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Archive for the ‘Ethanol’ Category

One Step Forward, Two Steps Back

Posted by jab12004 on May 5, 2009

Today was a curious day in biofuels land, where it seems that the corn ethanol industry both lost and won on the same day.  Here’s some background and what happened.
The Energy Independence and Security Act of 2007 stipulated that 15 billion gallons of conventional biofuels must be produced in 2015 under the Renewable Fuel Standards.  These 15 billion gallons need to have 20 percent less lifecycle emissions than gasoline, as judged by the EPA.  When the bill was written, the conventional biofuel was assumed to be corn ethanol.  However, a proposed ruling released today shocked many people by declaring that currently corn ethanol was only 16% better.
Much of this low estimate results from indirect land use statistics.  These account for previously uncultivated land being brought into production to produce biofuels (or displaced food).  This is a good development since these effects have the potential to be sizeable.
This could be a giant thwack on the head for the already ailing biofuels industry.  If strictly enforced, this means that all current corn ethanol production does not satisfy the 10.5 billion gallon ethanol requirement for 2009.  However, a statement from Lisa Jackson, the EPA administrator, illustrates how this will most likely play out
“There are things that could be done to make corn-based ethanol more sustainable” (http://www.eenews.net/Greenwire/2009/05/05/2 sub required)
Basically, the ethanol industry just needs to clean up their act…a little bit.  This most likely can be accomplished by using more sustainable land management (conservation tillage techniques) or switching to cleaner fuels (natural gas instead of coal) for the distillation process.
If the corn ethanol industry is able to clean up its act (and I would bet my corn futures on them being able to without much work) then this ruling might actually be of little consequence.    The flip side of the coin is that ruling also included a nice juicy carrot to the ethanol industry.  The new “Biofuels Interagency Working Group” will provide around billion for ethanol companies with difficulties.
So in the end, it seems that a potential attack on the corn ethanol industry might just end up as a way to hand them a fat wad of cash.  This isn’t how Environmental Capital sees it, in their post   Out of LUC: Team Obama Prepares Ethanol Smackdown. [http://blogs.wsj.com/environmentalcapital/2009/05/05/out-of-luc-team-obama-prepares-ethanol-smackdown/]  I agree with what they are saying about how this highlights how dependent the ethanol industry is on the government.  However, at the end of the day, today’s biofuels news seems more like a stealthy way to provide a handout.

Today was a curious day in biofuels land.  It seems that the corn ethanol industry both lost and won on the same day, potentially coming out on top.  Here’s some background and what happened.

The Energy Independence and Security Act of 2007 stipulates that 15 billion gallons of conventional biofuels must be produced in 2015 under the Renewable Fuel Standards.  These 15 billion gallons need to have 20 percent less lifecycle emissions than gasoline, as judged by the EPA.  When the bill was written, the conventional biofuel was assumed to be corn ethanol.  However, a proposed ruling released today shocked many people by declaring that currently corn ethanol was only 16% better.

Much of this low estimate results from indirect land use statistics.  These account for previously uncultivated land being brought into production to produce biofuels (or displaced food).  This land, when left unused serves as a carbon sink which releases a sizable amount of carbon when cultivated.

This could be a giant thwack on the head for the already ailing biofuels industry.  If strictly enforced, this means that all current corn ethanol production does not satisfy the 10.5 billion gallon ethanol requirement for 2009.  However, a statement from Lisa Jackson, the EPA administrator, illustrates how this will most likely play out

“There are things that could be done to make corn-based ethanol more sustainable” (sub required)

Basically, the ethanol industry just needs to clean up their act…a little bit.  My guess is that this can be accomplished by using more sustainable land management (conservation tillage techniques) or switching to cleaner fuels (natural gas instead of coal) for the distillation process.

If the corn ethanol industry is able to clean up its act (and I would bet my corn futures on them being able to without too much work) then this ruling might actually be of little consequence.    The flip side of the coin is that Obama included a nice juicy carrot to the ethanol industry.  The new “Biofuels Interagency Working Group” will provide around $1.8 billion for ethanol companies.

So in the end, it seems that a potential attack on the corn ethanol industry might just end up as a way to hand them a fat wad of cash.   Environmental Capital takes a different perspective it in their post   Out of LUC: Team Obama Prepares Ethanol Smackdown.  I agree with what they are saying about how this highlights how dependent the ethanol industry is on the government.  However, at the end of the day, today’s biofuels news seems more like a stealthy way to provide a handout than a smackdown.

Posted in Biofuels, Climate Change, Ethanol, Land Use | Leave a Comment »

The RFA is also an idiot

Posted by Evan Herrnstadt on December 17, 2008

From Greenwire (gated, sorry): Big ethanol The Renewable Fuels Association (RFA) has been lobbying the Obama transition administration proposed three major initiatives that are based entirely on good economics and policy and have nothing to do with the fact that their industry is floundering:

  1. Give the ethanol industry $50 billion in federal loan guarantees for new infrastructure and capacity.
  2. Automakers accepting federal bailout money must build all of their vehicles with flex-fuel capability starting with the 2010 model year.
  3. Establish a tax credit for ethanol producers for each green job created.

The problem common across all of these is that they seem to presume that ethanol is a good idea.

us-ethanol-production

The first one is not a categorically terrible plan because if we ever get second-generation biofuels up and running in an efficient, low-carbon, cost-competitive manifestation, we will need infrastructure to distribute it.  However, I don’t think that the ethanol industry needs any federal backing to expand capacity.

They seemed to be doing just fine on their own (if a 51-cent/gal blending subsidy equates to independence) until the last year or so, as is evident from this chart from the RFA itself.  To be fair, this boom was during the good times and things are tougher these days, but this kind of undermines the argument for loan guarantees.  Should we be shoring up the risk for an environmentally questionable endeavor while it seems exceptionally likely to fail?

The second request is preposterous.

The third is even worse.   First, let’s pretend that we can define a green job.  Think about possible loopholes in this tax law for about three seconds and you’ll see my problem.  Second, does anyone outside the RFA really think that a job producing first-gen ethanol should be considered green?  If so, my night job tending my tire fire should also qualify for a tax break.  If I never read the phrase “green jobs” again in my entire life, I’ll still consider myself overexposed.

Posted in Ethanol, Idiots | 3 Comments »

A bit too honest about Ethanol

Posted by jab12004 on November 21, 2008

One of the large problems with ethanol is that there is no “correct” way to measure its impacts. A recent editorial in the NY times (it is short and worth reading) addresses this point, and highlights the important role the E.P.A. plays in the process. However, before discussing it, I think it makes sense to describe the biofuels requirements referenced in the article.

The mandate, called the Renewable Fuel Standards, was first created under EPACT 2005. Ethanol production, however, exceeded the standard by wide margins. The Energy Independence and Security Act of 2007 updated the standard to MUCH higher levels, put more focus on cellulosic ethanol and extended the timeline out to 2022.

There are a few things of note in the new standard. First, corn ethanol, while playing a significant role, only represents 15 of the 36 billion gallon requirement in 2022. Cellulosic ethanol requirements start at small levels in 2010, but quickly increase to 16 billion gallons by 2022. Cellulosic ethanol is placed under a larger 21 billion gallon umbrella of generic “advanced biofuels” that include 1 billion gallons of biodiesel.

The second layer to these standards is the Greenhouse Gas (GHG) reduction requirements. Corn ethanol is required to have a 20% reduction of lifecycle GHGs “compared to baseline lifecycle GHG emissions.” This terminology is a bit vague, but the general idea is that the production and burning of corn ethanol must release 20% less GHGs than petroleum. Advanced biofuels have a 50% reduction target, with cellulosic having a specific target of 60%.

The trouble comes from how you evaluate these levels. The EPA is put in charge of the rulemaking, and ultimately how they choose to set the standards will dictate a large part of how the RFS functions. The EPA administrator also has the authority to lower mandate or GHG reduction levels if they feel it is appropriate. As mentioned in the NY Times article, previous studies showed corn ethanol as carbon neutral, while newer analyses show that corn ethanol might create more GHGs than gasoline. While these studies are important, my feeling is that they should not shape the debate.

This goes back to the fact that there is no one way to count GHG emissions . Opponents of biofuels will want all potential sources to be taken into account, while proponents will argue the opposite. It also begs the question of how far upstream are we looking in the petroleum process. Do we just include emissions from combustion? How about the emissions from finding and extracting the oil? What about pirate protection?

Considering all of these uncertainties, I try not to worry about where corn ethanol falls on the GHG balance sheet. We all know corn ethanol isn’t that great (well, most of us).  So is it worth that much time debating just how bad it is? Instead, the most important decision will be how the EPA  calculates their life cycle standards. It is a bit unclear as to when these will come out, but they should be done soon. Expect to see a lot of people angry, I know I’m excited.

Posted in Agriculture, Biofuels, Climate Change, Ethanol | 1 Comment »

Getting what you pay for: food & energy prices

Posted by Sarah Darley on April 15, 2008

In a relatively recent post, Rich asks how food and energy are different.  His implicit point (and I agree) is that in many ways they’re not that different.  My preliminary thoughts on why escalating food prices haven’t been getting as much press are: 1) oil is “sexy” in the sensationalist media sense of the term, food isn’t “sexy” until we start talking about riots and starving children, 2) the component of rising food prices that is related to rising energy prices suggests an inherent lag - energy prices are leading food prices, and 3) there may be some variation in the degree of regressivity in rising food prices versus rising gas prices.

I expand on number 3 and offer some other thoughts below…

Read the rest of this entry »

Posted in Agriculture, Ethanol, Gasoline | 1 Comment »

Will droughts make for expensive draughts?

Posted by Evan Herrnstadt on April 9, 2008

By now, most of us have heard about ethanol and its impacts on beer prices. As farmers dedicate more land to growing high-priced corn, they also dedicate less land to hops and barley. Now it is likely that this substitution effect will be/is being exacerbated by climate change as well. From MSNBC:

Jim Salinger, a climate scientist at New Zealand’s National Institute of Water and Atmospheric Research, said climate change likely will cause a decline in the production of malting barley in parts of New Zealand and Australia. Malting barley is a key ingredient of beer. “It will mean either there will be pubs without beer or the cost of beer will go up,” Salinger told the Institute of Brewing and Distilling convention…Similar effects could be expected worldwide, but Salinger spoke only of the effects on Australia and New Zealand. He said climate change could cause a drop in beer production within 30 years, especially in parts of Australia, as dry areas become drier and water shortages worsen.

This drought-induced price spike would perhaps mitigate or reverse some of the aforementioned substitution toward corn as barley prices become competitive for farmers again. However, as Salinger notes, the beer supply curve is likely to shift in at least initially until farming patterns change or the industry adapts to new varieties of malting barley.

Salinger is spot on when he points out the tradeoff between a price increase and a shortage. Let’s learn a lesson from the oil crisis of the late 70s. If that event taught us anything, it’s that a price ceiling would likely lead to the horrifying beer shortage that Salinger predicts. We’d have to endure a period of beer rationing: odd- and even-numbered license plate numbers birthdays alternate beer drinking days, and everyone rests his/her stein on Sunday (only wine allowed) to round out the seven-day week. I can see it now: mile-long lines outside bars, groceries, and liquor stores, each person waiting to take home their weekly 6-pack allocation.

More likely, we’ll just have to bear with the higher beer prices that come with the new supply schedule, at least for a while. Luckily, this development will not be as regressive as high fuel prices, as the cheapest beers (mmm…PBR) use far less hops and barley than most craft beers. Still, it’s unfortunate that as the planet warms, it’ll be harder than ever to find a cold beer.

Posted in Climate Change, Ethanol | 1 Comment »

Evan’s family is cleaning up

Posted by Rich Sweeney on April 4, 2008

While the rest of us are being forced to DRINK LESS :(

From Greenwire:

Corn prices — already up 30 percent this year — yesterday jumped to a record $6 per bushel on the Chicago Board of Trade….Worldwide demand for corn to feed livestock and produce biofuels is putting enormous pressure on global supply, and with the U.S. planting less corn this year, the supply shortage will worsen….Corn growers are reaping record profits……

Couple things. First, why is that I can’t turn on the news without hearing, invariably in very tragic terms, about soaring gasoline prices, yet there is almost no coverage of soaring food prices? According the the BLS, American’s spend about 3X as much of their income on food as they do on gas.

Second, in light of the “record profits” being reaped by corn growers, how long until Ed Markey hauls these greedy farmers before Congress? Let’s just say I’m not gonna hold my breath. Until then though, anyone care to explain to me how these two commodities are different?

Posted in Ethanol, Gasoline | 6 Comments »

Ethanol Sentence(s) of the Day

Posted by Evan Herrnstadt on January 15, 2008

A new USDA study regarding cellulosic ethanol has been widely reported, but I gleaned the information from ScienceDaily. It was the first study to examine the lifecycle emissions of switchgrass-based ethanol in the context of mechanized farming techniques.

The researchers then used that information, together with a model that calculates the amount of ethanol that can be produced per kilogram of switchgrass, and found that the switchgrass could provide 540 percent more energy than went into producing it.

Using high-input agricultural techniques instead of low-input prairie planting, yields per acre went up 93 percent. A major caveat of the study is the fact that no commercial-scale cellulosic ethanol plant exists. Thus, the 540 percent number is partially based on estimates drawn from lab tests and pilot-scale plants. In that vein, the DOE has six full-scale cellulosic demonstration refineries in the works:

The U.S. Department of Energy announced last February that it will spend up to $385 million to partially fund six cellulosic ethanol refineries. In November construction began on the first plant, the Range Fuels biorefinery in Soperton, Ga., which will produce ethanol from wood waste.

You know, now that a certain state (that shall remain nameless) has voted in its disproportionately influential primary/caucus, it’ll be interesting to see whether direct subsidies to corn ethanol will fade to the background of the Presidential candidates’ energy planks in favor of other more efficient policies, such as carbon pricing and R&D funding.

Posted in Ethanol | Leave a Comment »

Image of the day

Posted by Rich Sweeney on January 7, 2008

Corn and Pork. From the Energy Roundup. Evan, I hope I haven’t offended you……

Posted in Ethanol | 1 Comment »

 
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