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How to Fix a Broken Biofuel Incentive System
Posted by Robert Rapier on October 14, 2011 - 10:10am
While the mandates for corn ethanol have been met, I said quite explicitly from the start that the cellulosic ethanol mandates were wishful thinking, and that there was practically zero chance of meeting the targets. There are a number of reasons for this, but the fundamental reason is that cellulosic ethanol is not new technology, and can’t be expected to advance according to Moore’s Law. The United States actually had two commercial cellulosic ethanol plants in operation by 1920. Both plants were later shut down due to poor economics, and there were numerous attempts over the ensuing decades to commercialize cellulosic ethanol.
Of the 100 million gallons mandated in 2010 and 250 million gallons mandated this year, how much was actually produced? Zero qualifying gallons. As of today, there is still no qualifying production. For 2012, the EPA is considering reducing the 500 million gallon mandate to as little as 3.5 million gallons. This is a reduction of over 99%, and should be a crystal clear indication that this system is not working as intended.
But even though product isn’t being delivered, taxpayers and consumers are still paying a price. We are on the hook for grants and loan guarantees that have been given to plants that have not — and in some cases never will — produce any cellulosic ethanol. Further, the system penalizes gasoline blenders for not purchasing cellulosic ethanol — despite there being no qualifying cellulosic ethanol on the market to buy. Due to the mandates, blenders must either purchase cellulosic ethanol — or buy waivers that are akin to indulgences for their sin of not purchasing cellulosic ethanol. This drives up costs for blenders and ultimately consumers. So taxpayers are subsidizing plants, blenders are spending money to meet mandated obligations that can’t be met — and zero gallons of qualifying cellulosic ethanol have been produced under this system. The current system is failing badly for a very fundamental reason: You can’t mandate technological breakthroughs, and therefore the government should not attempt to choose technology winners such as cellulosic ethanol.
Congress is now under intense pressure to slash spending across the board. There is a real risk of total loss of support for next-generation biofuels given the history of the program to date. What is really needed is a different system that provides incentives only when product is delivered, and doesn’t penalize taxpayers, consumers, and gasoline blenders if no product is delivered. The current system is convoluted and hard to understand for most people, and it makes it easy to hide behind excuses if promised technology fails to deliver. So let’s strip it down, make it simple, and reduce the risks to taxpayers.
My Plan: Award Direct Per Gallon Subsidies for Oil Displacement
Instead of offering grants and loan guarantees for cellulosic ethanol producers — and forcing blenders to pay when they can’t purchase product — simply change the system to a direct per gallon subsidy for product that is sold. Here is how such a system could work.
1. Administer this program from the Department of Energy rather than the Environmental Protection Agency. This is more in line with their area of expertise and responsibility.
2. Eliminate the de facto carve-out for cellulosic ethanol. We want to displace petroleum here, but it isn’t necessary to pick technology winners. Perhaps someone has a viable process for biomass-based DME that could displace lots of diesel and drastically reduce emissions. Under the current system, the playing field is politically tilted strongly in the direction of cellulosic ethanol. But let’s assume for a second that cellulosic ethanol simply fails to deliver. Then under the current system we have done a tremendous disservice to competing biofuels by choosing cellulosic ethanol as a winner, and we have wasted valuable time and money chasing dead ends.
3. Offer an initially generous, but declining direct per gallon subsidy for all qualifying biomass-based fuels. For example, offer a direct $2/gallon subsidy for the first 250 million gallons of qualifying fuel produced and sold as transportation fuel from a facility, and then $1/gallon for the next 250 million gallons of qualifying fuel produced. Based on the expected size of these facilities (probably no more than 50 million gallons or so due to logistical issues) then that would amount to a government subsidized off-take for 10 years.
4. Require all interested parties to register and pay a modest fee to the DOE to have their process evaluated. That sets the bar pretty low, but serves as a filter against the DOE being overwhelmed with half-baked ideas. If the DOE approves the process as qualifying (which I would base largely on the level of oil actually displaced -- which means processes have to have favorable energy balances) both parties sign a contract committing the DOE to subsidize the qualifying product. This lowers the risk of having funding cut on the basis of the next election.
5. Eliminate all grants and loan guarantees for these facilities. Why? Because they subject taxpayers to undue risk, and under the proposed system the prospective producer has what is effectively an off-take agreement with the DOE that should be financeable by a bank.
6. Let the technologies then battle it out for supremacy in the marketplace just like other products breaking into new markets. We will have simply tilted the playing field away from oil and toward biofuels. If a $2/gallon subsidy isn’t enough to generate some next generation biofuels, then we will need to seriously reevaluate the viability of some of the next generation candidates. This system will certainly separate the pretenders from the contenders.
Private Business Should Take Over From the Government and Taxpayers
Such a system would have huge advantages over the current system. First, private business is now assuming the technology risk, and therefore will be responsible for conducting a high level of due diligence. This takes the technology risk assessment out of the hands of the government. Second, taxpayers won’t end up financing plants that never deliver, and gasoline blenders won’t pay penalties for product that never appears. Third, such a system makes it really clear just how “out of the money” certain technologies are. For instance, if you don’t see any algal biofuel producers stepping up under this system, then you know their costs are more than $2/gallon above those of the equivalent petroleum product.
Critics of this system might suggest that refiners would refuse to buy the product because they don’t want competition for oil. There is absolutely no merit in that argument. Oil companies have to buy most of the oil they refine anyway. They buy raw materials and sell them as fuel. A refiner is in the business of making money. If a cellulosic ethanol producer can produce ethanol for $1 or $2 a gallon — as many have claimed — they could sell to the refiner at far lower than the price of oil. For that matter, if they made it for $1/gallon they could give it away and make money with a $2/gallon subsidy. The refiner is going to buy whatever makes them the most money (which is why oil refiner Valero bought six ethanol plants). Maybe that’s cellulosic ethanol for $1.50 a gallon, or maybe it’s drop-in algal diesel at $2.50 a gallon. But what oil companies will not do is spend $3 a gallon buying oil from Venezuela if they can get renewable diesel from Solazyme at $2.50 a gallon.
Other critics might say that we have no business subsidizing biofuels in any case. On that point, I disagree. I think our dependence on oil is a threat to our economy and our national security, and as such warrants spending money on aggressively developing alternatives. While biofuels can't possibly replace the amount of oil we consume, they can make a contribution and I believe they can be done responsibly. But I leave that debate for another day. For the sake of this essay, let’s say that if we decide that biofuels should be subsidized then what I am proposing is a better way to go.
Who might oppose such a system? Obviously, those who have gotten (or expect to get) grants and guarantees under the current system — but who will not be able to deliver per their promises — would be the ones most staunchly opposed. After all, these are the companies that are are ultimately unaccountable for the taxpayer money they spend. A second category that might come out against my proposal are suppliers of equipment and raw materials who are benefiting under the current system. As a hypothetical, under the current system we might see ten plants built and one deliver. Under my proposed system, we might see five plants built and three deliver because more of the pretenders will be screened out. Who loses in that scenario? Anyone who lost out on building those five additional plants that ended up rusting away when they couldn’t deliver. (In fact, Novozymes, a clear beneficiary under the current system since they are a major provider of enzymes to this imagined industry -- unsurprisingly came out against my proposal).
The system I am proposing would be a transparent way to filter out those who are essentially just hyping their technologies in order to receive tax dollars. Thus, you can imagine that those who are after tax dollars under the current system might strongly oppose such a change. But if a cellulosic ethanol producer can really produce ethanol for $2/gallon — and you don’t see them building plants when a $2/gallon subsidy is available — then you can be pretty sure that they can’t really do what they claim they can do. Producers will be paid for what they deliver as opposed to what they claim they can deliver, and it isn’t taxpayers who are on the hook for their hype.
Note: I will be presenting at this year's ASPO Conference in Washington, D.C. Current plans are that I will give a talk on how to conduct technical due diligence on energy companies, a talk on our "new energy reality", and then finally I will participate in an investors roundtable that includes Jim Hansen, Charles Maxwell, and Charles Schlumberger.
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Corn based ethanol was designed to be a bridge into cellulosic ethanol. If cellulosic ethanol is a bust than it stands to reason that we should be doing away with the mandate for corn based ethanol. Clearly, there are no lessons/technology from corn based ethanol that is going to be of any benefit in getting cellulosic ethanol to market.
It seems to me there are two arguments that can be made for subsidizing bio-mass fuels. (a) because they reduce greenhouse gases or (b) because they reduce dependence on imported oil. If it is the former than it is preferable to have a broad strategy on CO2 reduction- not just bio mass. It is quite conceivable that there are other things that we could be doing to reduce CO2 that has a bigger bang for the buck. If we are trying to reduce imported oil than the simplest strategy is to put a tax on imported oil.
Bottom line while your proposal is better than the existing mandates both are fatally flawed.
If this proposal ends up subsidizing Corn based ethanol then it is indeed fatally flawed. You would have to exclude corn and other food products from 'bio-mass' in order for this to work. I would agree that a tax on carbon to fight greenhouse gases or on imported oil to decrease dependence on foreign oil would be more efficient, but they seem politically impossible in the US at the moment.
"If this proposal ends up subsidizing Corn based ethanol then it is indeed fatally flawed."
This would apply to next generation fuels, not corn ethanol.
"If we are trying to reduce imported oil than the simplest strategy is to put a tax on imported oil."
I have long advocated higher taxes on oil, period. It will take more than one strategy though. I think this gives the best possibility for generating some next generation fuels without putting taxpayers on the hook for the 90+% that will fail.
"It is quite conceivable that there are other things that we could be doing to reduce CO2 that has a bigger bang for the buck. "
Lower the speed limit
Winter will soon lower the speed limit without government action. Based on my gas records, MPG does not improve in the winter.
Even in the summer, making me drive to work in 4th gear does not seem likely to improve my mileage.
http://drive55.org/content/view/117/1/
"Based on my gas records, MPG does not improve in the winter."
One reason for that is that winter gasoline generally has lower energy content. Butane is in there at a higher percentage, replacing other blend components that have higher BTU content.
The original commenter surely knew this was not an apples to apples comparison, but -- A few other contributing factors: Reduced rolling efficiency due to surface conditions and winter tire choices, reduced engine efficiency due to increased warm-up idling and operation at lower engine temperature, increased vehicle weight and reduced aerodynamic efficiency due to extra winter equipment and mud/snow. That'll do for going on with. It remains true that for a given set of conditions, there is an energy efficiency optimal speed, and that for most vehicles, in most conditions, that speed is less than maximum interstate speed limits.
The issue I see is that high priced substitutes for oil make our economic problems worse. Just as high-priced oil tends to cause recession, so do high-priced substitutes. Because of this, it is important that subsidies be temporary.
I think your proposal does a good job of addressing this issue. Anyone can see that if their product is not likely to be down to the price of oil in 500 million gallons can move on. This helps remove low EROEI products which basically recycle fossil fuels. The total subsidy for any one product will be limited to $750 million according to your formula. The formula could be tweaked a bit to make the amount different, but the principle seems right.
In general I too like the layout of Mr Rapier's plan, but with the Federal Government in the very poor economic state it is in presently I don't think the Government, the Country or it's people can afford to pay for it.
At the same time I recognise that we may face a near term decline in oil availability which would necessitate turning to some type of alternate fuel if we want to keep business as usual to keep going, but personally I don't think we as a people or nation can keep the current deficiet spending going much longer.
I think the pending economic collapase may drop oil prices to levels that will just about kill bio-fuels for the near and maybe mid term due to financial non-viability.
This is one of those damned if you do and damned if you don't situations - And I really don't know what will actually happen. One can only plan for the worst and hope for the best?
"In general I too like the layout of Mr Rapier's plan, but with the Federal Government in the very poor economic state it is in presently I don't think the Government, the Country or it's people can afford to pay for it."
You can bet they are still going to budget money for renewable energy, but with what I am proposing they won't have to pay unless someone delivers. So it would be a much more effective usage of tax dollars.
I agree. This is how it should be with all renewable energies.
And the tax-payer does not even have to pay for it. Just add a "freedom-contribution" on gasoline and diesel to directly pay for renewable transportation fuels. So, people who choose to conserve fuel (e.g. not driving a F-150 or driving over 70 mph on the highway) are also rewarded for it.
In addition: This financing-model would actually reduce the tax-burden (no tax-payer-money to renewable industries & less unemployment) and increase tax-revenue (renewable businesses and their employees pay taxes) at the same time.
"The formula could be tweaked a bit to make the amount different, but the principle seems right."
Yeah, the numbers are just placeholders. I don't know what the right amount should be. We could adjust that, but it would be very transparent. And taxpayers would not end up subsidizing a bunch of plants that never deliver.
Personally, I think if you put a $2/gallon subsidy out there, it would become clear very quickly that a lot of these guys are just blowing smoke when they fail to react to that incentive.
Speaking of biofuels, I have a question about the IEA key stats that perhaps someone knowledgeable here can answer: According to the IEA key stats, Biofuels and waste account for 13 % of the world's final consumption, and 10% of the world's primary energy supply. The glossary says that "Biofuels and waste comprises solid biofuels, liquid biofuels, biogases, industrial and municipal waste". According to the BP world energy statistics, liquid biofuels amount to only 59 Mtoe in 2010, just 0.6% of the world primary consumption.
Can someone tell me where the remaining 9.odd % are? Is this biomass as in wood? Is it really that much?
hoping for enlightenment
Martin
Short answer, pretty much. About 7% of total global energy consumption is household wood/dung/etc. use (primarily for cooking) in non-OECD countries.
As you note, the IEA shows 1237.67 mtoe in biofuels and waste primary energy supply, or 10.2% of the 2009 total. You give BP commercial liquid biofuels for 2010, for 2009 these were even less, at 52.1 mtoe. Thus, roughly 95.8% of the IEA biofuel and waste energy supply is not commercial ethanol and biodiesel. Given the press attached to these fuels, this is somewhat surprising. Using EIA numbers for the U.S. we find that 2.6* quads of wood and waste energy was supplied in 2008. Some of this was residential firewood, landfill gas, and municipal waste incineration, but about 4/5ths of it was wood and wood products burned by paper/pulp/saw mills. U.S. wood/waste thus represents another 5.3% of global supply of biofuel and waste energy. Sweden produces about 1/3rd of their energy from biomass but this is just 1% of global supply. IEA numbers indicate about 4/5ths of the global supply is non-OECD. They also state 2.5B people's primary energy source is fuelwood/dung/charcoal/etc
"Sweden produces about 1/3rd of their energy from biomass"
this must be a mistake. perhaps the source is here:
http://www.renewableenergyworld.com/rea/news/article/2010/06/biomass-gen...
however, i think the correct statement is that 1/3 is renewables
http://www.erec.org/fileadmin/erec_docs/Projcet_Documents/RES2020/SWEDEN...
a large part of renewables is hydro. also peat is apparently counted as renewable. i couldn't find the correct number. my guess is that it could be about 5%. by the way is peat counted as biomass?
Thank you for the correction. It appears that the best number for percent of total Swedish energy supply from biofuel, peat, and waste is 22%. Please see the excellent data from the Swedish Energy Agency. The 1% of global biofuel/waste energy supply appears to be roughly accurate.
http://webbshop.cm.se/System/DownloadResource.ashx?p=Energimyndigheten&r...
As usual, how we count makes a big difference. The 1/3rd number for biofuels appears to reflect the share of total final use, rather than total supply. The main difference is that nuclear power plant thermal losses are excluded from the denominator. The level of penetration by this energy source in Sweden is truely impressive.
70% of combustion based electricity in Sweden is produced by biofuels. This is less impressive than it sounds, since most electricity in Sweden is produced by hydro or nuclear (only 12.4% is combustion based). 38% of industrial energy use in Sweden is direct biofuel use (an additional 41% is electricity or district heating). This is due to the high fraction of industrial energy use in the pulp and paper and wood products industries (about 50% of the Swedish total). Just 22% of Swedish industrial energy use is fossil fuels. 41% of Swedish residential/commercial energy use is either direct biofuel use (10%) or use of district heating (31%). District heating is dominated by 70% energy input from biofuel and waste combustion. Transport, as elsewhere, remains stubbornly fossil fueled, biofuels make up just 5.1% of (non-electric) Swedish energy consumed for domestic transportation.
benamery, thanks for the details!
cheers
Martin
Last month while in Sweden I noticed quite a few people driving cars. Based on such anecdotal evidence, I dug a bit deeper and can now report to you that Sweden produces about half of its energy consumption, importing the balance. Biomass (the kind you burn) produces heat and electricity, typically with cogen as detailed above. But that doesn't get you very far in the transport sector obviously, and brings the overall contribution of biomass lower when one clears up the confusion between consumption (biomass smaller) and supply (biomass larger).
OTOH, bio_fuels_ in Sweden are inconsequential (thankfully). The biofuel advocates were challenged by Tad Patzek and myself in late 2007 at KTH in Stockholm with a double-hitter pointing out the limitations of biofuels and the potential of solar for transport, even in Sweden. The economics for solar transport are sound: Swedes have half the sunlight but they pay twice as much for petrol.
Now Swedes can retrieve our papers whenever biofuels come up for consideration, so there is less chance that a Khosla type will pull the wool over their eyes and trick them into devastating their woodlands to produce biofuels just to run a fleet of hopelessly inefficient cars for a few years before their ecosystem collapses, as will likely happen wherever biofuels are pushed beyond the limits, e.g., fueling a few tractors and emergency vehicles.
There’s no reason for special incentives for cellulosic ethanol when some other biofuel may turn out better. A more general approach would be to penalise fossil carbon via a national CO2 cap or carbon tax. If as often claimed corn fermentation ethanol is oil and gas dependent via farm diesel and urea it won’t survive. CO2 from bio-carbon is already above ground and escapes penalty. That way fuel based on coal, oil, gas or tar sands goes up in price and biofuel is able to compete better.
That includes the no-fuel option such as EVs assuming the electricity is low carbon. Suppose jet fuel had to be made from coal but the CO2 cap was just 20% of current emissions. If people wanted to fly then coal fired power stations might have to be retired to stay under the cap in order to make jet fuel. Rather than an incentive scheme for biofuels it might be simpler to impose penalties on fossil fuels.
"There’s no reason for special incentives for cellulosic ethanol when some other biofuel may turn out better."
That's exactly what I said.
RR,
If informed common sense and numerical literacy were the criteria by which decisions were made in this country, you would no doubt be very near the top of all the presidential hopefuls shortlists for a very high position in the federal energy bureaucracy.
Unfortunately,speaking as a (former) thoroughly disgusted teacher, I must point out that both informed common sense and numerical literacy are in desperately short supply everywhere from the Ivy League faculty lounge to Skid Row.
But I will remain a faithful, appreciative reader of your work anyway. ;-)
OFM - I think you should get a gold star next to your name on the chalkboard, I think you have identified the problem, and very succinctly.
RR - I too am a big fan. I read your DME link. I also live deep in the woods... Wood house dwelling, charcoal BBQ-ing, tree hugging, disconnected delusions aside, I think we are fast approaching a world of hurt with regards to total energy used.
I fear for the forest, as desperation takes over to heat 2500 sq ft homes and drive 60 miles to work. I can visualize us turning this planet into Easter Island so easily. On my darkest days I think a plague might be good.
I wish you the best on your research, I think it is very important, I like tractors better than horses. The simultaneous need to power down is still the elephant, imho.
This is true, putting $2/gal tax on fuels in the US would be simple to implement, and would make a big decrease in consumption, while providing the same $2/gal (equivalent) to biofuels. Such a level of tax would bring the US up to about half the retail price of fuel In Europe!
BUT, while simple, it is politically much, much harder. JFK chose to do things because they were hard, but today's politicians seem to prefer just the opposite, so, as simple as this option is, I can't see it being implemented.
RR's plan is, in effect, a biofuel version of the most successful scheme to date for enabling solar and wind electricity -a feed in tariff (FIT). This has worked well for solar and wind, because it does not reward people who put panels in shaded places, or turbines in calm areas, it rewards on what is actually produced - period. It is paid for a by a levy on all electricity customers, and a fairly small one at that.
Given the US uses about 150bn gal of gasoline each year, a 1c/gal levy would raise $1.5bn per year, enough to subsidise 750m gal of (non corn, non soy) biofuels. That is about 749.5m gal more than is being produced today.
Funding it this way - gas tax instead of general tax - mirrors how the FIT is funded, and avoids penalising those who have given up their ICE vehicles altogether.
To keep the loop closed, the $2/gal subsidy is only paid on vehicle fuel - if the aviation industry wants a subsidy for jet fuel than they can pay a 1c/gal surcharge first.
Another way to do the same thing would be an import tariff of 1c/gal (42c/bbl) on all imported crude oil, and then the $2 subsidy can be fairy paid to any advanced biofuel used for any purpose.
But, to keep it simple, I would apply the surcharge to refined gasoline and diesel fuels, and the $2 subsidy is available to any advanced biofuel that displaces these.
It would avoid more of the Range Fuels and Solyndra type debacles that we are going to see.
It also gets around the "cherry picking"approach that currently exists - where only operations that are big enough to get the attention of VC's and DoE get funded. The simple FIT type subsidy would allow small operations to get in the game too. After all, Steve Jobs, Bill Gates etc started in garages, but someone trying to do that in biofuels is shut out of the game, and is at a huge disadvantage compared to the big boys.
In this regard, the simple subsidy would enable and encourage some "American ingenuity", whereas the only ingenuity encouraged by the current system is on the financial side, not the fuel side. That is why Vinod Khosla can claim clean tech has been a success because he and other VC's have made over a billion dollars, even though they have actually produced zero biofuel. Maybe we should call them "vapourware capitalists"...
This is an intriguing idea, Robert. If I understand your intention, it would make perfect sense to take this idea one step further and create incentives for _mobility_ rather than _fuels_. If that were done, then we could abandon fuels altogether and achieve dramatic efficiency gains at the same time. Fuels after all have to do with burning things, an awkward way of moving things (kinda smelly, you know) in this modern world.
Consider: the efficiency of an ICE is arguably on the order of 10%. (RMI offers 13%; who's splitting hairs?!)
The efficiency of biomass with respect to sunlight is of the order of 1%. Take it to fuels at any plausible efficiency and you have <<1%. Now stick this pathetic fuel into an ICE at 13% to net <0.1% efficiency and you may have achieved the performance of the Puffing Billy (oldest extant locomotive, operated by my great-great grandfather in England, taking coals to Newcastle)!
Oh, I almost forgot to mention the objective — moving people not metal. With 2 tonnes of metal and 100 kilos of people, we are moving 5% people. With fuel at <0.1% * 5% our cellulosic people mover is <0.005% efficient.
Back to the future!
We are talking about transportation, after all. And we find each other on this website because we are pooling our wisdom to find ways to get away from using up our planet's remaining endowment of petrochemicals ... and driving civilization at high speed against a brick wall of resource limits... and doing our best to avoid exhausting our soils and water supplies.
If we allow for market forces as you propose, we can build a solar powered transport system above the streets (saving countless human and animal lives) and derive a payback against gasoline — without subsidies — in < 4 years. How can that be? Well, it's really no contest: PV and other forms of solar are up to 20% efficient, and we can deliver electricity in real-time directly to the wheels with negligible losses, say 15% net. With suspended vehicles weighing about twice their passenger loads, from my previous post 20% PV * 50% load = 10%>>0.005% or 2000:1 improvement over biofuels. Add in energy storage, infrastructure requirements, cloudy weather and nighttime, and you might only be 100:1 better off with solar transport in comparison to biofuels.
So we won't need those tax dollars at all, and we won't have to fight wars over oil, either. Oh, and the aquifers might begin to replenish, since they won't be needed to supply water to grow and make fuels.
If a new technology offered a 2X improvement, I can't see why anyone could afford to budge. But since most people won't have the discretionary funds to buy EVs as peak oil drives prices up, I think this 2000:1 or 100:1'improvement will be hard to stop, once we have a few of these up and running.
It is not exactly clear what you propose for this transportation system.
But you seem to be arguing that PV is much more efficient on an energy per unit area basis. It certainly is. But area is something that is not in short supply. What is in short supply is money & energy. PV systems are very expensive and so would be a huge 'suspended vehicle' system. I can't see how that would be economically feasible.
The concept of humans appropriating net primary production (HANPP) is worthwhile to consider when claiming '...area is something that is not in short supply'.
PV is expensive relative only to heavily subsidized fossil fuels. Either subsidize solar or get rid if fossil fuel subsidies.
Suspended ultralight vehicles use 10X less energy than a car or EVs. Initially they will compete with underground metro lines, for example, which are 50X more expensive than surface rail. But surface rail lines are disruptive, dangerous, inefficient and noisy.
As for details, join the solarevolution (dot com).
I agree with RR that cellulosic bio fuel is dead or at least should be dead. I call it zombie ethanol because it refuses to die. Just when you think it's finally dead it comes back to life.
Why is that? I blame it on the phony food vs. fuel debate surrounding corn ethanol among other reasons. Promoters of this argument insist that corn is human food and that somehow corn ethanol is taking food out of the mouths of starving children around the world.
This argument has been bought by many. Cellulosic ethanol supposedly takes non food base stock and makes ethanol. As RR correctly points out, the problem is that it doesn't work technically. The other reason it doesn't work is that scaling the base stock to the the huge amounts necessary requires a duplication of the corn based ethanol base stock infrastructure.
Critics of corn ethanol do not appreciate the volumes and storage/handling facilities/equipment in place that support it. It is a matter of economic efficiency to use what is already in place.
For the most part corn is not human food. It is animal food, mostly pigs and poultry. Both of these are energy wasters in that the calories in are much more than the calories out. This should be obvious to EROEI believers.
The correct use for cellulose is not ethanol. It should be as feed for ruminant animals which can harvest and use it directly. This requires a shift in eating habits away from pork and poultry to beef and other grazing animals.
But the pork and poultry industries do not want to give up market share to beef and have managed to maintain their offerings at prices below that of beef and dairy.
The reason for this is that corn is a very concentrated energy form.
It is the same problem that cellulosic ethanol faces. The feedstock is not concentrated, nor is it easily handled. Cows can not be produced in factory farms like pigs and poultry where concentrated feed is automatically fed to caged animals.
Instead beef requires a long time from gestation to market and the animals are often moved from place to place to find feed rather than have the feed come to them as in factory farms.
This shift to beef and dairy is not likely to happen until pork and poultry prices are much higher. The only thing that can make that happen is high corn prices.
As I see it corn ethanol is necessary to drive up corn prices to a level that beef fed on cellulose is economic. It is the factory farm pork and poultry industries that have to die and so does zombie ethanol.
Corn ethanol is the tool to make it happen.
Corn ethanol is a tool for destroying our soils and aquifers, not to mention our neighbors to the south, and is not sustainable. Pigs and cattle will probably go by the boards too.
Please remember that corn is people food down south of the border where peak oil and high corn prices (NAFTA) will combine to create intolerable conditions in the next few years. Tunisia, Egypt, Yemen: riots protesting food prices caused by rising oil prices caused by declining and failing net exports. Mexico is not far behind... and not far away.
Fuel-based ground transport in all its forms is like cooking with campfires in urban kitchens. Maybe fuels will persist for trucks and emergency vehicles but all these efforts to create liquid fuels are distractions. It amazes me that TOD participants knowledgeable about peak oil are still trying to resuscitate the moribund 1% efficient automobile to preserve the same American way of life that Cheney defended and Obama propped up with shovel-ready (BAU) stimulus. The automobile (+trucks, buses, motorcycles...) kills a million people a year, injures countless others, precipitates wars over oil, and divides communities. We are at a unique juncture with a crisis looming, to either dig ourselves in deeper or move beyond 2 tonne behemoths per person, beyond oil, beyond ethanol, beyond biodiesel, beyond oil wars, beyond soil depletion, beyond aquifer destruction.
Sweden, Belgium, England, Germany, Netherlands are on the case. Where is TOD?
Just an observation, X: it may not be apparent in 'corn country', but there has been a shift in our area from a diversity of crops to mostly corn. Several of the larger farms here (and many smaller farms) have changed to corn-only for several years. Where they used to grow cabbage, alfalfa, potatos, tomatos, sorghum, much more, we see only corn these days. Effects: less crop rotation, less variety, and higher prices for, what you would term, "actual food crops". These staples not only cost more, but are being brought in from other areas while the corn is being trucked out to who-knows-where.
These knock-on effects are real, even if you continue to choose to ignore them. Many of these other crops were more labor intensive as well, providing jobs and capital injections to the area. Your "concentrated energy" is concentrating wealth and jobs elsewhere. Enjoy your subsidized good fortune while it lasts.
Corn was the staple food of the Americas for centuries. The most efficient conversion of sunlight to human food. The best of the C4 plants. We just do not use it correctly/efficiently.
Entropy bats last
We eat a lot more corn then you think. Most of it is highly processed.
Cattle are fed corn in feed lots to fatten them up.
a lot of corn tortilla are eaten south of the border.
Over the years, I have read with interest your informed comments on cellulosic ethanol. Barring a technological breakthrough it has always looked like a bad bet. Clearly, as pointed out in this article, the current policy is based on fantasy and large amounts of lobbying aimed at promoting self-interested goals.
Nevertheless, I can't see why the government should have any subsidies to encourage one type of non-oil based fuel over another. It makes more sense to have a subsidy on any fuel that they can blend into gasoline or diesel that replace petroleum based raw materials. The market could then decide which ones work and which don't.
BAU. If there will be subsidies, it makes more sense to subsidize mobility, not fuels. "Fueling" transport means efficiencies too low to justify and continuing pressure on agriculture. The IC engine is obsolete for personal transport.
Better yet, if government were to get out of the way of innovation (e.g., 1984 bust-up of AT&T), and stopped subsidizing BAU altogether, viable solutions would emerge.
We cant continue this corn biz making ethanol and selling to China as well as others.At least not unless we have another Earth to grow more corn.China alone wants more and more large amounts of corn.Where from?
October 14,2011
"China has made one of its biggest-ever purchases of corn on overseas markets, buying 900,000 metric tons of American corn and showing that growing Chinese demand will play an ever larger role in global grain prices"
http://tinyurl.com/3rhsm7f
So how does this plan produce funds, votes or both for politicians? There must be quid pro quo, no?