It’s not often publicly remarked upon, but the emphasis on biofuel capacity in the United States has a bit of an international political component to it. American farms exported well over 100,000 metric tons of corn and oilseed in 2010. Some major portion of that production was sent to oil-rich areas which are short on food. The E85 boondoggle can be viewed as a simple declaration to those nations: we can burn your food in our cars, but you can’t eat your oil.
America’s pretty good at producing another item besides food, however, and if early research is any indication, it could be used to run a significant portion of the nation’s car and truck fleet.
A brief piece in the Wall Street Journal’s “Dealbook” discussed the potential of natural gas powered vehicles, largely as a way to stop falling prices for natural gas.
One hope for many natural gas producers reeling from collapsing prices is wider adoption of natural-gas-powered cars.
The biggest hurdle so far: lack of infrastructure to refuel them.
But Steven Mueller, CEO of Southwestern Energy, says if 10% of passenger cars were powered by natural gas, gasoline prices would fall by $1.60/gallon and gas producers would get 4 billion cubic feet/day in demand.
One of the biggest complaints about biofuel is that food is turned into fuel while people go hungry. Price hikes for staples have been blamed on ethanol production, especially subsidized ethanol production. Ethanol is usually made from sugarcane, corn, and beets. Grapes find their way into fuel tanks instead of wine glasses, rice is often driven instead of eaten. Woodscraps and agricultural residue would be less of a moral and financial hazard if converted into fuel. However, it proved resistant against yeasts. Today, Toyota took reporters to a lab in Aichi and showed off a yeast that wood-scraps, dead leaves, straw etc find highly irresistible. Read More >
As a relatively pragmatic person who generally chooses the imperfect-yet-achievable path rather than agonizing over the perfect-but-unattainable goal, this chart [from a fascinating Boston Consulting report, in PDF here] frustrates me. I understand why Americans choose hybrid-electric cars as their most favored “green car” technology, but from their it gets fairly crazy. EVs are fantastic on paper, but in the real world they’re still far too expensive, their batteries degrade, they have limited range, oh and did I mention that they’re freaking expensive? Biofuels, America’s third-favorite “green” transportation technology can be fantastic in certain limited applications, but the ongoing ethanol boondoggle proves that it will never be a true “gasoline alternative.” Finally, at the bottom of the list, Americans grudgingly accept only relatively slight interest in the two most promising short-term technologies: diesel and CNG. Neither of these choices is radically more expensive than, say, a hybrid drivetrain and both are considerably less expensive and compromised than EVs at this point. So why are we so dismissive of them?
Cracks continued to in the ethanol industry’s once-impregnable political vanguard, as the San Francisco Chronicle reports that the Senate has voted to roll back the Volumetric Ethanol Excise Tax Credit (VEETC) as well as import tariffs on foreign-produced ethanol. This rollback of multi-billion-dollar ethanol credits failed earlier in the week, when the Detroit News reports automakers came out in opposition of a bill that would have required that 95% of all cars built in the US be capable of running 85% ethanol by 2017. The Senate did fail to pass a repeal of a government ethanol blending mandate that underpins the VEETC, however, and funding is moving forward for ethanol blending pumps. Still, the Senate’s repeal of VEETC alone means taxpayers could save over $5b per year on subsidies, and as one expert puts it
“Looks like we’re going to be relying on the biofuels mandates to make sure blenders use biofuels, rather than bribing them to use it with $6 billion,” [Bruce Babcock, professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State University] said.
In fact, Babcock thinks killing the subsidy could help ethanol because it would come out from the stigma of being a subsidized industry. And removing the subsidy may strengthen support for the mandate, and the tariff on imports.
Reuters reports that White House has approved a label for E15 ethanol blends, which warn motorists not to use the higher blend if their vehicle was built before the 2007 model-year. What Reuters won’t show you is the final label design that was approved… was it the EPA’s proposed design (above), or one of the ethanol lobby’s proposed alternatives (see gallery below). Clearly there’s a bit of a difference between the two, and the EPA was under quite a bit of pressure to not go with the orange-and-red “CAUTION!” version. In documentation from hearings on the E15 labeling issue [PDF], you can read executives and lobbyists expounding at length about the fact that ethanol is good for America, and that labeling shouldn’t discourage the use of E15. Which it doesn’t…. in 2007 and later vehicles. And if you check the EPA’s docket on the issue, you’ll find plenty of good reasons for preventing “misfueling”. Luckily few gas station owners are likely to invest in E15 pumps anyway, so you may never actually see this label in the wild.
Over the course of TTAC’s coverage of US ethanol subsidies, I’ve often wondered why nobody made a political issue out of slaying an ever-growing waste of tax dollars ($6b this year on the “blender’s credit” alone). And with the political rhetoric about America’s debt prices rising, I’ve been wondering with more and more regularity when someone will finally take the ethanol fight to the American people, who are already voting against ethanol with their pocketbooks. But just last December, Al Gore explained why not even he, an environmentalist standard-bearer, could oppose the corn juice he knew was bad policy, saying
It is not a good policy to have these massive subsidies for first generation ethanol. First generation ethanol I think was a mistake. The energy conversion ratios are at best very small… One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.
The Iowa primary is a key early contest in the Presidential election, and because Iowans grow and refine a huge amount of corn ethanol, campaigning against ethanol subsidies in Iowa is a non-starter. At least that’s what the conventional wisdom was before today, when, with nearly nine months to go before the primary, the impossible just happened. Read More >
TTAC has paid close attention to the fortunes of ethanol in the United States, where grossly wasteful subsidies have forced the corn-derived fuel into the fuel supply in growing percentages, drawing backlash from small but vocal portions of the population. But much of the ethanol ire is directed at higher blends like the recently-approved E15 and the increasingly-unpopular E85 mixtures. Meanwhile, most Americans regularly fill up their tanks with E10, which has become standard at pumps across the nation. But in Germany, where E10 was only just introduced, people are rejecting the low-ethanol blend that even the most vocal American ethanol opponents use every day. Initially, the biofuel industry in Germany blamed a lack of education for suspicion of E10, but according to Autobild, some 75 percent of German drivers now know whether their vehicle takes E10 (and most do)… but still, only 17 percent actually chose E10 for their last fill-up. And only 39 percent who know for a fact that their car can take E10 have ever used the ten-percent ethanol fuel. Why? Despite the high level of education, 52 percent of respondents still feared motor damage from the ethanol. Another 50 are opposed to “filling up with food.” Sometimes the more you know about something, the less you like it.
The “cornerstone” subsidy that all other ethanol subsidies support is the Volumetric Ethanol Excise Tax Credit, or VEETC, or “blender’s credit,” a $6b per year subsidy that directs 45 cents to refiners for every gallon of ethanol they blend with gasoline. The VEETC nearly died in December’s lame duck session, only to be revived as a way to buy votes for the President’s tax policy. Now, however, The State Column reports that a bipartisan Senate bill has been introduced that would eliminate both the VEETC and import tariffs on foreign-made ethanol. And with a rash of bad news coming out about ethanol, this could just be the opportunity to kill this wasteful government subsidy with fire.