Wishful thinking

(phrase) Hoping for a socially good outcome when evidence suggests otherwise.

Example//

The United States has enough land, water and transport capability to make cellulosic ethanol that could displace one-third of its gasoline needs in 2030, according to a study by a government laboratory, in partnership with General Motors.

But the study does not say how to actually make the fuel.

  [end trite transmission]

I work in the renewable energy field and have a fair amount of experience with technology adoption and policy strategies.  Cellulosic ethanol (ethanol from grasses, trees, waste instead of corn) is hailed as the solution to getting off foreign oil, using cleaner fuel, and avoided the (specious) food v. fuel debate.*

The problem is that nobody knows exactly how to do it.  We have options:

a) break down the biomass with acid and enzymes to release the complex sugars, and then ferment sugars to make ethanol.  Problems: you need very uniform feedstock because it's difficult to engineer an enzyme that works with many different kinds. 

b) gasification.  We can gasify biomass and create various compounds that can be cracked (a la refineries) into various products.  Ethanol is not really the first thing you get, but it can be made from the gaseous products.  This system has a higher capital cost than (a), which is already at least five times higher than corn ethanol.  Plus, it may actually be easier to turn biomass into diesel than ethanol - although this makes integration into our fuel mix easier, it does not make our fuel any cleaner.

In short, we are hinging our hopes for fuel independence on a technology that is very complex, has yet to reach commercialization, and for which we have no readily available production and distribution network.  Corn ethanol, anyone?


*Note: ethanol from corn can contribute to an increased price for feed corn, which can in turn increase the price of meat and processed food, including such goodies as high fructose corn syrup.  If you combine the American obesity epidemic with Economics 101, this is a Good Thing.

*Other note: the major problem with corn ethanol is that growing corn is a fossil fuel intense activity.  The energy return on energy invested is positive, but not by much.  Research suggests we get - at best - 2 units of energy back for every 1 we put into corn ethanol.  Oil returns 10-to-1, so modern civilization is going to slow down a lot if we have to rely on corn ethanol for transportation.

Food for thought (not biofuels)

You've probably heard about how biofuels are causing world hunger. Well, world hunger's sadly been around for a lot longer than biofuels, and agricultural economist Daryll Ray tries to provide some perspective:

Even if no corn were to be used for ethanol production, over 800 million people around the world would suffer from malnutrition...when corn prices were below $2.00 per bushel [they're now close to $6.00], 800 million people were still food insecure and the US subsidies that enabled prices to remain at those levels were being blamed for impoverishing farmers in the rest of the world.

Ray also notes that during the last world food crisis in the 1970s, we blamed cattle for the food shortages in the developing world, since getting energy from meat requires much more grain than just eating grains.

So corn to ethanol may not be the best environmental or nutritional solution to high oil prices or global warming, but it's not the source of malnutrition.

How much more can we hate ethanol?

Folks rip it for being made from fossil-fuel intensive corn, for having less energy per gallon, and for getting subsidies. But here's my deal on ethanol:

1. You got anything better to stick in your tank? Don't tell me about hydrogen or cellulosic ethanol or any other pipe dream of a fuel. Do they sell it at Super America?
2. Where does oil money go? OPEC. Where does ethanol money go? Farmers. Half of ethanol plants are owned by corn farmers in cooperatives.
3. Heard ethanol will increase food prices? Not by as much as higher oil prices, which add a shipping premium to all those supermarket foods. And to reference #1, do you have a better plan?

Ethanol. Imperfect, but better than nothing.

Replacing gasoline: efficiency, alternatives or both?

Over at Energista they're examining a proposed state tax credit for alternative fuel vehicles in Minnesota, and I think Christopher's comments are worth examining. He decries a credit for alternative fuel vehicles because it can end up subsidizing the purchase of fuel inefficient cars.

The implied argument is that when it comes to developing energy independence, reducing overall fuel use is more important than alternative fuel capability. (It's also important to distinguish between a vehicle that's capable of using alternative fuels from one that is actually run on them - an E85 compatible car can also use straight gasoline)

That particular distinction is what makes this tax credit bad policy. Helping people buy an E85 car is counter-productive if they end up filling up with 100% gasoline. Furthermore, as this op-ed piece notes, tax credits tend to skew benefits toward upper incomes. Shouldn't we expect people of all income levels to help reduce gasoline use? And shouldn't we make sure that government incentives for alternative fuel use actually guarantee that use?

Instead, government could subsidize alternative fuel use - as the feds do, to the tune of 51 cents/gallon - making it more price competitive.

But what about the efficiency issue? Cheaper fuel, even alternative fuel, tends to encourage greater fuel use (although fuel demand is relatively inelastic). And alternative fuels will be able to displace more gasoline use if our overall use is lower. From that perspective, perhaps government is better off just increasing the price of gasoline with a gas tax (exempting alternative fuels like ethanol or biodiesel based on their proportion in our fuel - e.g. 10% off for 10% blend).

A gas tax with a renewable exemption can reduce overall fuel use and shift consumption to alternative fuels. To keep tax burdens equitable, the proceeds can be used to reduce taxes on the poor, who will otherwise be disproportionately burdened by increased gas taxes.

So, a tax credit that may be ineffective (and that will put a hole in the budget) or a gas tax that could be revenue-neutral? Tough choice...