Blatant Reality

Judging from the comments posted on two of my posts about ethanol (seen here and here), I need to go a little more in depth about why I do not like the idea of growing our next source of fuel on farmland.

There are many reasons why I don’t like the idea of growing ethanol crops on farmland no matter if you are growing corn, sugar cane, beets, switch grass or any plant that requires space and water. One thing that none of the major proponents of any of these ethanol sources are confronting is the reality that in our capitalistic economy, using these crops as fuel would give farmers more incentive to plant them.

You can already see this with farmers planting the most acres of corn in 2007 since 1944. This year (2008), farmers were expected to plant less corn but thank goodness they didn’t because floods have affected a lot of the farmland devoted to this crop.

Bad for Aquifers

Underground aquifers are found all over the world and they are basically natural reservoirs. These aquifers have been tapped and are used for irrigation and the like. More farmland means more water use and this can be bad news for these aquifers. For example, one of our largest aquifers, the Ogallala, has gone down roughly 100 ft due to our use of it for irrigation. Normally, the aquifer would refill itself with rain but our withdrawal rate far outstrips the replenish rate so as of now, every year the aquifer gets lower and lower.

Now, I am not arguing that we stop using this aquifer (though I would argue that we should use it more efficiently by eliminating water subsidies for farmers) but I don’t like the idea that we could potentially increase the withdrawal rate due to increased crops being used for fuel. Freshwater is an important resource in general so I don’t like the idea of using it for creating fuel in the heavily subsidized ethanol industry.

Massive Subsidies

And thats another thing about ethanol, it is a very heavily subsidized industry. Sure the oil industry is subsidized as well, but the ethanol industry receives a subsidy almost twice as big as the oil industry. For example, Minnosota’s Department of Agriculture tries to make the argument that the oil industry gets larger subsidies. Take a look:

It is important to compare “apples to apples” when discussing fuel subsidies. According to the Government Accountability Office (GAO), the U.S. has spent more than $130 billion over the last three decades in subsidies to the oil industry. Add to this the amount of money that the U.S. spends to maintain a major presence in the Middle East, and you begin to see the “embedded” cost in our gasoline coming from the oil imported from this region.

 

Ethanol has received government subsidies as well. However, with the rise in today’s market price of corn, agricultural subsidies in their current form will be reduced from more than $10 billion/year to approximately $2 billion/year. Even by factoring in the current cost of the U.S. excise tax credit to gasoline blenders, which amounts to $3 billion/year, the subsidy level is greatly reduced from previous norms.

These two paragraphs try to make the argument that the subsidies to ethanol are “modest” in comparison to oil. Well if the subsidies are truly modest, I would really like to see a dictionary on how Minnesotans define modest. If one uses my definition of modest, the two paragraphs above show that the subsidies are anything but modest in comparison.

First off, they try to confuse you by saying that “the US has spent more than $130 billion over the last three decades.” Not per year people. Talk about not comparing “apples to apples.” $130 billion per three decades comes out to about $4.33 billion/year.

Now lets look at the second paragraph, keeping the $4.33 billion/year in mind. First of all, they use the phrase “will be reduced” which means the ethanol subsidy is still at $10 billion/year. I, for one, have great faith in our lobbying industry and their ability to keep subsidies coming no matter if they are needed or not so I doubt the subsidies will be disappearing anytime soon. Therefore, instead of Ethanol subsidies being “modest” in comparison, they are over two times more than oil per year!

Even if you take their approximate $5 billion/year subsidy ($2 billion + $3 billion stated about), you still get a subsidy amount that is above the oil industry’s average $4.33 billion/year. Another estimate puts the ethanol industry subsidy at $7 billion for the year 2006 so any way you look at it, subsidies for ethanol are definitely not modest.

Bad for Biodiversity

Anyways, back to the environmental aspect of ethanol production. As I have stated in the past articles linked to above, with the increase in demand for ethanol producing crops, people are going to either switch from food crops to crops that produce and/or clear more land for farmland. The latter part means that farmers might actually see that it is economically worth clearing acre upon acre of forests or prairie which, as we have heard the Greens say multiple times, is bad for the environment. By clearing these lands, farmers are hurting the biodiversity of that particular region.

One example of this can be seen in Indonesia where there is a large palm oil industry. This oil is a big component in some biofuels and Europe is helping drive Indonesia’s palm oil industry by mandating that 10% of their fuel comes from biofuels by 2020. Thanks to the central planning of Indonesia’s government, 75,000 square miles of land are set to be converted to palm oil production by 2020 (”The Really Inconvenient Truths“). The land being converted consists of forests that are being cut with the fauna (tigers, orangutans, elephants, etc.) being killed (see the book link above for more).

Now the United States wouldn’t mandate a certain number of acreage to be put under for ethanol crop production, would they? No, but with legislation that has already been passed, they really don’t have to. Instead of mandating a specific number of acreage devoted to ethanol production, the government has mandated the use of 7.5 billion gallons of ethanol by 2012 with goals of renewable fuels in general reaching 36 billion gallons by 2022. With tariffs on cheap foreign sources of ethanol (like sugarcane from Brazil) impeding importation, it looks like we will be growing our own, hence the need to cultivate more land.

Conclusion

Now, do I believe that oil is the best form of energy in the world? Of course not. Do I believe that it is something that we are going to be primarily using for a while? Yes I do. Do I believe we should relax restrictions on drilling in ANWAR and offshore? Absolutely. However, I also like the idea of alternative energy, as long as it is economically feasible and can basically stand on its own.

My problem with crop based ethanol is that it is going to give farmers the incentive to grow crops specifically for fuel instead of for food and as prices rise due to increasing demand(be it for ethanol or increasing demand for food worldwide), more and more farmers are going to get on the action. This means more land under cultivation which will end up hurting the environment more than any alternative fuel might help it. I’m no environmentalist but I do appreciate nature (conservationist) and hate to see forests get chopped down for unnecessary reasons.

So why add any extra demand on farmland for things other than growing food when there are viable fuel alternatives out there?

The Algae Alternative

At this point you are all probably wondering that since I absolutely abhor crop-based ethanol, what other feasible alternatives are there? Well there is at least one that looks pretty promising (or at least more friendly to the environment and our food supply).

Farming algae for either ethanol or biodiesel could potentially be the answer for growing renewable fuels.

Now hold on a minute, I bet your about to comment something to the affect that “Algae basically lives in water! How will using algae lesson our water usage?” Well that is a great question and I’m glad you asked it.

The great thing about algae is that it can be grown in wastewater or even saltwater. Obviously there is little demand for those two sources of water and since we are not going to be eating it, it really doesn’t matter what the water source is. This flexibility would allow us to save freshwater for our food crops and drinking water.

Another great this about algae is that these algae farms could be located next to power plants and the CO2 they produce can be used as nutrients for the algae. Therefore, instead of investing in carbon sequestration methods which basically just cost money to the power plants, they could potentially make money by selling the CO2 to the farms.

Some of you might also be thinking that algae is just as bad as farms because land will have to be used to produce this algae harvest. Well this is where I would tell you that you’re not entirely correct. The first benefit of algae is that you don’t have to use land that has agricultural value (basically it can grow anywhere as long as the temperature and nutrients are right). Another benefit is that with algae, you don’t have to grow it horizontally. What I mean by this is that you could theoretically have a skyscraper that house algae producing vats.

And do you know what the best part about algae is? It’s a whole lot more efficient at producing oil than crops. Take a look:

Companies in California, Texas and Florida are leading the effort to produce and market fuel from algae. PetroSun of Rio Hondo, Texas, began producing fuel in April 2008. The company says it can produce 4.4 million gallons of oil every year from its 1,100 acres of algae ponds – roughly 4,000 gallons per acre. In contrast, one acre of corn produces about 330 gallons of ethanol, according to industry reports.

So there you have it, more reasons why crop-based ethanol is a bad idea and an alternative that is better in every single aspect that we could focus on producing instead.

This article points out some excellant reasons for using algae as a fuel source. My favorite quote is that “algae can produce more oil in the area the size of a two-car garage than an entire acre of soybeans.” Read more of the article:
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http://www.denverpost.com/opinion/ci_9780963

HR Biopetroleum has hired Ed Shonsey to help commercialize alternative fuels like algae-based biodiesel. More on this here:
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(Link)

Corn ethanol is once again being linked to as a contributor of rising food prices and it seems that things will only get worse. This year, because of flooding and other factors, the corn harvest expected to be drastically smaller than last year. When you add this to the fact that the government has mandated a 9 billion gallon corn-based Renewable Fuel Standard (RFS), the demand for corn is going to far outstrip the supply. This will end up contributing to the increase of prices of all corn-based products, including food.

“A lot depends on how badly this weather has devastated the corn crop,” said Thomas Elam, an agricultural economist at Indiana University who was commissioned by the Balanced Food and Fuel Coalition to release a study on the matter. “A smaller crop will be devastating to meat, dairy, and poultry producers if the Renewable Fuels Standard is maintained, and consumers will suffer as food and fuel costs rise.”

 

About 5% of the world’s corn supply goes to producing bio fuels - representing a whopping three years of growth in typical crop production, according to Elam.

 

“Corn will have to go to at least $8 a bushel to squeeze out enough food use to keep up with corn for ethanol,” he said. “Food prices will be significantly impacted by corn if RFS goes to 10.5 billion gallons for 2009.”

 

How significantly? Collins said food costs could rise 23% to 35% above the normal annual inflation rate of 2.5% over the next two to three years if the RFS mandates are not reduced. Elam said food price inflation rate could go as high as 7% without a mandate reduction.

“Collins” is the US Department of Agriculture chief economist just to let you know. How should we fix this? Well the article states that just a simple 50% reduction in the RFS would bring the bushel price of corn to $2. Sadly, this probably won’t happen.

I sure hope everyone is beginning to see that using a food crop for fuel is never a good idea, no matter how well intentioned or fool-proof it looks on paper.

For more of my thoughts on Corn Ethanol, check out this article I wrote on the subject a couple weeks back.

Obama seems to be in a little conundrum about whether or not to support ethanol subsidies. Better yet, he still hasn’t decided who these subsidies help: the nation which he wants to represent or corn-growing Illinois (my emphasis).

Today, in a New York Times article on Obama’s support for ethanol, Jason Furman, the Obama campaign’s new economic policy director, is quoted saying that Obama’s stance on the issue was based on the merits, a determination that ethanol subsidies are in the national interest. “That is what has always motivated him on this issue, and will continue to determine his policy going forward,” Furman said. The article continues: “Asked if Mr. Obama brought any predisposition or bias to the ethanol debate because he represents a corn-growing state that stands to benefit from a boom, Mr. Furman said, ‘He wants to represent the United States of America, and his policies are based on what’s best for the country.’”

 

It was the expected answer during a presidential campaign — except that it flies in the face of what Obama himself said on the issue a few months ago. Asked about his support for ethanol during a press conference at a gas station in Indianapolis in April, Obama was remarkably candid in explaining why he backed the subsidies: “Look, I’ve been a strong ethanol supporter because Illinois … is a major corn producer,” he said. He went on to say that he was concerned about reports that ethanol was helping drive up food prices, and that he saw ethanol as merely a transitional option that would eventually give way to biofuels that were more efficient and has less of an impact on food prices, such as ones made out of switchgrass.

Take a look at this and tell me this isn’t the US Government helping subsidize Europe’s self imposed high oil prices.

The scam — as Shadegg and others call it — is known as “splash and dash.” It stems from an existing $1 subsidy for every gallon of biodiesel fuel blended with regular diesel in the United States.

 

Here’s how it works:

 

Biodiesel is produced abroad using South American sugar cane or Asian palm oil and shipped to the United States, where it’s blended with just a “splash” of regular diesel.

 

A typical tanker-load of about 9 million gallons of biodiesel requires just 9,000 gallons of American diesel to make it qualify for the subsidy. But every gallon in the shipment garners a buck. The ship then makes a “dash” for Europe, where its fuel is sold below market rates.

 

That means each tanker-load that makes the dash nets importers about $9 million dollars in tax credits from the IRS. Lawmakers have estimated its cost to Americans at tens — or even hundreds — of millions each year.

 

And while Congress and the National Biodiesel Board say they know the loophole is being exploited — as America is exporting much more biofuel than it’s producing — they’ve been unable to identify the guilty companies.

 

“Ultimately when you dig down it gets to the point that you would have to have access to IRS information,” said Manning Feraci, vice president of federal affairs at the National Biodiesel Board. “Taxpayer information is confidential, so we can’t have access to it.”

Luckily, Europe is mad about this too because it is hurting European biofuel producers and they demanding that the US stop this subsidy. Rep. John Shadeg, R-AZ is leading the charge to close this loophole. Hopefully he succeeds because the thought of us subsidizing another countries energy when our prices are outrageously high is completely asinine.

Three airlines are partnering up with the Algal Biomass Organization to help develop algae based fuels.

In related news, the Algal Biomass Organization (ABO) said Thursday that three airlines have joined the industry group.

 

The airlines–Air New Zealand, Continental, and Virgin Atlantic Airways–join biofuel technology developer UOP and existing member Boeing, which co-chairs the ABO.

 

There are a growing number of algae-to-energy ventures and projects. The advantage that algae has over other feedstocks is that farms won’t compete for existing crop land and yields can be higher.

Shell is looking into a new process of getting biofuel from marine algae. Take a look at some of the benefits we could expect from this process (my emphasis).

“We have good confidence that it’s very viable,” said Ed Shonsey, chief executive officer of HR Biopetroleum, a company that is partnering with Shell on the project. That includes believing the processes can eventually produce oil for $30 to $50 a barrel.

 

“It’s looking extremely good.”

 

The marine algae gets a much better yield than many plants. Where the highest producing oil palm farmers get 600 gallons an acre per year, algae can produce 5,000 to 8,000 gallons per acre annually, Shonsey said.

 

Moreover, algae proponents note it has the attractive environmental side effect of being able to absorb carbon dioxide waste from industrial facilities such as power plants. Thus it’s hoped the production of biodiesel and other fuels from algae could reduce global-warming emissions if paired with a nearby power plant.

 

“That’s the exciting thing about algae and why everyone is so interested,” Shonsey said. “It’s ideal for Hawai’i because no fresh water is required, no ag land is required and it cleans up the environment.”

$30 to $50 a barrel? None of our scarce freshwater required? Doesn’t use up any agricultural land? Sounds like a pretty good idea.

However, if the US was ever to switch over totally to this type fuel to replace oil, it would need a whole lot of space. If you put our yearly consumption of oil at 7.6 billion barrels/year, we would need roughly 40,000,000 acres of algae to produce this amount. Just to give you an idea, that’s a little bit smaller than the state of Missouri.

Now there are many ways that you could fix this problem of land. One way would be to just build up rather than out. Make algae farm skyscrapers that are next to power plants and then just pump the CO2 into the building. Save land and energy companies can make a profit on their “waste.”

Another thing you have to take into account is that those 40 million acres would be enough to provide us with ALL of our oil needs. If we just used smaller amounts, than we wouldn’t need that much land.

It’s about time that McCain gave me something to look forward if he wins the presidency.

Sen. John McCain called Wednesday for the construction of 45 new nuclear reactors by 2030 and pledged $2 billion a year in federal funds “to make clean coal a reality,” measures designed to reduce dependence on foreign oil.

 

(…)

 

“Every year, these reactors alone spare the atmosphere from the equivalent of nearly all auto emissions in America. Yet for all these benefits, we have not broken ground on a single nuclear plant in over thirty years,” he said. “And our manufacturing base to even construct these plants is almost gone.”

 

Even so, he said he would set the country on a course to build 45 new ones by 2030, with a longer-term goal of adding another 55 in the future.

 

“We will need to recover all the knowledge and skills that have been lost over three stagnant decades in a highly technical field,” he conceded.

Powerline Blog has more on this here.

If you remember, it came out about a year ago that Gore’s house in fact used 20x more energy than the average household. This fact cannot be debated because even the all knowing snopes.com found that this claim was true. Now this fact in itself is worthy enough to be brought up every year in order to celebrate the hypocrisy it represents. However, this is not the reason I bring up this year old fact; the reason is that this saga gets so much better.

During this past year, Gore has worked to try to make his home more energy efficient in order to lesson some of the outright hypocrisy in his life. Did he succeed in his mission, you ask? Nope. He failed miserably. The end results of his efforts was a house that consumed 10% more energy on average than previously.

In the year since Al Gore took steps to make his home more energy-efficient, the former Vice President’s home energy use surged more than 10%, according to the Tennessee Center for Policy Research.

 

“A man’s commitment to his beliefs is best measured by what he does behind the closed doors of his own home,” said Drew Johnson, President of the Tennessee Center for Policy Research. “Al Gore is a hypocrite and a fraud when it comes to his commitment to the environment, judging by his home energy consumption.”

 

In the past year, Gore’s home burned through 213,210 kilowatt-hours (kWh) of electricity, enough to power 232 average American households for a month.

 

(…)

 

After the Tennessee Center for Policy Research exposed Gore’s massive home energy use, the former Vice President scurried to make his home more energy-efficient. Despite adding solar panels, installing a geothermal system, replacing existing light bulbs with more efficient models, and overhauling the home’s windows and ductwork, Gore now consumes more electricity than before the “green” overhaul.

 

Since taking steps to make his home more environmentally-friendly last June, Gore devours an average of 17,768 kWh per month –1,638 kWh more energy per month than before the renovations – at a cost of $16,533. By comparison, the average American household consumes 11,040 kWh in an entire year, according to the Energy Information Administration.

Stories like this make me laugh and laughing is good, right? They say it adds years to your life, years that Gore said aren’t going to be there due to global warming. Know what I say to that? Utter BS. Judging by the way he is living, he doesn’t seem too worried. I think I am going to follow Gore’s example (not his message).

Hat Tip Right Wing News