Environmental Groups Oppose Ethanol Bailout in Stimulus Package
Environmental groups and food producers oppose the Renewable Fuels Association’s requests for support from the stimulus package that includes $1 billion to finance current operations and a $50 billion federal loan guarantee, as well as job tax credits.
The Clean Air Task Force, Environmental Working Group, Friends of Earth, and the Network for New Energy Choices released a statement today saying that federal government subsidies and mandates for corn-based ethanol produce potentially catastrophic consequences to the environment, and have no payback to taxpayers in terms of alleviating global warming effects, providing for energy security, or even simply reducing the cost of driving. The group’s stance:
“With evidence mounting that biofuels are worsening global warming and harming water quality and wildlife habitat, it makes no sense for the federal government to lavish billions more on an industry already flush with government assistance. It is time for ethanol to stand on its own.”
- » See also: The CitiCar Capital Of The USA (And Perhaps The World): Browntown, Wisconsin
- » Get Gas 2.0 by RSS or sign up by email.
The spokesman for Renewable Fuels Association, Matt Hartwig, responded: “We are not asking for a bailout or anything like that.”
But environmental groups say that the ethanol industry already receives more federal support than any other renewable energy program. According to the EWG statement, two out of every three dollars that the government spends on what it calls renewable energy programs (including wind, solar, and geothermal) already goes to the ethanol industry.
“It’s utterly irresponsible to continue to expand this conventional biofuels industry.” - Craig Cox, Environmental Working Group
Food producers aren’t happy either, saying that America should be looking toward second generation solutions that don’t compete with the need to produce affordable food. “An additional $50 billion in government support for the corn ethanol industry will only calcify the status quo and reduce the urgency for innovation,” says Scott Openshaw, with the Grocery Manufacturers of America.
The RFA replied to the detractors, stating that “The RFA recognizes that by stimulating increased production, innovation, and investment in new technologies and cellulosic feedstocks, a revitalized renewable fuels industry can help bail out the flagging U.S. economy and lessen America’s dependence on foreign oil.”
Update: Just after finishing this post, I Tweeted it, and got a response from @nathanschock, saying “The environmental groups are opposing something that doesn’t exist.” He left a link to Biofuels Journal, which published this statement from RFA:
“America’s ethanol producers share the vision of President-elect Obama of a domestic industry that is innovating to include ethanol production from a wide array of materials including switchgrass, wood chips, and municipal solid waste.
That vision can only become a reality if today’s ethanol technologies and producers are successful. As such, the RFA is having discussions with the Obama team on how ethanol fits into a green stimulus package.
Today, ethanol is the only alternative transportation fuel having any impact reducing America’s dependence on foreign oil. Moreover, ethanol is uniquely poised to employ new technologies and scale up production significantly in the short term to greatly reduce imports of foreign oil and more meaningfully help address the issue of global warming.
Ethanol production must be at the core of any green initiatives designed to reduce foreign oil dependence, create economic opportunity, and address climate change by changing how Americans fuel their cars.”
I disagree with @nathanschock. Asking for one billion dollars to continue operating sounds like a bailout to me.
Image: Aunt Owwee at Flickr under Creative Commons
The Real Next Generation Ethanol:
Today, demand for ethanol is restricted by the “blending wall” and how much gasoline is being pumped. We want to make more ethanol, but there aren’t enough flex-fueled vehicles on the road to consume it. Increasing the blending wall is a good short term solution for increasing ethanol demand. But then what? Will the EPA continue to inhibit ethanol growth? Will production of ethanol continue to be restricted, because only a certain percentage is allowed in gasoline? Or could new technology create unlimited growth and demand? Hold that thought.
Corn ethanol is not only a fuel, it’s also a food production system. The byproducts of corn ethanol, distillers grains, supplement a huge dairy feeding, cattle feeding, poultry feeding, and fish feeding system, and export business. Corn cobs are made into cellulose ethanol. Corn oil goes to food or fuel. GreenShift is extracting surplus corn oil from distiller’s grains at 4 locations, and they’re building 12 more sites, enough crude oil to make 20 million gallons of biodiesel a year. We only make ethanol and distillers grains from about a third of the feed corn crop. That would yield 580 Million gallons of biodiesel every year. Make ethanol and distillers grains from the entire feed corn crop, and you would get roughly 30 Billion gallons of ethanol and 2 Billion gallons of biodiesel, without additional corn acreage. And now, with Algae in the fast lane, even the waste products of corn ethanol production are valuable. Could existing corn ethanol plants become the foundation for a much bigger biofuel industry?
Recently, it was announced that ALGAE will be grown on ethanol waste products: CO2, nutrient rich effluent, and waste heat. This is a joint venture between Green Plains Renewable Energy (a corn ethanol production company) and BioProcess Algae LLC (an algae production company). Wayne Hoovestol, Chief Executive Officer said: “Algae is potentially a by-product of ethanol that makes the process cleaner and greener through carbon sequestration…Algae production fits into Green Plains’ business model since we are already in the business of marketing biofuel and feed products.” BioProcess Algae will be produced at Green Plains’ ethanol plant in Shenandoah, Iowa, from the plant’s CO2, waste heat, and nutrient rich effluent water, all of which algae thrives on.
Biodiesel will be made from algae oil, ethanol from algae starch, and animal feed from algae protein. If biodiesel is the main objective, then an oil rich strain of algae will be grown. If ethanol is the priority, then a strain of algae, up to 96% starch will be grown. Or if animal feed is the primary goal, 60% high protein algae strains such as chlorella or spirulina (also used for human consumption) will be produced and marketed alongside distiller’s grains. All exploited from the waste products of an existing fuel and feed infrastructure. Algae production integrated into corn ethanol refineries will dramatically improve the profitability and the energy balance of the fuel.
We currently have 240 million vehicles on the road valued at $6 Trillion, consuming liquid fuels. And, over 95% of the new vehicles being built also run on liquid fuel. These vehicles consume roughly 140 Billion gallons of gasoline, 60 Billion gallons of diesel fuel, and 9 Billion gallons of ethanol every year. Although E-85 (normally cheaper than gasoline) can be used in some of these vehicles, overall consumption is limited by the small percentage of flex-fuel vehicles on the road, by less than 2,000 pumps, and by lower mpg. Flex-fuel mandates and high compression, turbo-charged engines optimized for ethanol, coming in the next few years, may change that.
What is more significant right now is the phenomenal spread of retail blender pumps that mix E-20, E-30, and E-40 from locally produced ethanol. Blending ethanol at the pump is becoming popular, because many people have discovered the MPG sweet spot of their particular engine. Some people are actually getting better mileage and more power on E-20 and E-30 than they get on regular gasoline. And the fuel is much cheaper, because the shipping cost of locally made ethanol is much lower, and because part of the 51 cent per gallon ethanol blending subsidy is being passed on to consumers.
Still, blending ethanol with gasoline may continue to restrict its growth for years to come. Some auto makers are finding a way around that. Suzuki and several others are introducing vehicles that’ll run from zero to 100% pure ethanol. Now the issue will be: Where can you pump pure ethanol? This is a new beginning for the fuel’s liberation from gasoline, back from the days of Henry Ford’s Model A, which ran on 82% ethanol and 18% water.
Is there a higher use for ethanol than blending it with gasoline? Note the higher octane, the fabulous flame speed, the ultra fast vaporization rate, and the unique way that the hydrogen bonds change when ethanol combines with water. We want to exploit these characteristics. Did you know that if ethanol is mixed in a 50-50 solution with water and then vaporized, it will still combust?
Missing from the current debate is the REAL Next Generation Ethanol, a solution of 2/3 ethanol and 1/3 water. Ethanol-water technology is a basic, inexpensive, onboard reformer that converts the solution into hydrogen, on a conventional ICE engine or coupled with a fuel cell. This is now being demonstrated by DongFeng, a major Chinese automaker, although the original process seems to have been created in 2004 by Lanny Schmidt, Chemical Engineering Professor at the University of Minnesota. Professor Schmidt published a scientific paper in Science magazine called “Renewable Hydrogen from Ethanol by Autothermal Reforming.”
The 2/3 ethanol 1/3 water reformer is remarkable. It produces a stream of hydrogen instantaneously, using very little energy. It is self-powered from byproducts of the reforming process. And, not only does it strip all the hydrogen from the hydrogen rich ethanol, it also strips half the hydrogen from the water.
ITM Power has a device that converts internal combustion engines to run on either gasoline or hydrogen (with the flick of a switch). Combine this device with an onboard reformer, and you can convert existing vehicles to run on hydrogen made from ethanol and water.
As a cheap source of hydrogen, a liquid fuel such as ethanol-water is safe. It can be carried in a conventional liquid fuel tank. It does Not have to be hyper-compressed into expensive high pressure hydrogen tanks, with couplings and hoses that might eventually spring leaks and become problematic. Shipping and handing ethanol-water is cheaper, easier, and safer than shipping and handling bulky, invisible hydrogen. “Hydrogen on Demand” from liquid ethanol-water carried on the vehicle may prove to be the most practical and the most efficient way to power internal combustion engines and fuel cells. Efficient because the ethanol distillation cost is cut in half with 1/3 water left in solution. And because 20% additional hydrogen is coming from the water. This will also dramatically improve the energy balance of ethanol and lower the cost, especially when used in fuel cells, which are almost 3 times more efficient than internal combustion engines.
This is how we can produce massive quantities of domestic biofuel and solve our liquid fuel demand. We could partially distill the ethanol, leaving 1/3 water in solution with the fuel. We could adapt ALL of our over 200 ethanol refineries to produce Algae from their waste products. And from the algae, produce more biodiesel, more ethanol, and more high protein algae feed.
Biodiesel made at or near algae-corn ethanol plants would supply long haul truckers and local farmers with cheaper fuel. Then a transition would be made to high torque hydrogen fuel cell electric tractors and long haul trucks, developed to run on ethanol-water. For next generation cars and light trucks, Plug-in Electric Hybrids equipped with internal combustion engines and then fuel cells could also be powered with ethanol-water.
Ethanol demand would no longer be restricted by gasoline. Conventional vehicles with internal combustion engines would phase-out over a 20 year period, as fuel cells mated to plug-in electric hybrids replace them. With this technology, we consume domestic ethanol and water, instead of gasoline and foreign oil.
Open Source, Publish Freely, Jeff Baker
The only people that still support corn-ethanol subsidies are those who get them and the politicians. Supporting corn-ethanol subsidies doesn’t scare away votes, it buys them.
Jeff Baker?
Please email me at
bobbyfontaine@verizon.net
I follow your comments on hydrous ethanol and write about it as well. I would like very much to to be able to contact you directly and I also have some information I believe you could make very good use of.
Ethanol concentrations above 10%-15% damage most engines and fuel systems made today. Corrosion issues abound if you want your car to last.
As for Jeff Baker’s statement: “Some people are actually getting better mileage and more power on E-20 and E-30 than they get on regular gasoline.” I don’t see how this is possible. Ethanol has less energy than gasoline - how can you get better mileage?
Back to the original article and the use of bailout funds for the ethanol industry - it’s about time the use of algae and other fibrous material was actually used rather than the current oil-fertiliser-corn-ethanol cycle of lunacy. As the ethanol industry stands today - worldwide - the taxpayers funding this have been and continue to be conned by the people making the $.
“As for Jeff Baker’s statement: “Some people are actually getting better mileage and more power on E-20 and E-30 than they get on regular gasoline.” I don’t see how this is possible. Ethanol has less energy than gasoline - how can you get better mileage?”
Theoretically it’s possible because ethanol has a higher octane rating of 110. Although, gasoline has higher energy content, a higher percentage of ethanol’s energy can be harnessed in an IC engine because the higher octane rating allows the compression-stroke and power-stroke to be longer. The same is true for diesel. Diesel fuel has only ~10% higher energy content than gasoline, but a good diesel engine will be about 40-50% more efficient than an equal-sized gasoline engine.
My guess is that if anyone is getting better MPGs with E-20 or E-30, it’s either because it’s a turbo/supercharged engine and the ethanol permits higher boost without knocking, or it’s a modified
engine (higher compression ratio).
An engine that were designed for ethanol (and not simply to accomodate it like current flex-fuel vehicles), but be more like a diesel, longer stroke, higher compression ratio and probably a turbo.
-Tim
The facts are that ethanol:
1. Can be used in almost any car or truck with minor or no modification.
2. It can and is distributed by the same filling stations that currently sell gas and uses all the same equipment.
3. It produces almost no pollution when burned.
4. The same bio-mass that created it absorbs CO2.
5. All corn or other grain products used to make it are intended for animal feed not human food. This corn is not suitable for human consumption.
6. Once corn or grains are fermented, starch is converted into protein, increasing protein content by up to 40%.
7 This protein rich produce (silage) is most always fed to the same animals in feed lots who benefit.
8. Manure from the feed lot, which is a waste product, can be collected and placed in a manure digester that not only reduces the waste by 80% (smell free), but also produces methane (natural gas) which is burned to run the ethanol plants.
9. This entire process is CO2 neutral.
10. Pure ethanol is over 116 octane, meaning more efficient high compression engines can use it.
11. Garbage trash and ag-wastes can also make it.
I agree that it is a bad idea to use coal or other fossil fuels to make it.
However, if the use of ethanol was widely adopted it would solve a lot of the world’s major economical and ecological problems.
When you hear that it that it is bad news consider Deep Throat’s admonition to Burnside (i.e. All the Present’s Men) “Follow the money”
Thermosaver
Derek,
It seems that any time that anybody writes an article criticizing ethahol policy it brings out the clowns. Jeff Baker must spend all of his days cutting and pasting the same replies to blogs like yours. How much is the RFA paying you to do that, Jeff? As for Thermosaver’s facts, they are more like half lies. Let’s take them one by one:
The facts are that ethanol:
“1. Can be used in almost any car or truck with minor or no modification.”
Only in blends up to 10%. Some may be able to handle up to 20% or 30%. But going beyond that, unless the vehicle has been built to be able to use high concentrations, is courting trouble.
“2. It can and is distributed by the same filling stations that currently sell gas and uses all the same equipment.”
Again, only in low concentrations. E-85 requires big investments in special tanks, lines and pumps. That is why both the states and the federal government are offering generous subsidies to filling stations to undertake the conversions. Note: other fuels, like butanol, would not require such investments.
“3. It produces almost no pollution when burned.”
That is not true. It producers fewer of some pollutants that are released through the burning of gasoline, but more of others. On balance, Mark Jacobson, an atmospheric chemist at Stanford University, estimates that if the entire U.S. gasoline-powered fleet were to convert over to E-85 entirely, there would actually be a slight increase in the number of deaths due to air pollution (mainly from increased ground-level ozone).
“4. The same bio-mass that created it absorbs CO2.”
I think the writer means that the amount of CO2 released in burning the ethanol is the same amount absorbed in the plants from which the ethanol has been derived. But that is not the only CO2 released.
“5. All corn or other grain products used to make it are intended for animal feed not human food. This corn is not suitable for human consumption.”
Not true. “Feed corn” IS used in a number of food products. It is also ground and used as food (corn meal) in some poor countries. But for Thermosaver to say that the corn “is intended for animal feed not human food”, as if that settles the food-vs-fuel debate, implies he must really think that most Americans are as dumb as two planks. What does he think those animals are fed for. As pets? Most livestock I know have one purpose in their short lives: to provide milk or to be butchered for meat — i.e., food.
6. Once corn or grains are fermented, starch is converted into protein, increasing protein content by up to 40%.
Thermosaver is referring to distillers’ grains. He fails to mention that the starch used for ethanol still has a value as food. Hogs and chickens cannot tolerate large portions of distillers’ grains in their diets. If ethanol was such a great boon for the livestock industry, why are they complaining so loudly?
“7 This protein rich produce (silage) is most always fed to the same animals in feed lots who benefit.”
Exactly: it benefits mainly beef producers with intensive feedlots (with their requirement to use large amounts of antibiotics, hardly environmentally friendly facilities) located near the ethanol plants. It harms dairy farmers located outside the Midwest, and hog and poultry farmers everywhere.
“8. Manure from the feed lot, which is a waste product, can be collected and placed in a manure digester that not only reduces the waste by 80% (smell free), but also produces methane (natural gas) which is burned to run the ethanol plants.”
It can be, but it is not being done on a large scale.
“9. This entire process is CO2 neutral.”
This is the biggest half-truth. Even the U.S. Government admits, in its life-cycle models, that the CO2 savings from ethanol production, on a life-cycle basis, are meagre.
“10. Pure ethanol is over 116 octane, meaning more efficient high compression engines can use it.”
Yeah? And how many of those can you find on America’s roads at the moment?
“11. Garbage trash and ag-wastes can also make it.”
Yes, and if you were to equip them with parachutes, pigs could fly. The fact is, NO amount of ethanol is being produced commercially from refuse or agricultural wastes at this time.
“I agree that it is a bad idea to use coal or other fossil fuels to make it. However, if the use of ethanol was widely adopted it would solve a lot of the world’s major economical and ecological problems.”
Next joke. The expanded acreage devoted to corn is already contributing to increasing the Dead Zone in the Gulf of Mexico. And the reduction in wheat and soybean acreage through increased corn planting is a factor driving deforestation in the Amazon.
How ironic that Thermosaver should suggest that readers “Follow the money”. On that, I agree with him wholeheartedly. They will find that the money trail leads to all manner of subsidies, tax breaks and government regulations that favor ethanol.
Subsidies paid to the Petroleum Industry are SIX times higher than what is paid on all biofuels combined (ethanol, biodiesel, and biogas). There may also be even bigger hidden subsidies to Big Oil that are kept secret. Coal and natural gas are also subsidized. Furthermore, every dollar spent on subsidizing ethanol results in tens of thousands of jobs created and a huge economic stimulus from the spin off, plus County, State and Federal tax revenue. Ethanol subsidies pay for themselves many times over. The Bush Administration has also been spending over $200 Billion a year to control the oil supply in Iraq and to protect an oil pipeline in Afghanistan. Add that to the cost of your gasoline, diesel fuel and your airline ticket.
We also have a huge Trade Deficit of about $700 Billion a year, and $500 billion of that is caused by buying foreign oil with debt instruments. On that, we pay revolving interest on fuels made from foreign oil. This is taken out of our income tax payments by the IRS and then paid to the Federal Reserve Corporation (not a government agency) which has a monopoly on lending money to the United States Government. We pay no floating interest on domestic ethanol, biodiesel and biogas.
Ronald S: Regarding your abusive and false claim: I am not being paid anything from The Renewable Fuels Association or from any other entity. I am an independent researcher with zero financial interests in any form of biofuels or alternative energy. On the potential of ethanol, I see the cup half full and rising, not half empty.
“Subsidies paid to the Petroleum Industry are SIX times higher than what is paid on all biofuels combined (ethanol, biodiesel, and biogas)”, according to Jeff Baker.
You don’t mention your source, Jeff, but Friends of the Earth — hardly a friend of the oil industry — estimates that “Between tax incentives, royalty relief, research and development subsidies and accounting gimmicks” U.S. oil and gas companies “will receive more than $32.9 billion from the federal government over the next five years.”
http://www.foe.org/pdf/FoE_Oil_Giveaway_Analysis_2008.pdf
Let’s round that up to $35 billion, and make it an even $7 billion a year. It says, further, that Ex-Im and OPIC Loans to the same companies between 2000 and 2006 cost an additional $15.6 billion, or $2.2 billion a year. Let’s assume the annual rate over the next five years will rise to $3 billion a year. Add the two together and you get an even $10 billion a year. The EIA, by the way, reports that subsidies to are only $2.15 billion a year:
http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/execsum.pdf
(Yes, I think that that is an under-estimate.)
Last year, the USA produced 1.85 billion barrels of crude oil, or 77 billion gallons.
http://tonto.eia.doe.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm
If one allocates that whole $10 billion a year in subsidies to just crude-oil production (i.e., ignorring the natural gas produced with those subsidies), it comes to around $0.13 per gallon. If you allocate it to all petroleum consumption consumed (7.55 billion barrels, or 317 billion gallons), it works out at just $0.032 per gallon.
I am not defending oil subsidies, but neither do two wrongs make a right.
Currently, just the federal volumetric ethanol excise tax credit (VEETC) alone is $0.51 per gallon. (It will drop to $0.45 per gallon next week.) A number of small producers benefit from an additional payment of $0.10 per gallon on the first 15 million gallons they produce in a year. And numerous states provide subsidies and tax breaks for ethanol or biodiesel as well.
But let’s only compare federal subsidies. By my reckoning, even the $0.45 per gallon tax credit for ethanol (i.e., the value of just one of the many subsidies on offer) is almost 3.5 times greater than $0.13 per gallon for gasoline, even before adjusting for differences in energy content (which would make it 5 times as big). So, per gallon, you have the subsidy rates the wrong way around.
No let’s go back to the totals. Under the schedule for the new Renewable Fuels Standard, fuel suppliers are required to blend 62.1 billion gallons of “renewable biofuel” (at a subsidy rate of $0.45/gallon) and 7.65 billion gallons of “advanced biofuel” (at a rate of $1.01/gallon for cellulosic ethanol and $1.01/gallon for biomass-based diesel) over the next five years — i.e., between 2009 and 2013.
http://www.ethanolrfa.org/resource/standard/
That comes to $35.6 billion in federal subsidies over the next five years — i.e., more than the FoE estimates the oil industry will receive in “tax incentives, royalty relief, research and development subsidies and accounting gimmicks” over the same period.
I have shown you my accounting. Now kindly show me yours. On the potential for ethanol subsidies to grow, I see the cup already full and spilling over.
P.S., Imports of crude oil, fuel oil and other petroleum products was $317 billion dollars in 2007. Perhaps the bill will approach $500 billion dollars in 2008. But it is likely to be back at the 2007 (or lower) in 2009. Still a big number, I agree.
P.P.S., A return of tens of thousands of jobs created per dollar spent on subsidizing ethanol is an incredible return indeed. At that kind of pay-off, every man woman and child in the whole world should by now be working for the industry.
Corrections (always easier to see once in print):
“The EIA, by the way, reports that subsidies to NATURAL GAS AND PETROLEUM LIQUIDS IN 2007 WERE only $2.15 billion a year:”
“… 7.65 billion gallons of “advanced biofuel” (at a rate of $1.01/gallon for cellulosic ethanol and $1.00/gallon for biomass-based diesel) … “