behalf of the whole country.
WHY
- The case of corn ethanol, Schnurman contends, shows what happens when mandates and subsidies are used in the wrong way.
- Schnurman argues for incentives that spur development and innovation without bias and within capacities (ex: wind in Texas).
- The subsidy and mandate backing ethanol has created an interest group incentivized to sustain the mandate and keep the subsidy flowing.
- Many experts argue for a gasoline tax with revenues channeled to the development of a wide range of New Energies.
click to enlargeQUOTES
- Schnurman, columnist, Star-Telegram: “This should be a grand time for ethanol, with sales climbing and high gasoline prices making every alternative fuel more attractive…But the ethanol push is looking like a noble idea gone bad. Growth of the liquid biofuel pushed up corn prices and feed costs for cattle and poultry, badly damaging the livestock industry…”
- Schnurman, columnist, Star-Telegram: “The trick lies in striking a fair balance — encouraging new development and innovation without biasing the system toward one player.”
- James Eaves, Laval University: "When the government steps in and says we’re going to replace gasoline with X or Y, it cuts out all those smart people and instead replaces them with a lobby that’s only purpose is to keep the subsidies flowing…"
- Mark Williams, corn grower, Texas panhandle: “We bought fertilizer and corn seed, decided our crop mix on the basis of ethanol being where it was. To change that mandate in the middle of our growing season, that’s really not right.”
- Lee Reeve, pioneer/plant owner, corn ethanol refining: “If this goes through, I guarantee you that by next Thursday there would be arguments about how we should get rid of the mandate entirely…And where are you going to find the oil to replace eight or nine billion gallons of ethanol?”
posted by Herman K. Trabish @ 6:07 AM
2 Comments:
Corn Ethanol critics routinely omit this fact: Less than half of the corn kernel is used to make ethanol, only the starch. The other half is made into distillers grain, which is fed to animals to produce food. Distillers grain, the byproduct of corn ethanol, improves the energy balance and increases food production. Though it is cheaper, it actually has a higher food value than whole corn as a feed product, because it contains about 10% fat and 90% protein, which are both superior to starch.
Grass is the natural food for dairy cows and beef cows, not whole corn. For pigs, with a natural diet of starchy root vegetables, rodents and insects, whole corn is not so bad. Poultry would eat whole corn in the wild, but the availability would be limited. They would also eat a variety of local seeds, worms and insects. Feeding whole corn to cows, pigs and poultry is not their natural diet, although it works. It is better to supplement animals with high protein distillers grains than whole corn. When dairy cows are given a 10% supplement of distillers grains, milk production increases by 10 lb per week per cow, and livestock generally put on 10% more meat. This should be a credit to the ethanol industry. Also, it is possible to make distillers grains into high protein foods for direct human consumption. Corn ethanol is food and fuel and always has been.
Merrill Lynch reports that ethanol blended into regular gasoline lowers the cost by 14 to 24 cents per gallon and reduces our Trade Deficit caused by importing foreign oil. The Trade Deficit we pay interest on, because we pay for imported oil and fuel with debt instruments which are added to the National Debt. Pay no interest on domestic ethanol. The benefits of ethanol and distillers grains offset the impact of higher food prices due to consuming 15% of the corn crop (by weight) in the form of starch.
The recent roller coaster ride that crude oil went on had a much bigger impact on food prices than corn ethanol. Try shipping a ton of corn from Iowa to a tortia factory in Arizona and see what happens to the price. When oil goes up, ALL food prices go up across the board, including corn. Corn had no impact on rice, and the price of rice doubled.
Americans are consuming a huge amount of fuel to wage two wars. They also bombed Iraqi infrastructure and cutoff half of Iraqi oil production. This too has cut into the oil supply, increased demand, and driven up the price of the fuels we consume. Speculative investors in oil and commodities futures are causing artificial demand, which also drives up the price of fuels and food. OPEC is restricting oil production, and Big Oil is manipulating the supply line of crude oil and refined fuels. The first half of this year, Big Oil exported 9% of American produced gasoline and diesel fuel, and then imported more expensive foreign fuels, which they sold to you. Your wars, your investors, your cartels, and your 5 oil conglomerates are costing you extra money at the pump and at the grocery store.
Theres only 7 cents worth of corn in a box of corn flakes. Then why do you pay $3 for it? Because 75% of what you pay for at the supermarket is processing labor and overhead, shipping costs, and marketing labor and overhead. These are all in an inflationary spiral. The complaints against corn ethanol are way overblown.
The State of Louisiana working with Renergie is building a network of small, localized ethanol plants, based on sweet sorghum, that are expected to get a 5 to 1 return. Every year, a higher percentage of ethanol is coming from other feedstocks: sweet sorghum, organic waste, algae and biomass. This will have a big impact on our domestic fuel supply and also weigh-in on our National Security.
America is a nation plagued by over consumption. If you are overweight, consider this: You too are contributing to the higher demand for food and impacting the price. Everyone get down to your ideal weight. That will drop food prices faster than whining about corn ethanol.
The main problem with ethanol is that the majority of engines on the road today are not designed for it. The Saab 9-5 Biopower engine is optimized for ethanol. It outperforms gasoline, getting 20% more power, 16% greater torque, and 10% better mileage. Now Suzuki and other car makers will follow. Ethanol can be denatured without using gasoline. Our system of blending 15% gasoline into ethanol is not necessary. That was how politicians created an incentive for oil companies to distribute ethanol, by giving them a 51 cent per gallon tax credit to blend it with gasoline. Problem is, ethanol performs better when its mixed with water rather than gasoline. This is called hydrous ethanol. A Pratt Community College engine testing team lead by instructor Greg Bacon, mixed 20% water with pure ethanol, and efficiency in the combustion chamber doubled. When the ethanol explodes, the water instantly turns to steam and provides hydrogen and oxygen inside the cylinder. Next year, Ford is introducing the EcoBoost engine, which may also have advanced ethanol technology that doubles efficiency. Brazil has been using 4% hydrous ethanol for years. They laughed at us when we started mixing ethanol with gasoline. Water is the way. Louisiana is implementing an experimental hydrous ethanol program. Dongfeng, a major Chinese auto maker is introducing a car this year, with a slightly modified fuel system, that runs on 65% ethanol and 35% water. They claim hydrogen is formed. Toyota also has a similar hydrous ethanol prototype that produces on board hydrogen. Major automakers are coming out with smaller, lighter, high compression and turbocharged ethanol optimized engines that are more efficient than current gasoline engines. Maybe that’s why Toyota is building ethanol plants in Brazil, and GM is investing in ethanol development in the U. S…They must know something we don’t know about ethanol.
Corn ethanol that is clean and from America or dirty crude oil from dangerous Middle Eastern deserts?
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