EVENTS

Date:	Wednesday, November 8, 2006
Time:	9:30 AM -- 12:00 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

November 2006

Ethanol: Boon or Boondoggle?

Not since prohibition has ethanol--that intoxicating compound found in beer, wine, and hard liquor--held such a high profile in America's public policy debate. Whether made from corn, sugarcane, woodchips, or the newly famous "switchgrass" mentioned by President George W. Bush in his 2005 State of the Union address, ethanol is being held up as a solution to a number of public policy concerns, including reducing conventional air pollutants, minimizing greenhouse-gas emissions, ending foreign oil dependency, reinvigorating the family farm, and a host of other ethanol-fueled dreams. In an effort to shed light on a policy issue consuming increasing sums of taxpayer dollars in research and subsidies to ethanol producers, panelists at this conference examined the benefits and detriments of ethanol fuel.

 

David Pimentel

Cornell University

 

The use of ethanol is a dead end because it has negative net energy, it is not possible to grow enough biomass to displace oil, it is ethically dubious to use food for fuel when people are still malnourished, and it is environmentally egregious. Twenty-five thousand kcal are required to produce one gallon of ethanol from corn, producing 19,400 kcal and resulting in net energy of negative 29 percent. Corn is actually among the best in terms of net energy--better than switchgrass and wood--but it still requires more energy to produce the fuel than the fuel ultimately contains.

Further, biomass is insufficient to displace oil demand in the United States. If all the corn currently produced is converted to ethanol it would equal only 6 percent of total energy from oil, and if all the biomass covering the United States were harvested for biofuels, it would not equal the amount of energy generated in the United States by fossil fuels. If biomass were to be adopted widely, the poor and the malnourished would bear the greatest burden. This can already be seen with the distortion in the beef market, requiring consumers pay $1 billion more than in a market without ethanol production. The environmental impact would also be negative because it would require an expansion of agricultural activity, contributing to soil degradation, increased water use, and increased use of fertilizers, herbicides, and insecticides.  

Bruce Dale

Michigan State University

The ethanol debate has been centered on net energy, which indicates that ethanol is more efficient than gasoline. The net energy metric is useless, however, because it assumes all forms of energy to be equal. Heat, light, and transportation each require a different form of fuel. Since liquid fuel is required for transportation, ethanol should be compared only to gasoline which has a net energy of  negative 45 percent to ethanol’s negative 29 percent. Even so, a better metric to compare the two would be a petroleum replacement ratio (liquid fuels delivered to user over petroleum energy used) which still shows a steep advantage for ethanol.

Food supply is also irrelevant to the debate. Corn ethanol may increase the price of animal products for the affluent but poor people will be unaffected. In fact, the use of cellulosic ethanol would actually reduce food prices. In the case of animal feed, a byproduct of some ethanol-generating processes is a protein that is usable in feed. Maintaining land for food is not a limiting constraint on ethanol since there is a large food surplus in the United States and the majority of corn goes to animal feed. Finally, ethanol will not always cost more than gasoline. The industry will mature from $1.20 per gallon today for corn ethanol to $0.60 per gallon for cellulosics in the future.

Lester Lave

Carnegie Mellon University

Staying with our current source of energy for transportation is ill-advised because prices are likely to continue their upward trend. Additionally, switching away from oil will slow funding for state sponsors of terrorism in the Middle East. These two facts make home-grown ethanol an attractive substitute for oil in the transportation sector.

 

Corn-based ethanol is viable today as an alternative only as long as its byproducts have a market, mostly in the form of protein feed for animals. A more attractive source in the long run is switchgrass, which requires fewer inputs to grow, is environmentally friendlier, and has a low harvest cost. The viability of switchgrass only increases in the future as maximum switchgrass yields can theoretically be doubled and as the efficiency of conversion to ethanol can theoretically increase by more than 30 gallons per ton. The market share of flex-fuel vehicles should be increased in order to facilitate the diversification of America’s liquid-fuel supply.

 

AEI intern Sean McGregor prepared this summary.