Jason Barton

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Archive for the ‘Corn Ethanol’ tag

More Solid Challenges to Government Protection of Ethanol, This Time from the Left

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The article below points out that historically there are three forms government intervention in markets: mandating a product’s use, protecting it from foreign competition through measures such as tariffs, and subsidizing its production.

Corn ethanol benefits, at our expense, from all three.

This does not encourage the kind of innovation that will make domestic, clean energy a larger part of our energy matrix. Instead, it binds us to an inefficient and expensive (made artificially cheap by our tax dollars) practice that is environmentally damaging, not beneficial.

Congress, please, let your baby fend for itself on the free market. Even Al Gore agrees with me.=

  • DECEMBER 5, 2010, 7:10 P.M. ET

Ethanol on the Run

A left-right coalition is emerging against this energy boondoggle.

The political class inevitably invokes the moon shot or Manhattan Project as a model for every unrealistic energy goal, but for once maybe that hyperbole is apt: A left-right coalition is emerging to end ethanol subsidies.

Last week, no fewer than 17 Senators signed a letter calling ethanol “fiscally indefensible” and “environmentally unwise.” Led by Democrat Dianne Feinstein and Republican Jon Kyl, the group said Congress shouldn’t extend certain subsidies that expire at the end of the year, including the 45-cent-per-gallon tax credit for blending ethanol into gasoline and tariffs on cheaper imports. Conservatives like Tom Coburn dislike this costly industrial policy, while liberals like Barbara Boxer and Sheldon Whitehouse are turning against the hefty carbon emissions that come with corn fuels.

Read the entire article here.

Al Gore Finally Opposes Corn Ethanol

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An editorial in The Wall Street Journal this morning discusses Al Gore’s apparent change of heart from supporter to opponent of subsidies for corn ethanol in the U.S.

It’s not that I’ve ever put much stock in Al Gore. I’m glad he’s helping more Americans understand the importance of environmental health, but I don’t think climate change science is the way to do it.

The article below provokes two different, almost visceral reactions in me: One to corn ethanol and one to the attention paid to climate change.

Climate Change:

Whether or not it’s accurate to say that the climate is changing in negative ways, and that humans are the cause of it, it’s simply too distant to most people’s daily lives for it to gain real traction in making change.

For example, Hurricane Katrina: Did a one degree increase in the Caribbean Sea’s temperature drive the wind and rain that much harder into New Orleans to make the storm so much more severe that it led to thousands of deaths? Was that temperature increase caused by humans?

Hurricane Katrina was clearly a terrible event, and many things went wrong there, but in terms of the environmental facets, the climate change discussion distracts us from the real and tangible fact that WE MOVED A RIVER!

Isn’t there a sufficiently poignant lesson to learn in seeing the terror of what happened when the river moved back? Digressing into the chemistry of atmospheric leads us away from tangible facts that can induce real and effective change.

Similarly, we don’t need to convince someone of climate change for them to understand why it’s not healthy for our lungs to go jogging next to a freeway. Their lungs help them to understand, without Gore’s Powerpoint, why we should work to limit vehicle emissions.

Can we focus on solutions when we see problems? How am I supposed to understand the real impacts of my own actions when I’m focusing on that one degree change and my possible role in it?

I can’t believe anyone would still be reading at this point, and this site has enough about my thoughts on the inefficiency of corn ethanol, so thanks if you’re still here.

Suffice it to say that I’m glad Al Gore has joined the chorus of those opposing subsidies for corn ethanol. Now if he could convince Obama to go back to his earlier criticisms of this boondoggle, we’d be making some real progress.

Rather than continuing on that subject that’s been discussed so often, I’ll hold off and let you continue to the Journal’s editorial.

  • NOVEMBER 27, 2010

Al Gore’s Ethanol Epiphany

He concedes the industry he promoted serves no useful purpose.

Anyone who opposes ethanol subsidies, as these columns have for decades, comes to appreciate the wisdom of St. Jude. But now that a modern-day patron saint—St. Al of Green—has come out against the fuel made from corn and your tax dollars, maybe this isn’t such a lost cause.

Welcome to the college of converts, Mr. Vice President. “It is not a good policy to have these massive subsidies for first-generation ethanol,” Al Gore told a gathering of clean energy financiers in Greece this week. The benefits of ethanol are “trivial,” he added, but “It’s hard once such a program is put in place to deal with the lobbies that keep it going.”

Read the entire article here.

UNICA Continues Pressure on U.S. to Drop Ethanol Tariff

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To listen to UNICA, the powerful voice of Brazil’s sugarcane and ethanol industry, you’d think the U.S. tariff on imported ethanol would be gone by the end of the week. I don’t see that happening, and definitely don’t think an all-at-once elimination would be good for Brazil.

Ethanol accounts for half of their transportation fuel by volume (slightly less on an energy content basis), and if the U.S. tariff were eliminated, Brazilian producers would likely sell a huge portion of their ethanol to U.S. buyers, forcing Brazilian drivers to pay higher prices, or, more likely, revert to far more gasoline. This could jeopardize Brazil’s energy independence and would impact their balance of trade, though probably only slightly.

Additionally, just as UNICA and the studies they cite may sound certain that this tariff of US$0.54 per gallon is terrible for American drivers, its elimination would not hurt corn farmers, and so is soon to be history, U.S. corn farmers and our ethanol industry, led by Growth Energy, the U.S. counterpart to UNICA, are equally sure that government support is necessary and here to stay.

Let me be clear that I am not a fan of corn ethanol. I have become much more encouraged about cellulosic and other technologies on the near horizon, but still believe that corn is produced irresponsibly and at great harm to ecological, human, and even bovine health. I don’t blame farmers for this, as they are working within a system that rewards growing corn without taking into account the negative externalities.

All this said, the best scenario would likely be reducing the tariff on U.S. importation of Brazilian ethanol to meet the “advanced biofuels” mandates laid out in George Bush’s Renewable Fuels Standards, as allowed by the recent EPA findings in the RFS2 decision in February. This would gradually increase Brazilian ethanol’s presence in the U.S., while also encouraging the much needed move to second and third generation biofuels technologies, reducing our dependence on imported oil and increasing our energy independence and security.

Any of this, of course, must be done in concert with vastly increased efforts towards energy efficiency, driving less, more efficient vehicles, etc.

Here are a few of the pieces from UNICA…

Scholars call for phase-out of U.S. ethanol tariff at Wilson Center seminar
07/26/2010

(left to right) Joel Velasco, Alexandros Petersen, Paulo Sotero,
Robbin Johnson and C. Ford Runge

An open and globalized biofuels market is essential to promote greater efficiency and competitiveness, and phasing out the US$0,54 per gallon tariff imposed by the United States on imported ethanol would be a key step in the right direction. The recommendation came from two University of Minnesota scholars during the “Biofuels: Food, Fuel, and the Future?” panel, organized by the Woodrow Wilson Center in Washington, D.C, on Friday, July 23.

Read the entire article here.

And a second piece, citing the study from the University of Iowa:

Universidade americana vê ganhos para consumidores com fim de tarifa sobre etanol importado
26/07/2010

Em meio a um debate aquecido e ganhando cada vez mais visibilidade nos Estados Unidos, um estudo divulgado na terça-feira (20/07) por um renomado economista agrícola do meio-oeste americano está desafiando conclusões catastróficas, geralmente disseminadas por grupos de lobby do etanol de milho, sobre o que poderia acontecer se a atual tarifa de US$0,54 por galão (3,78 litros) imposta ao etanol importado expirar no final deste ano como planejado. O estudo, realizado por Bruce Babcock, chefe do Centro de Agricultura e Desenvolvimento Rural (CARD em inglês) da Universidade do Estado de Iowa, apresenta um cenário bem diferente.

Read the entire article here.

And the University of Iowa study to which they are referring:

CARD Study Shows U.S. Ethanol Production and Corn Demand Will Grow With or Without Subsidy and Tariff

Contacts:
Bruce A. Babcock ; babcock@iastate.edu
Sandy Clarke; sclarke@iastate.edu

July 20, 2010

America’s growing interest in renewable fuels has spurred a robust discussion about the pros and cons of continuing or changing current U.S. federal government ethanol policies, specifically, (1) mandates to increase the use of renewable fuels like ethanol from approximately 13 billion gallons today to 36 billion gallons by 2022, (2) a 45-cent-per-gallon tax credit for “blenders” who add ethanol to gasoline, and (3) a 54-cent-per-gallon tariff, which increases the price of foreign imports.

Read the entire article here.

U.S. Ethanol exports rise, even to Mideast

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Well, this is definitely interesting information. All along we’ve been wondering how the U.S. is going to meet the Renewable Fuel Standards (RFS) that were signed into law in 2007. It turns out, we have so much ethanol, and at such competitive prices, that we’re actually exporting it, even into the heart of OPEC.

I smell subsidies at work.

The Des Moines Register

By PHILIP BRASHER • pbrasher@dmreg.com • May 23, 2010

Washington, D.C. — The United States has a growing new export — ethanol fuel — and a lot is going to, of all places, the Middle East.

New government data show that nearly 46 million gallons of U.S. corn ethanol was exported in March, up from 4 million in March 2009. For the first three months of this year, ethanol exports totaled 72 million gallons.

Read the entire article here.

Written by Jason

May 23rd, 2010 at 10:16 pm

Rival Ethanol Trade Groups Campaigning to Woo Senators, Clobber Each Other

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With talks well underway in the U.S. Congress for a new energy/climate bill, the U.S. EPA’s recent decision that Brazilian sugarcane ethanol meets the “advanced fuel” mandate, and now Brazil’s removal of their tariff on imported ethanol, the stage is set for some heated discussion about lowering or even eliminating our own tariff, as several senators have argued the U.S. Government should do.

The Brazilian sugarcane and ethanol industry association, UNICA, has recently launched a website and a series of ads aimed at winning over U.S. consumers.

An important note: The paper cited at the end of this article that claims larger environmental benefits from corn ethanol is not indicative of the U.S. corn ethanol production system. It focuses on fewer, newer refineries that use natural gas and have greater efficiency. If the whole U.S. corn ethanol production system were like those surveyed by Liska et al. (2009) then yes, the fuel would be cleaner. But as it stands this is not the case of the average refinery.

All of this back and forth makes my time here in Brazil that much more interesting. I’ll keep you posted.

By ANNE C. MULKERN of Greenwire
Published: April 13, 2010

Two rival trade groups seeking congressional help for the ethanol industry launched advertising yesterday to promote themselves and bash one another.

Growth Energy Inc., which represents corn and other domestic ethanol producers, seeks to maintain supremacy at home, while the Brazilian Sugarcane Industry Association, or UNICA, wants to tear down corn ethanol’s benefits in order to grab a larger share of the U.S. market.

Read the entire article here.

Brazil Keeps Import Tariff on Ethanol at Least Until July

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There has been some talk that poor sugarcane harvests amidst increasing demand for ethanol in Brazil would cause the country to lower its tariffs on imported ethanol, allowing the U.S. to export corn ethanol. This is quite an ironic twist since the U.S. is the leading importer of Brazilian ethanol, which is much more efficient in terms of energy ratio and land use. Almost all of the talk on international trade in biofuels, and there has been much talk, has been about trade going the other direction.

It looks like it will continue in that direction for the time being, but it will definitely be interesting to watch how this develops in the coming months.

Brazzil Mag

Trying to understand Brazil since 1989

Friday, 12 February 2010 20:48

As announced by the Brazilian minister of Agriculture, Reinhold Stephanes, the reduction of the import tariff on ethanol has been postponed until July. Upon leaving the meeting of the Foreign Trade Board (Camex), he informed that the tariff reduction has been removed from the guidelines and will only be discussed again in five months.

According to the minister, the beginning of the sugarcane crop, in March, would render an eventual reduction of the import tax ineffective. “If we were to eliminate the tariff now, nothing would change with regard to fuel prices, because the sugarcane crop is going to start and prices would drop anyway.”

[…]

Presently, ethanol pays a 20% import tariff in order to enter Brazil. According to Stephanes, the tariff’s elimination, which should occur in the second half, will have diplomatic objectives.

“We are going to scrap the tax in order to pressure the United States into not taxing our ethanol on their market,” said the minister.

Read the entire article here.

RFS2 reduces 2010 cellulosic ethanol requirement

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Well, this is fairly important news for those of us (meganerds) who are directly involved with this whole biofuels thing.

As a bit of background, in 2007 George Bush signed the Energy Independence and Security Act, which included the Renewable Fuel Standards (RFS), mandating increasing amounts of renewable fuels, almost entirely ethanol, in the U.S. gasoline supply. The standards, which mandate nearly 13 billion gallons of renewable fuels this year, and up to 36 B gals in 2022, also has substandards for cellulosic ethanol and “advanced biofuels,” which are defined as those that decrease greenhouse gas emissions by at least 50% compared to gasoline. (I know, hard to believe that W. would pen a law that mandated GHG reductions, but there we are.)

These new laws, known as RFS2, do not change the overall requirements, but affect some of the environmental accounting and the substandards. First, the original RFS mandated 100 million gallons of cellulosic ethanol, which is ethanol that comes from the green portions of plants such as corn and prairie grasses. The problem is that the technology for these fuels still has a little ways to go, and we are not capable of producing 100 million gallons of it. RFS2 reduces that requirement to 6.5 million gallons, quite a reduction indeed.

The other change is in the assessments of environmental impacts of biofuels, mainly lifecycle analysis (LCA) of GHGs, including those from land use changes. The argument, put forth most notably in a paper by Searchinger et al.  in Science magazine, posits that when corn is diverted from the food supply and used for biofuels, the decreased supply and increased prices induce farmers in other parts of the world to plant more corn. At times this may mean clearing forest for the new crops, and rarely is agricultural land as productive, or are fertilizers and other inputs as available, as in the U.S. Therefore, the 130 or so bushels of corn from one acre of land in the U.S. that’s diverted to ethanol production can mean, for example, an acre and a half of forest cleared in another part of the world. This, Searchinger and others have argued, defeats the purpose of biofuels in that their proposed environmental benefits are undermined by this deforestation.

In the new RFS2 rulings, these land use changes are now counted in the GHG calculations for biofuels, which is a huge advantage for cellulosic biofuels that are not reported to cause these indirect land use changes (ILUCs), but a bit of a hit for corn ethanol producers. Poet LLC’s CEO, Jeff Broin argues in the article below, “we are concerned that some pieces of the rules put out by EPA today run contrary to that stated effort. Although the international indirect land use change penalty has been lessened somewhat, EPA still relied on the disproven theory when all of the data shows that ethanol production continues to improve and isn’t requiring new land.” His statement that Searchinger’s theory is “disproven” stems from the fact that tracking these land use changes is basically impossible. We can’t very well say that one particular acre of corn in the U.S. diverted to ethanol means that another specific acre of land is diverted to corn from a particular land use to make up for the fallen supply.

As the debate rages on, as I’ve said in previous posts on this site, corn ethanol does not seem to me to translate to healthy, efficient use of land, especially given the terrible effects on land and water from the way we grow corn. I am also not convinced that such large scale corn ethanol production is necessary in order ease the transition to second and third generation biofuels technologies. Finally, while I believe there is great promise for those advanced technologies, the greatest promise, in terms of efficacy and cost effectiveness, lies in the simple task of using less transportation fuel.

By Lisa Gibson

Posted February 3, 2010, at 4:22 p.m. CST

The new requirement for cellulosic biofuel production in 2010 is reduced to 6.5 million ethanol–equivalent gallons in the renewable fuels standard (RFS2), down significantly from the 100 million gallons established in RFS1, included in the Energy Policy Act of 2005. The U.S. EPA released final RFS2 rules Feb. 3 as media outlets, producers and others scrambled to find out how it will affect their industries.

[…]

“I think it’s a great change,” said Arnold Klann, CEO of California-based BlueFire ethanol, which focuses on producing cellulosic ethanol from waste. “It was very clear our industry couldn’t meet the standard set for this year.” He added that the new goal is easily achievable and was a good decision.

[…]

Ethanol from sugarcane also meets the standard, reducing GHG emissions by 61 percent. “EPA’s reaffirmation of sugarcane ethanol’s superior GHG reduction confirms that sustainably-produced biofuels can play an important role in climate mitigation,” said Joel Velasco, chief representative in Washington for the Brazilian Sugarcane Industry Association (UNICA). “Sugarcane ethanol is a first generation biofuel with third generation performance.”

[…]

RFS2 rules were originally scheduled for release Jan. 1, 2009, but inclusion of new elements pushed it back. It expands the scope of the program and lays out the strategy for reaching the RFS of 36 billion gallons by 2022. Currently, the country is not on track to meet that goal, as only about 12 billion gallons of biofuels are produced annually. President Obama’s biofuels initiative, also released Feb. 3, states that the goals will be met by supporting the existing biofuels industry, while accelerating the commercial establishment of advanced biofuels by increasing communication and having a strategic plan across the U.S. government, and by employing strategic public-private partnerships.

Read the entire article here.

New Biofuels Strategy and EPA Policy: Promote Clean Energy & Green Jobs

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I agree with Mr. Dineen that there is great promise in second generation technologies such as cellulosic biofuels, and other technologies on the horizon, such as the drop in replacements for gasoline that he mentions later in the article. But I do not agree that the current, high-input, industrial production of corn in the U.S. is a system that should continue, for biofuels or any other purpose. Runoff from nitrogen fertilizers in the Midwest causes tremendous damage to the Gulf of Mexico, creating a hypoxic zone that hurts fishing industries there as well as human health along the Mississippi River Basin. Not only is its production causing considerable damage, its main end uses–as feed for cattle that are not meant to eat grain, or processed into high fructose corn syrup and other products for people–are not healthy in their consumption.

While some have argued that corn serves as a necessary bridge to biofuels feedstocks that do not compete with food or even agricultural land, I see no reason why those technologies cannot continue to be developed in the absence of a corn ethanol industry. The Renewable Fuel Standards (RFS) Dineen discusses mandate increasing amounts of ethanol from these advanced feedstocks, though it is doubtful that we will be able to meet the 2010 standards, the first year that they take effect, of 100 million gallons. Those involved in the corn ethanol supply chain would be more than happy to have that standard waived, allowing those 100 million gallons to be supplied with their product. This does nothing to move us closer to those  biofuels that do not compete with the food supply or even prime agricultural land, are much healthier for the environment, and create more jobs in rural America.

Bob Dinneen

President and CEO of the Renewable Fuels Association (RFA)

Posted: February 4, 2010 06:42 PM

With two important policy announcements, the Obama Administration is putting the nation on track to increase its production and use of clean-burning, American-made biofuels.

That’s good news for all Americans who care about protecting the environment, combating climate change, generating good-paying jobs, reviving rural communities, and reducing our dependence on imported petroleum.

[…]

Second, the Administration understands that the nation needs every proven or promising biofuels technology, from existing corn ethanol to the newer cellulosic (non-grain-based) technologies and the most visionary “next generation” technologies. New or old, we need them all. Yes, it is essential that all the newer technologies – from those closest to fruition to those that are still years from commercialization – have every opportunity to succeed.

Read the entire article here.

US ethanol imports could temper rising prices in Brazil

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Whoa. The idea of the U.S. exporting it’s much less efficient corn ethanol to Brazil, so they can temper rising prices in sugarcane ethanol, well, it strikes me as odd. Of course, this could just be hearsay, as Petrobras claims there will be no imports of U.S. ethanol. Since the U.S. has been the largest importer of Brazilian ethanol for years, this would be inefficient to trade these fuels, especially considering the amount of energy needed to transport ethanol.

Published: Monday, January 25, 2010 16:08 (GMT -0400)

Imported corn-based ethanol from the US could help ease ethanol prices in Brazil that have been rising because of increasing demand and heavy rains that have delayed the sugarcane harvest, Julio Maria Borges, a director at sugar and ethanol industry consultancy Job Economia e Planejamento, told BNamericas.

[…]

Brazilian sugarcane and ethanol industry association Unica has already asked the government to scrap the 20% tariff imposed on imported ethanol.

Brazil should set an example for the world by removing tariffs in order to stimulate other countries to do the same, the association said in a statement.

[…]

“It is a risk for the importer to ship ethanol from the US now, in a moment when prices will probably begin to fall because of lower demand and the start of a promising harvest year in March,” Borges added.

Read the entire article here.

Written by Jason

January 30th, 2010 at 1:51 pm