ETHANOL

Think About It
God help us when our Federal government tries to do the same. I wrote recently about Senator Charles Grassley (R-IA) and his Blender’s Tax Credit, hidden in the JOBS ACT to help out the corn growers in his state, and the disastrous side effects. In 2005-6, corn was averaging $2 per bushel. Now, the future’s market for corn is over $7 per bushel. Yet in 2006, the US produced only 10 billion bushels of corn, while last year it was over 13 billion bushels. But because of competition with ethanol production, the National Pork Producers Council reports that the cost to feed a pig to slaughter was $65 least year, compared to $35 the year before. We can look for a price increase of about 7.5% more on milk, pork, beef and chicken because of corn ethanol. As early as 2006, Bush was considering removing ethanol subsidies, but Congress kills the action every year.
In 2007, the US, world’s largest ethanol producer, produced 6.5 trillion gallons of ethanol from corn. The second largest producer by far was Brazil, with 5 trillion gallons made from sugar cane. Third place EU produced only 600 million gallons. Brazil produces much more than they can consume. Yet, we imported only about 189 million gallons from Brazil. They would like to ship us more, but can’t. Why? Because we charge them a 2.5% import tariff, and a secondary duty of 54 cents per gallon; supposedly to offset the blender’s credit given to the US petroleum producers who mix ethanol and petroleum. We don’t charge these tariffs to Israel, or our NAFTA buddies, or the Caribbean islands, because they can’t send us even 100 million gallons. But the US corn growers have a substantial ally in keeping tariffs against Brazil. The US sugar industry, who frowns at the precedent of doing anything to help foreign sugar producers, supports these tariffs.
The cheapest price for E85, which is 85% bio-fuel and 15% petroleum, is about $3.13 per gallon now in Georgia, nearly 25% cheaper than pure gasoline. However, you need a flex-fuel car to burn it. Tried to buy any E85 lately? With a population nearing 9 million, until recently, there were 5 stations in Georgia. I understand Protec Fuel is now opening 12 stations in metro Atlanta. In 2007, corn-growing Iowa, with a population of under 3 million, had 88 stations open. Surprise, surprise!
While ethanol is easier to produce from starch, such as in corn, it can also be produced from cellulose. While we think of cellulose as wood fiber, it is the main component of all plant cell walls, and is the most common organic compound on earth. Ethanol could be produced from corn stalks, rice straw, wood chips, even kudzu. The US Energy Department states that it takes only 0.1 btu’s of fossil energy to produce 1 btu of energy from cellulose for the pump, while it takes 0.74 btu’s to produce 1 btu from corn. The corn is almost not worth the effort. According to the Energy Department, with only modest changes in land use, we could grow 1.3 billion tons of replaceable cellulosic biomass by 2030; enough to replace 30% of our gasoline consumption.
Are the corn growers taking us to the cleaners, or what? The Iogen Corporation of Canada is already producing 1 million gallons of cellulosic ethanol annually from a plant started in 2004. And they have just received a license from Perdue Research Foundation to use genetically enhanced yeast that increases the yield by 40%. Iogen considered a second generation plant in Idaho, but backed away because of lack of support from our Energy Department. I wonder what part Grassley may have played. Whatever happened to US leadership?
While miles per gallon go down slightly with E85, power seems to be greater, because octane is higher. If there are two things Georgia can grow, it’s pine trees and kudzu. Johnny and Saxby, are you listening?