Monday, October 24, 2005

Meanwhile, Saudi Arabia Remains The Saudi Arabia of Arabia

by Tom Bozzo

A story on ethanol developments in Wisconsin by Jason Stein in yesterday's Wisconsin State Journal is headlined with a slight condensation of this quote from former Republican state senator and current corn lobbyist Bob Welch: "We can become the Saudi Arabia of ethanol."

As my good blogging buddy Drek said in comments earlier, "Oh hell. That loud bang you heard was my head exploding." Welch, most recently known for finishing third in the 2004 Republican U.S. Senate primary to eventual Feingold thrashee Tim Michels and Not The Right Russ Darrow, may be in the running for the stupidest utterance of the year by a Wisconsin politician, and considering that the paleolithic caucus in the state legislature still has the self-styled Taxpayer's Bill of Rights to consider among other bad ideas, it's not an award lacking competition.

Wisconsin, Stein might have noted, is not even the Saudi Arabia of corn — per USDA statistics, Iowa takes that honor, while Illinois is Russia and Nebraska ('Cornhuskers' notwithstanding) is something like Iran and Mexico combined. Wisconsin's place in the corn hierarchy makes us something more like Venezuela.

Welch characterized as a "conservative, free-market[er]" despite his efforts on behalf of legislation that would mandate 10% percent gasohol for the state (on top of the federal subsidies), goes on to ask, "What's the downside to bringing those jobs home?"

I can turn over the mike to Wisconsin Manufacturers and Commerce, which doesn't like that increased emissions of nitrogen oxides from the ethanol would force businesses to reduce their emissions to meet air-quality standards, which aligns its position with the Sierra Club's enough to lead to zombies walking the streets of Madison. Not exactly principled opposition, maybe, but that's WMC for you.

There's also the nagging detail that ethanol really doesn't save energy, and isn't an economical proposition at market prices. Stein characterizes this in terms of a battle between new analysis from the Argonne National Lab (optimistic) and older research from Cornell (pessimistic), but as I'd noted back in September, the pessimistic studies differ from the optimistic ones most significantly by (correctly) including additional sources of energy consumption in the corn-ethanol cycle.

There is a pro-ethanol argument that it substitutes relatively abundant fuels that aren't convenient for use in motor vehicles for oil. Unfortunately, one of those fuels is natural gas, whose supply situation is such that it's losing its position as a cheap fuel; the other is coal, which has its own environmental issues.

This is not to say that research into biofuels is wasted. On the contrary, it's better to find economical processes rather than to throw subsidies down the rathole for the benefit of agribusiness conglomerates like Archer Daniels Midland The Family Corn Farmer.
" There is a pro-ethanol argument that it substitutes relatively abundant fuels that aren't convenient for use in motor vehicles for oil. Unfortunately, one of those fuels is natural gas, whose supply situation is such that it's losing its position as a cheap fuel."

Bravo Tom, very perceptive, and something the ethanol lobby and the politicians who support ethanol overlook.

Ethanol production is entirely dependent on the consumption of fossil fuels:

-- Farmers must burn diesel to run their tractors and corn pickers.

-- Tire companies must consume fossil fuels to make the millions of tires farmers and the truckers who haul ethanol use each year.

-- Ethanol plants burn still more natural gas to mill and distill corn into ethanol.

-- Trucking companies burn diesel to haul corn from farm to ethanol plant, and finished ethanol from the plant to retailer.

-- Chemical plants must burn natural gas to make the millions of tons of fertilizers; pesticides, herbicides, and fungicides, farmers depend on. (And of course much of those chemicals eventually run off into our watersheds.)

The ethanol industry is dependent on fossil fuels because of the tremendous amount of ammonia fertilizer farmers rely on. Almost all of that fertilizer is now made from natural gas. Even worse, much of the ammonia fertilizer farmers use must now be made from increasingly expensive overseas natural gas and imported to the US.

What is ironic about the ethanol industry is that if fuel ethanol ever becomes our primary liquid fuel, we would still have to rely on overseas fossil fuels because of imported fertilizer made from natural gas.

If you want to do an interesting thought experiment, consider why it is that the ethanol industry -- from farmers to ethanol stills to the truckers who haul corn and ethanol -- don't use ethanol as their energy source.

Ethanol proponents like to say that ethanol returns more energy than it consumes. If that is the case, why doesn't the ethanol industry use some of the ethanol it makes as the fuel with which to make more ethanol?

That they don't, tells all one needs to know about the profitability of and sustainability of ethanol.

I once asked the owner of an ethanol plant why he didn't use ethanol to run his plant instead of natural gas. His answer: "Ethanol is too expensive for me to burn here, and if I did, I wouldn't have any left to sell."

Right, and he wants me to believe making ethanol returns more energy than it use.
Gary: Thanks for the comment. Clearly, with the marginal units of natural gas supply now being imported, the domestic-supply argument in favor of ethanol is increasingly a chimera.

It could be argued that ethanol has a higher value as a motor fuel than as an industrial fuel, which is why the plants don't burn it. (This is not to say that I agree, or that the situation doesn't derive from the subsidies and fuel-blending mandates; that the "free" market is being disrupted is one of WMC's secondary objections.) However, if the energy balance really were positive and large, then increases in the prices of natural gas and electricity (plus the avoidance of post-distillation costs) ought to make the fuel substitution you describe increasingly economical.

I can see biofuels having their place, eventually, but the idea that they can just be substituted for petroleum within more-or-less the current energy use arrangements is IMO dangerously false.
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