Biofuels run into trouble

November 20, 2008

John Kemp Great Debate— John Kemp is a Reuters columnist. The opinions expressed are his own —

Despite a promising start, the U.S. experiment with renewable fuels is facing a serious challenge next year. Falling gasoline consumption, lower pump prices and contradictions within the federal government program are intensifying existing pressures on ethanol distillers and farmers already struggling to cope with over-capacity and collapsing margins.


Between 2000 and 2007, production of fuel ethanol quadrupled from 1.6 billion to 6.5 billion gallons, and the industry is on course to distill a record 9.3 billion gallons in 2008.

Ethanol production is not really economic at oil prices below about $60-70 per barrel (prices of grains and fats for ethanol conversion and processing costs are too high relative to oil). So the original boost to ethanol came from its use as an oxygenating additive in reformulated gasoline, rather than as fuel in its own right, when a number of states banned the use of MTBE.

As oil prices breached $50 in late 2004 and continued to climb steadily higher over the next four years, ethanol’s properties as a fuel suddenly became more attractive.  Blenders began to use ethanol as a cheaper (partial) substitute for conventional oil-derived blendstocks in making gasoline.

Prompted by national security concerns and encouraged by lobbyists for the farm sector, U.S. legislators tried to accelerate the use of ethanol by mandating a minimum ethanol content for all gasoline produced or imported into the United States.

The centerpiece of the government’s intervention is the Renewable Fuel Standard (RFS) which sets a steadily increasing minimum volume of ethanol that must be blended into the nationwide gasoline supply each year.

The original RFS set out in the 2005 Energy Policy Act was relatively modest — requiring blenders to incorporate 4 billion gallons of ethanol into the fuel supply in 2006, rising to 5.4 billion gallons in 2008 and 7.5 billion gallons by 2012.

But as soaring crude oil prices intensified concerns about energy dependence, the 2007 Energy Security and Independence Act imposed a set of much more ambitious targets. The RFS blending target for 2008 was almost doubled to 9 billion gallons, rising to almost 13 billion gallons in 2010 and to an extraordinary 36 billion gallons in 2022 (see chart


Most attention has focused on the role of the RFS, but surging oil prices were probably more important in supporting ethanol.

RFS is designed to stimulate investment in the production facilities and distribution infrastructure needed for ethanol by guaranteeing a minimum level of demand for the fuel irrespective of oil prices.  But over the last three years, RFS has never been binding.

On a purely voluntary basis, gasoline blenders have always used more ethanol than the required minimum because increasingly high oil prices made ethanol an attractive fuel in its own right.

RFS mandated 4 billion gallons of ethanol in 2006, but blenders actually used 4.9 billion. It mandated 4.7 billion in 2007, when blenders actually used 5.7 billion (an extra billion gallons or 22 percent).

The apparent success of the ethanol industry on a voluntary basis because of favorable economics was one reason why legislators felt comfortable about amending the RFS to include more ambitious targets in 2007.

But as oil has tumbled below $70 per barrel, ethanol no longer looks competitive. On current trends, blenders will use 9.26 billion gallons of ethanol in 2008, just 260 million gallons or 3 percent above the RFS-mandated minimum of 9 billion gallons.

Unless oil prices rise substantially from current levels, the RFS is set to become binding for the first time in 2009. Gasoline blenders will have to use 11.1 billion gallons of ethanol because that is what the law tells them, not because it makes economic sense.


In practice, RFS is expressed as a percentage requirement imposed on each gasoline refiner and importer to buy a specified volume of ethanol (or tradable credits) in proportion to their production/import volume – thereby ensuring the total quantity of ethanol used each year meets the mandated target.

The Environmental Protection Agency (EPA) uses total forecast gasoline consumption in the United States for the coming year (sourced from the October edition of the Energy Information Administration’s Short Term Energy Outlook) and adjusts it for gasoline consumption in Alaska (not currently included in the RFS requirement); production by small refineries and refiners (not subject to RFS until 2011); and the quantity of ethanol that has to be incorporated into the gasoline mix (there is no requirement to blend ethanol into itself).

EPA divides the total mandated ethanol volume into the adjusted gasoline supply to publish the percentage RFS requirement for the coming year. Each gasoline refiner and importer must purchase sufficient ethanol (or tradable credits from others blending more than the minimum) to meet this ratio.
So far, ethanol credits have been cheap (trading at around 3-6 cents per gallon in 2008). However, if oil prices fall further, and RFS becomes binding, the price of credits will have to rise to give blenders an incentive to use at least the mandated minimum volume.


Ethanol is a good but not perfect substitute for gasoline.

It has around 66 percent of the energy content of regular gasoline. Almost all ethanol is sold is sold in a 90-10 gasoline-ethanol blend known as E10 and is the limit that can be used in regular motor vehicles under existing manufacturer warranties. A tiny percentage is sold in a 15-85 blend known as E85 that can only be used in vehicles with specially designed engines.

As a practical matter, the amount of ethanol that can be blended into the general gasoline supply is capped at around 10 percent of the total or about 10-14 billion gallons per year – known as the “blending wall”.

For 2008, EPA set the RFS obligation for refiners and importers at 7.76 percent, based on the need to blend 9 billion gallons of ethanol into forecast gasoline consumption of 144.5 billion gallons or 116 billion gallons after adjustments.

In the event, gasoline demand has proved much weaker than forecast. Without voluntary blending above the required amount in the first half of the year owing to high oil prices, the 7.76 percent blending requirement would not have been high enough to ensure 9 billion gallons were used.

On Nov. 14, EPA published an RFS for 2009 of 10.21 percent, based on the need to blend an even higher volume of ethanol (11.1 billion gallons) into a diminished amount of gasoline consumption (139 billion gallons, or 109 billion gallons after adjustments).

The industry is now very close to hitting the blending wall.

This was always going to happen, given the much more ambitious RFS volume obligations in the 2007 law. It was never going to be possible to blend 20.5 billion gallons into the gasoline supply by 2015 without much wider uptake of E85 vehicles or other modifications of the U.S car fleet. But the unprecedented cyclical reduction in gasoline demand has brought the blending wall much closer.


In fact, the gasoline industry is now trapped in a vice.

Low oil prices are discouraging ethanol blending (RFS becomes binding) while slumping gasoline demand is tightening the technological constraints (the blending wall approaches faster).

Blending credits look set to become more expensive, as gasoline refiners and importers have to start paying far more to make it worthwhile to blend 11.1 billion gallons into the fuel supply next year at low oil prices.

Meanwhile, the limits of the system could prevent any more ethanol being blended for technological reasons. The RFS requirement for 2009 looks achievable, but 13 billion gallons in 2010 and 14 billion gallons in 2011 may be impractical unless the car fleet changes.

The looming wall explains why ethanol advocates are pushing the incoming Obama administration to set a much higher blend rate than E10, reaching E15 or E20, and require motor manufacturers to start redesigning cars to take much higher blends and produce a higher proportion of E85-enabled Flex Fuel Vehicles (FFVs) as a condition of any financial rescue package.

Want to Debate? Send your Great Debate submissions to


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

You make no mention of the wind farms with thousands of new generators. They must be having the same problems? If the wind farms were able to sign long tern contracts with the utilities doesn’t that mean they are also producing at a loss but their investors are protected by contracts with utility companies who now have to pay more for wind they they do for oil or coal?

I have heard comments from people that wind turbines have hig maintenance costs but I can’t imagine they are very much more expensive to maintain than the massive oil and coal burning electric generating plants. The turbines don’t have to pay for the fuel. How much staff does an oil or liquified coal plant need to run compared to a field of towers supporting very compact generators and blades.

I’ve seen engineering drawings of a liquified coal power plant. It was a fifteen story block of very interwoven pipes, boilers, scrubbers, structural framing and access ways that was so complex and densily packed it was almost imposible for me to read them at all. They cannot be inexpensive- at any time in their life cycle to maintain. Wind turbines look like models of simplicity compared to those places.

And the oil companies are also subsidezed by the governemnt in the form of tax breaks.

Isn’t this issue also clouded with industry “puffing” and not really about who can provide the most inexpensive and reliable Megawatt?

Isn’t the fact that wind is not influenced by market fluctuations always to the turbine farms’advantage? Not even bio fuels have that freedom. One would rationally think that that will always be to wind and solar power’s advantage.

Posted by Paul | Report as abusive

There is also a positive environmental impact benefit to blending ethanol to gasoline. That issue is the reason why the ethanol mandates surfaced in the first place. This article is very freshman-essque and very short sighted on a number of issues regarding the environment, tax issues, and the politics of big oil.

Posted by Dan | Report as abusive

Congress should lock in oil prices at $100 a barrel. It’s the only thing that will guarantee we break our dependence to it. Not only will it ensure that blending ethanol – and I hope we are talking about cellulosic biomass ethanol – economically advantageous, it will also guarantee that the Big Three will finally get their heads out of their butts and start producing fuel-efficient vehicles.

Posted by Jennifer | Report as abusive

Biofuels are a con, It’s a joke and you are all falling for it.
This is just another attempt by the oil companies to save their dying industry. Because they know that electric vehicles are the future, they are trying to divert your attention into something they can make more money on. Don’t you realise that trying to ‘grow fuel’ is ridiculous. The one cent your gaining in your left pocket is now being ripped out ten-fold from your right pocket by the supermarkets, because agricultural land is now been bought up for this imbeciles scheme, leaving less productive land to grow food. This problem is one of the main reasons the natives are slashing and burning the Amazon. Yes that’s right it is your fault, it’s about time you realised this.
Renewables are the future, and the quicker you all realise this the better.
Wake up America.

Posted by brad | Report as abusive

Freshman-essque? Um, what positive environmental impacts? The ethanol mandates were created very quickly — before there has been much of a scientific understanding of the impact of ethanol, especially corn based ethanol. If you had been paying attention to this debate, you would know that many leading environmental groups have expressed concerned with these mandates.

Dan, I suggest before you call someone out essentially for being ignorant about a topic, you might want to finish your own research first.

I think this article show incredible insight into this issue. I do think it is often a good idea to present the alternative solutions, such as wind, but overall, this shows the complicated nature of this argument.

Posted by Lindsay | Report as abusive

While cellulosic ethanol holds promise IF the technologies can be proven, taking food off tables to burn in our cars is non-sense on several levels: Corn-ethanol saves virtually no oil by the time you fully count all input from tilling to fertilizer; Corn-ethanol offers no or little savings on global-warming pollution plus it adds new carcinogenic compounds to smog; Corn-based ethanol of necessity forces up the price of foods (many, not just corn itself) which is a regressive tax and literally kills people in non-developed countries.

If ethanol makes sense at all, making it out of food is a bad idea, and if you picked a food to use, corn is among the worst.

So, spending tax dollars to subsidize corn-based ethanol is a trebly bad idea.

Converting our auto industry back to burning corn (back, because the first Model T’s ran on moonshine) is a step in the wrong direction.

Posted by JimF | Report as abusive

Ethanol growing isn’t nearly as impractical as it has seemed in recent years. A great deal of US corn goes to livestock, which benefit from eating the parts of the plant that are extremely inefficient for the ethanol makers.. During prohibition, efficient farmers & brewers fattened their pigs famously while filling their stills. This wave destruction of the amazon is unnecessary, and largely due to a lack of pre-planning. No one considered the consequences of the fast, thoughtless switch of so much farmland, so ways of minimizing the impact weren’t really considered.

Posted by Bex | Report as abusive

Say it ain’t so.
We have ethanol plant bankruptcies. Why? The greedy drove up corn with contracts and speculation and the farmers followed by selling under contract. Now they file bankruptcy so they don’t have to honor 6 dollars for corn when spot market prices are at 4 dollars.

This is what we used to call stealing. I suspect many have bought corn and not paid for it at all and the farmer is out the corn and no cash.
Thou shalt not steal. Looks like we are facing some brewers that are unethical.

Posted by sevan | Report as abusive

Mr. Kemp have you looked at the California LCFS, Low Carbon Fuel Standard, to be put into law in 2009? With current EPA estimates, operating a vehicle on E85 costs almost twice as much as with unleaded gasoline. I have been unable to find any studies of the financial impact of LCSF in California. The head of the California Air Resources Board is being touted as the next head of the EPA.

Also, when vehicles are tested for emissions are they tested at gross weight, or with a full tank? If so, then unleaded gas cars compared to the same E85 vehicle should have the amount of gas they carry be reduced to the equal the range of the fully fueled E85 vehicle. The amount of unleaded required to go the same distance as an E85 car of the same model is probably two thirds the amount of an E85 car resulting in a lighter regular gasoline test car resulting in lower emissions on the test. Testing E85 and regular gasoline cars at the same weight is not a fair comparison.

Posted by Robert Branch | Report as abusive

That’s my understanding too — it takes so much energy to make corn ethanol that it’s pretty marginal. My thought is, freeze the ethanol mandate and subsidies at current levels for corn ethanol, just as a kind of place-holder, but support cellulosic ethanol every possible way. (I’m excited by that news item about putting a cow gene in corn so it digests its own cellulose when it’s crushed.) Plug-in vehicles are great, except batteries suck. I do electrical engineering, and I hate them. My boss hated them. That’s why McCain wanted to offer a huge prize (which I think was dumb, but anyway…). It’s also likely to take hours to recharge a battery. And I’m not sure plug-in is right for buses and tractor-trailer use. Plug-in is very exciting, but I’m not ready to bet the farm on it.

Posted by Pete Cann | Report as abusive

What about biodeisel? This is not ethanol based.

Posted by ScottC | Report as abusive

Hold up, did I miss something? So Ethanol’s fix is to increase the blending wall to E15 which would change the RFS which then means ALL gasoline is required to be 15% ethanol forcing car makers to create new engines (and new vehicles) So now the majority of the country is going to have to run out and buy a new car, becasue the cars we had yesterday will now no longer run with the extra 5% ethanol content in all gasoline.Wow, this even screws up hybrid drivers.

And this is all because Ethanol loses money when gasoline is cheap and the rest of the country actually saves money.

This seems like a completely backwards plan.

Posted by John | Report as abusive

As a red blooded American, I must say I am very disappointed in my Government. The Fuel of the next generation is not Corn or is it sugar. What is it? WATER. The production of Hydrogen and oxygen on demand is what we need to turn is what we need to turn the attention too.
The problem with that is that the Government cannot tax it, as water as in every house hold around the world. The HHO on demand works 100 % do some research and find out for yourself.
By adding Ethanol to gas does two things.
1. Decreases you current fuel millage.
2. Allows them to add a tax on the production. So for them it’s a win win.
You get less gas mileage means you buy more gas, meaning they get more taxes.

Each state has to fight back. Go to your local officials and demand that a law be passed outlawing ETHANOL in gas. If they are not willing to do it, then it a petition start and force it to a vote. If we do not stand up now we will all suffer in the long run.
I say to you my fellow Americans, stand up and fight.

Posted by Joe. Orlando Fl. | Report as abusive

This is what happens when you have corrupt morons (read: Bush/Cheney)who are in bed with the petroleum and agribusiness corporations and whose stated political ideology is, “if you are the elite, then I am your guy”.

The world, and many generations into the future will be paying for the corruption, hubris and idiocy of this government. We simply did not have the courage to confront them and remove them from power. Who, exactly, is “we”? Every single adult on this planet.

Posted by Jonathan Cole | Report as abusive

Ethanol, Biodiesel, Water,
They all massive hidden costs individuals and the planet. None of these are truly renewable fuels. These are fuels that business can easily charge you for , and the others are not. Electricity can be renewable. That is why it is the future, and we already have the infrastructure to deliver it. Combine Sun, wind, wave, geothermal power and all the stupid arguements like ‘the sun doesn’t shine all day’ or ‘the wind doesn’t blow all the time’ all go out the window. They are rubbish arguements. Don’t use these renewables individually, use them together, and surely we have the brains to invent a longer lasting battery. NASA probably already have one. talk to the Russians they will sell you the technology.

Posted by brad | Report as abusive

The sole reason why ethanol became a fuel, was Senator Ethanol, Bob Dole. He said a lot of things but one rang true: there are a lot of corn growing farm state Senators. Henry Ford used corn liquor, and found it is a lousy fuel. It does not have the unit energy of gasoline. The US will never use cellulosic ethanol, because a) it does not work well(this may change), but b) it is made from weeds, and there are no Senators funded by the weed lobby. The electric car has a fatal flaw, the battery. Batteries have been studied since Faraday’s time, and they, and their variant, fuel cells, are puny in energy density. Electric vehicles will be slow, expensive, and incredibly inconvenient to recharge. Hydrogen has technical barriers in safe storage, and supply. DOE is studying fuel tanks in the 10,000 psi range (think shotgun blast pressures), but they have not met liability lawyers. A fender bender might melt a shopping center. Hydrogen does not exist in a free state. The only viable means to produce it from water is by enormous costly quantities of electricity, or inside a nuclear reactor. A large national fleet of hydrogen vehicles would overwhelm our electric grid and nuclear power plants.
We are stuck with the internal combustion engine for several generations to come. It is cheap, powerful, long lasting, and dependable in all weather. We will burn diesel, gasoline, coal to liquid, as we have centuries of reserves. There are coming advanced materials,e.g. nanotechnology, which will revolutionize its efficiency. But it all depends on the political types who created a useless industry, ethanol fuel production.

Posted by R. L. Hails Sr. P. E. | Report as abusive

Ethanol as a fuel represents a disguised subsidy as long as it continues to be produced from sugar or starch. As it is now, its prescribed use in gasoline represents a disguised form of assistance to the farmers as a beggar thy neighbour policy (ie. you pay through higher food prices).

Until it is produced from bagasse and other cellulosic waste by-products, it is drain on the economy.

It is not a renewable. It is a con.

BTW. And so is the use of hydrogen (“water” as one respondent puts it). Until hydrogen is produced by photo catalysis of water, its use is actually more polluting than even the use of LNG/LPG.

Posted by Remco | Report as abusive

Ethanol is not an efficient way to convert solar energy and energy from the fertilizers. It is better for the human race if all our effort, money and brain-power spent on resolving the energy issue, is used for harnessing solar energy. I am sure we can solve the world’s energy problem by directly utilizing solar energy. We can use it for heating and convert it to electricity for use in the home and for charging electric cars.

Posted by ajay | Report as abusive

So what do we do about Global warming? A lot of very significant organizations like the UN, the European Union and the Japanese take it all seriously. Whats’ their angle if they are all deluded? But no one is suggesting that have they? The internal combustion engine has been more or less universally acclaimed as King of excess CO2 in the atmosphere and has lots of heirs to the throne.

In my opinion the Auto giants – shrinking fast? should be forced to create much more fuel efficent cars using whatever fuel they use. That can be done. I am driving a reconditioned 17 years old Geo tracker that still gets about 38 miles per gallon on the open road. The little darling looks like new for less money than it would have cost to buy an old gas guzzler. It will make many more trips in an out of the rural town I live at the edge of and even take a round trip to the nearest big city – about 75 miles – and all on an 8 gal tank. I had a blazer with a fidteen gallon tank that couldn’t go to the center of town and back two or three times without a refill. I really don’t care what the fuel of the future has to be but I hope I do not find myself having to purchase a vehicle guaranteed to force me to take out a home equity loan so I can get a gallon of milk and a few groceries.

I tend to agree with those who smell a scam about everything having to do with the displacement and or replacement of existing ways of doing things – and it is terrible that we are in a position where those who make the vehicls seem to be designing the product to load them with every sybaritic luxury they can market. They control the market already. Where are the safe American made TATA equivalents talored for an American market for an american highway system that does not make the driver feel like a bug on them. He has to frequently share the road with the big rigs.

I suspect we get the cars that make the distances between places seem not so awesome. I appears we can kiss public transportation any larger than the CBD and some commuter lines goodbye. The old passenger trains were always internally subsidized by the railroad companies themselves. Freight carried the freight so to speak. Too bad car companies can’t do the same thing.

And by the way – a minor point of anatomy. Every one no matter the country – is a red blodded something.

Posted by Paul Rosa | Report as abusive

The price of crude oil at US$50 is not sustainable whilst average production cost is US$60 – 70. Most producers will cut production. Basic demand supply market tells us that the price will move back up to a sustainable level, i.e. US$80 – 100. I am supportive of ethanol production as well as any other renewable energy source due to its renewable nature and domesticated, mitigate the risk of reliance from third party. Additionally, the economy, especially farmers and entrepreneurs will benefit from this industry in the long term. Lets not forget that the earth temperature is rising and oil reserves are depleting at an enormous fast rate. By planting more energy crops would certainly resolve some of these issues and also enrich the earth for the future generations, your childrens’ childrens.

Posted by H.C. TAN | Report as abusive

Come on, we are getting less miles per gallon. they say it is hurting small engines,fuel life not as long. O well I am trying.

Posted by Justin | Report as abusive

Ethanol, a great fuel. A tremendous sucess of production, this domestic brew fuel, a powerful dampening effect on petro prices. Keep it up. Better for environment, American jobs, economy, and consumers.

Blending to 20% allowance from my experience a good thing. Personally, currently blending with E85 for a 30% fuel mix. My gas mileage still 21-24 mpg. Varies mainly on driving habits and weather. Haven’t experience any problems with small engines or the 2 cycle engines either.

Corn production for ethanol still a huge potential as those genetic modified corn plants (tailored hybrids) for better ethanol production technology, show tremendous potential. Also, the sorghum plant appears to be capable of 1,000 gallons ethanol per acre. Sorghum works well with alternating plantings with corn to keep natural disease and pests at bay.

IC engine technology just begining to exploit ethanol capability. High turbo pressure, diesel ignition, and water injector or blends are proving to increase mpg past regular fueled engines. The future fuel may just be the E95 or E100 with water.

Posted by flee | Report as abusive

Biofuels such as ethanol made from corn is a joke! It costs twice as much as ethanol made from sugar cane and the net energy developed is very small. It was a congressional flop and should be abandoned!

Posted by whs806 | Report as abusive

For $100 the auto Industry can make any vehicle a Flex Fuel Vehicle capable of running on Gasoline or any blend of ethanol..that\\’s the beauty of Ethanol.(Henry Fords Model T was a Flex Fuel vehicle (it could run off the farmers still) isn\\’t a big deal to make the conversion)

For $100 the consumer now has a vehicle that gives them the POWER to actually choose at the Pump. At the pump you can tell Oil to take a hike or Ethanol.. you can support which every fuel for that day is the best bargain

Choice is a very powerful tool and consumers have never had any real Choice at the pump because of Oils monopoly..Gasoline or Gasoline anything that brings competition at a reasonable cost should be welcomed.

Electric vehicles are certainly part of the longer term solution but no one is buying any vehicle right now let alone an EV that will add 10k to the sticker price.

a Flex Fuel vehicle adds $0 to the sticker price

There are now 1900 Stations selling E85 across 1371 Cities ..4 years ago there were just 200 Stations selling E85. ( )

That growth will surge if the Auto Industry were required to simply make every vehicle capable of running on higher blend of ethanol….$100 per vehicle far less that EVs and dosent require any massive re-tooling of the auto Plants

GM is Invested in 2 Cellulose Ethanol companies including Coskata that can turn Industrial waste , even old tires into ethanol ! ( )

Of the 36 Billion Gallons of ethanol in the RFS 16 billions has to be made from Cellulose material.

More on topic though , John K The problem has been the blending set up that allowed ethanol as an additive instead of as an Alternative fuel. This lead to a rush of ethanol production because the Oil Companies would buy all the ethanol they could get there hands on because Oil does the blending and thus gets the blenders credit .

So the ethanol producers had a ready buyer for all the ethanol they could produce ..without any concern as to the end product ..ethanol as an additive instead of ethanol as an alternative fuel.

To address that the blenders credit should be graduated based on the end product ..less credit for ethanol blended as an additive and higher credit for ethanol blended as a alternative fuel.

That would encourage ethanol and oil to build out/ invest more E85 stations as well as encourage Blender Pumps right at the Station ..a Blenders Pump is simply a Gas Pump that has 2 Tanks that Holds Gasoline and one that Holds ethanol.

The Consumer can choose whatever blend they wish Unleaded , E20 E40, E60 , E85 ..and the blenders credit moves from Oil to whoever installs the pump (whether that be Oil, Ethanol or an Independent )

The bottom line though is for the Cost ($100) every vehicle should be FFV and then let the consumer decide no matter there personal choice of fuel.. the object is simply to break up Oils Monopoly and actually allow for CHOICE .

Posted by Dan M | Report as abusive

Converting food staples into ethanol is a terrible idea. Converting compostable waste into methane makes a lot more sense. Most of us know methane as Natural Gas, which is about 80 percent methane. A close cousin can be easily liquified – propane. I am not a fan of ethanol because it takes a lot of effort to produce and creates adverse conditions in poor countries due to pressure on food supplies. So yeah, I would put aside this idea. Ethanol was invented by bureaucrats and market manipulators who wanted to control wheat prices. They could eliminate excess product without actually feeding people. That kind of infectuous thinking is all over the place – like in the auto-industry.

Posted by Don | Report as abusive

Does anybody think that tractors and trucks are powered by the Holy Spirit? Did anybody account for diesel fuel spent for planting, growing, and harvesting the corn and delivering it to ethanol makers? Fertilizers – they’re also made from oil. Energy consumed by ethanol making process – also results in burning oil or coal or gas at power plants. The oil import savings are mostly imaginary and invented by agricultural lobby. The price increases on all foods produced from corn, and meats – due to animal feed being mostly corn – those are real.

Posted by Anonymous | Report as abusive

Ethanol (both 1st and 2nd generation), while not a perfect replacement for gasoline, is a crucial piece of the energy independence pie. There will be no one answer to solve our energy problem. We will need wind, solar, geothermal, and biomass technologies…not to mention far more efficient technologies. I want to focus on ethanol in this, though.

It is true that when added to gasoline it significantly lowers the energy density; however, it is an octane booster, which means a more thorough combustion of the hydrocarbons will take place. With a turbo-charged engine, the fuel efficiency will jump from 35% below to 20%. This oxygenation of the fuel reduces CO, hydrocarbon, particulate matter,benzene, and sometimes NOx( cles/emissions_e10.html). Not only does the fuel reduce tailpipe emissions, but looked at from a life cycle analysis standpoint, ethanol (E100) reduces the total carbon emissions by around 75% compared to gasoline b/c the carbon released was absorbed by the plant from the atmosphere.

The media have created an unnecessary and faulty tension between the use of corn/soy for food versus for biofuels: the claim is that biofuels are responsible for the increase in food cost. However, according to USDA and the Department of Energy, biodiesel and ethanol consumption accounted for only 0.2% of the overall increase in food prices (4-5% of the 4.8% increase) fuel_food.html. The tiny size of this effect is due in part to the biofuel industries’ ability to coexist with the livestock industry, the largest consumer of corn/soy in the U.S. The residue from the fermentation of corn into ethanol (called distillers’ dried grain) and from the pressing of soy into oil (called oilseed cake) is sold as highly nutritious, protein-rich animal feed. (Cattle cannot digest starch, which is the carbohydrate hydrolyzed to sugar to make ethanol.) Thus, as more ethanol and biodiesel plants come online, the amount of
feedstock they consume affects the overall corn/soy supply significantly less than is initially apparent.

So, if biofuels are not the main factor causing the food prices to increase, then what is the culprit? Food prices are increasing because food is a product of energy, and energy costs went up like mad last year. It cost more to plant the seeds, harvest, process, package, and transport food than ever before. Therefore, rather than being the death toll of the rapidly developing biofuels market, the increase in food prices functions as a harbinger for scarcity of petroleum and the many effects of our reliance on it.

President Elect Obama was asked several days ago how the falling price of oil would effect his push for renewables. He responded rightly saying that it is more important than ever to push forward b/c we must be thinking about our future. In the next 10-20 months, the market will be saturated with ethanol. So, it is of utmost importance that the government pass a tax incentive like that of Brazil which gave auto manufactures a break on flex-fuel vehicles. In 2003, 0% of the cars in Brazil were FFVs, but by Oct of 2008, 88% of them were.

I think it is important to remeber that, yes, the cost of ethanol is high, but compared to what…oil that we go to war for? Biofuels allow us to create energy security, generate economic activity, and abate greenhouse gas emissions. I have a lot more to say, but will leave it at that.

Posted by James | Report as abusive

Food VS Fuel Debate..

The bottom line is the cost of corn is very minor to your end food product..that is simply a fact

Lets take a Product that is ALL corn

1 Lb Box of Corn Flakes at $3.29

1 Bushel of corn & $7 a BU

56 lbs / $7 == 12.5 cents for the corn
So $3.16 of the cost is something other than corn

same Math with Poultry , Cattle (your chicken and Steaks)

Also If ethanol were to blame for high Corn prices then why is it we are producing nearly 9 Billion gallons of ethanol this year ..up 1.5 billion gallons from last year)and corn dropped from nearly $8 a BU to the current $3.38 cents ?

You can blame anything you want for the higher price of food but to blame high corn and ethanol simply has no logic in it. WE make so much corn we don’t know what to do with it all, to this day we still have farm subsidies that PAY farmers to not grow corn.

The reality is the Food vs Fuel debate was an orchestrated smear campaign by the GMA (Grocers Association). They paid a Glover Park Firm 50K to put together an attack plan blame ethanol so they could protect their profits ! MA_Proposal.pdf

They would spam boards like this ..they would release their “story” to the Major media like CNN all would hear that Ethanol was to blame for high food costs and you simply believed it ..why? well because it was on the News lol

No one is going hungry because of was ludicrous last year and it’s ludicrous today.

The beauty of the internet is that it can be extremely empowering for those that REALLY want to search out the truth

That said.. Corn is not perfect (mostly because of fertilizer costs)but it is well known that we are already on a path away from corn to cellulosic ethanol..

The first 2 Cellulose plants are already in production stages ..and within 2 years those will be the only ethanol plants you will even see being built

Ethanol is not evil .. the only people who think it is evil is the GMA and the Oil Companies … both of which are simply trying to enhance and protect their profit margins .

God Forbid any major terror attacks or hurricanes etc..but during any catastrophic event .. with a flex fuel vehicle you can MAKE your own fuel if push came to push .. it’s just alcohol that’s all it is can drink’s moonshine.

You cannot make gasoline ..

If Iran decides to black the Persian Gulf and stop the flow of Oil from that region.. Ethanol can bridge us through that don’t need to do anything special ..simply pull up to the E85 pump instead of the Gas Pump…

And we can have that OPTION ..for just $100 per vehicle

We don’t have to send our kids to spill their blood .. we simply pull up to the E85 pump until the “crisis” is resolved .

Yes we need Hybrids, Electric Vehicles , Hydrogen and so on.. but the shortest path out of the Monopoly of Oil IS ethanol..because the infrastructure is already in place…Billions of gallons of ethanol are already produced, there are already 1900 Stations selling E85 and it only costs $100 to make any vehicle E85 capable..

So while we work towards longer term electric vehicles etc.. for the money the best short term to transition is all vehicles FFV

BTW.. here is GMs 2009 Line Up of FFV’s

2009 Chevrolet HHR FWD
2009 Chevrolet Impala
2009 Chrysler Sebring
2009 Dodge Avenger
2009 Buick Lucerne

along with there larger Trucks and SUVS..

It’s a good start but there is no reason ALL the vehicles coming off the line shouldnt be FFV’s

Posted by Dan M | Report as abusive

Ethanol is a waste of time and money as a fuel. If the government didn’t put 42 cents subsidy in it, it would be long gone. Worse yet, a 10% ethanol blend DECREASES fuel mileage 8-12%.

If we had any sense, we would be making and using diesel cars. Right now, diesel is less than 3% of the U.S. consumer market (Europe is well over 40%). Then, instead of ethanol, we could make much cheaper corn oil and other vegetable oils and run vehicles on that. Yes, it might take a fuel heater in colder climates in the winter OR they could just use diesel, big deal. And that oil can also be cheaply converted as heating oil too.

Why doesn’t it happen. Federal and state governments tax diesel heavier than gasoline so that business ends up with a bigger bite of the cost. So, consumers avoid them. Don’t go there with emissions–we have clean burning diesel and vegetable oil burns even cleaner.

Thanks Government. And now you want to run the health care program as well as you do our energy program. And you have done so well with Medicare already!

Posted by Jim Blue | Report as abusive

Everyone that has posted a comment and has mentioned ethanol as a Bio-fuel by using corn, soy beans etc, but they left out one very important source for Bio-fuels Algae. It solves problems with coal and with other pollutants. Check it out for your self. e/bd/geo/me/il/il.html

Posted by Jay Wheeler | Report as abusive

GM ‘s sudden stewardship of the environment is simply a way to continue to make gas guzzlers thanks to E85 an extremely inefficient fuel. The CAFE standards call for all car companies to achieve an average MPG for all vehicles. I believe the most recent number is 27 MPG. Well if you make the biggest money off of 10 miles per gallon SUV’s you would hate to say good bye to them wouldn’t you?
The CAFE standards has a loophole, that being that an E85 vehicle operating on E85 miles per gallon are ONLY figured against the actual amount of gasoline in the blend (15%) if you divide 100% fuel by 15% gasoline you get the multiplier to the mpg (666) therefore a gas guzzling 10 MPG SUV is given credit for 66.6 MPG. If you sell one SUV like this you can have 5 vehicles only achieving 20 MPG and this gas guzzling SUV and you average more than 27 MPG overall while not one of their vehicles really met the standard.
GM is not the only one taking advantage of this free ride Ford and Chrysler are too. The big three are heading down the toilet and this is just their hands clinging to the rim.

Posted by Corny | Report as abusive

Corny, looks as though we need to change the MPG standards away from gallons to use miles per BTU of theoretical chemical energy available by oxidation. I’d say grams of carbon, but renewable fuels contain carbon that was extracted from the atmosphere during their production, so that’s not a great idea.

Biodiesel should be talked about, yes. I’m ignorant of how much oil we can grow. The foodies aren’t going to approve.

Posted by Pete Cann | Report as abusive

If the public even thinks ethanol raises food prices that’s not good. First we’re taxed to pay ridiculous farm subsidies. Then we get fewer miles to the gallon. Then grocery prices go up as well. I realize there are multiple factors, but look at just the psychology–the effect on people already depressed by losing their homes and their jobs and their retirement money. Stop using corn-based ethanol–stop until a non-food like algae or crop wastes can be used as the source.

Posted by June | Report as abusive

The whole concept of corn ethanol for fuel is absurd, if for no other reason than its (in)efficiency. Were it not for the farm states & their lobbying efforts over the last decade, we wouldn’t be faced with this continuing debacle. Once again, the almighty federal government with its regulatory & bureaucratic gobbledygook has created an artificial market that would not otherwise exist or even be remotely sustainable. Many of the “Greenies” who have bought into the delusion that ethanol is good for the environment, are totally uninformed. When corn is cooked down and distilled, there are 3 chief by-products: Ethanol, Distiller’s Grain (which generally are dried, consuming more fuel & producing more emissions to become Dried Distiller’s Grains – DDG’s)and CO2. YES . . . . CO2!! Carbon dioxide is one of the principle by-products. Hmmm, CO2, where have I heard of that molecule before? Oh yeah, it’s a GREENHOUSE GAS!!! Wake-up America and smell yet another government mandated fleecing! Not only are we not realizing any true environmental benefits, discussions continue as to whether or not corn ethanol production is even net energy positive. With millions of starving/ hungry people on the planet, sourcing fuel from food is a concept that is illegitimate and unfounded.

Posted by etohisnosavior | Report as abusive

BioFuels are not competitive to oil or gas. The only reason they exist in the USA is due to government subsidy. Ethanol made from corn costs twice as much as ethanol made from sugar cane. It requires a lot of energy to make ethanol resulting in very little if any net energy production. But it does raise the price of FOOD! Stop the federal subsidy of ethanol made from corn!

Posted by whs806 | Report as abusive

quote: For $100 the auto Industry can make any vehicle a Flex Fuel Vehicle capable of running on Gasoline or any blend of ethanol..

the flex fuel sensor for a GM costs $500, the larger needed injectors cause worse atomization, and less accurate fuel air mixtures. GM gets away with this because it lets the vechile get %20 worse fuel economy. They trade these MPG costs to other vechiles to stay under the cafe cap.

Posted by lance | Report as abusive

[…] Read the full story […]

Posted by Opinion: Biofuels run into trouble | Ethanol | Report as abusive