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Ethanol: Not Ready for Prime Time, Impacts Dinnertime

By Jim Chen at al.

Amassing an unsightly carbon footprint, I traveled from North Dakota to Washington, D.C., yesterday for an Energy Bar Association meeting, and woke up to find a copy of the Washington Post at my door. The lead was an article in the Post?s Global Food Crisis series that Susan Schneider discussed on Sunday: Siphoning Off Corn to Fuel Our Cars.

Corn for fuel has been good for some farmers, e.g., those who are seeing significant profits because of the record corn prices. However, it is not as though the current policies are wildly pro-farmer. Prices for corn to feed cattle and chickens, for example, are now extremely high. Furthermore, the cost of fertilizer and fuel that will be needed for next year?s crops have more than doubled in some instances. So, while some farmers are reaping the benefits, others are feeling the pinch, too. Add to this the even bigger issue ? the global food crisis ? and I have to wonder, why are we promoting ethanol when we haven?t figured out how to feed everyone?

Is it about national security? If so, it shouldn't be. Ethanol is not currently (and will not in the foreseeable future) making a significant impact on the amount of oil consumed in the United States. If it were, gas prices would be a lot lower. The environment? I hope not, because even on its best day, ethanol is only a mild improvement over fossil fuels.

The answer, it seems, is basic economics. Oil and gasoline prices, not new technologies, are making ethanol arguably viable today, much in the same way that oil in Wyoming and Alberta is ?suddenly? available because of the high prices.

Contrast this with the current wind energy boom. Wind energy use has increased dramatically in the past several years, in part motivated by the production tax credit, which helped move new technologies forward. Wind energy has been viable on a small scale for centuries (think Don Quixote), but it was very expensive as an energy source in modern society. Tax policies and other incentives have helped change the way wind energy is produced ? dropping costs from $0.80 per kilowatt (adjusted for inflation) in the 1980s to between $0.04 and $0.06 today. Yes, increased sensitivity to climate change has had an impact, too, but it is the technology that is making wind an option today more than anything.

Maybe ethanol will be the answer, or part of the answer, at some point. But current ethanol mandates are misguided, and the EPA should waive the current ethanol requirements. Until new technologies allow ethanol from non-food sources to be viable in the market -- and incentives can be used to make that possible -- ethanol should not be a part of the U.S. fuel mix. Otherwise, even though there is plenty of oil for the time being, we?re literally putting food in the gas tank when children, and even Gods, are going hungry.

Full post as published by Agricultural Law on May 02, 2008 (boomark / email).