Where’s The Big Algae Lobby? (or The Ethanol Smokescreen)

Posted in Energy, Environment, Pork Barrel on Wednesday, June 21st, 2006 at at 11:33 am by TheRanter

According to the latest buzz, the future of American energy lies with biofuels like ethanol and biodiesel. According to the Archer Daniels Midlands (ADM) commercial, somewhere in Kansas a farmer is rising at 5:00am to plant the corn that ADM will turn into ethanol and the soy that they will turn into biodiesel that will save the environment and get us out of Iraq. Biofuels can be produced domestically and they are net carbon zero fuels, meaning that they sequester as much CO2 during production as they give off when burned, so they don’t make a net contribution to greenhouse gasses. In addition, they burn relatively cleanly so they should have a postive impact on air quality. In the case of biodiesel, furthermore, it can be made from cast off vegetable oil, so the jillions of gallons of deep fry oil from MacDonald’s can find a second life powering Willie Nelson’s bus rather than just going into the waste stream. Reduce, reuse and recycle, right? What’s not to love? Several things actually.

Let’s begin with ethanol. Ethanol in the United States is primarily produced from corn. Historically, this is because corn-state senators insisted on expensive subsidies to their farmers as a form of welfare, not because corn was a particularly good source of ethanol. Moreover, between 1998 and 1994, our friend ADM contributed 2.4 million dollars in soft money to the Republican and Democratic parties which, among other things, got Newt Gingrinch to change his tune on ethanol subsidies [1], of which ADM is the largest beneficiary. This is not just a liberal conspiracy theory. The Cato Institute’s James Bovard, in the executive summary of his article on ADM and corporate subsidies, states that

At least 43 percent of ADM’s annual profits are from products heavily subsidized or protected by the American government. Moreover, every $1 of profits earned by ADM’s corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30″ [2].

Subsidizing ethanol production was not only bad economic policy, until relatively recently ethanol production from corn was a net energy loser. In 1991, the Department of Energy estimated that it took 85,000 to 91,000 worth of BTUs in gasoline to produce a single gallon of ethanol, which contains the energy equivalent of 76,000 BTUs [2]. A 1994 report by the Congressional Research Service found that corn subsidies were not justified in terms of economics, tax policy, alternative fuel production or other environmental issues [2]. Production methods have improved in the last decade and many now peg the “return ratio” at 1.3 BTUs produced for each BTU burned, but some analysts believe that in actual practice, if all inputs in terms of diesel fuel for tractors, petroleum for fertilizer and pesticide, energy to fuel irrigation pumps and other inputs are included, that it is still a net energy loser (but that’s up for debate).

But let’s assume that there is a net gain. Shouldn’t we just start turning corn into ethanol and quit burning petroleum from the Mideast? In short, no. In 2002, the United States plants about 80 million acres of corn. Meeting one days’ oil requirement for the US requires about 2.8 million acres of corn, not counting the fuel lost in producing the ethanol. This means that if we quit eating corn, and it took no oil energy to actually produce ethanol and we turned it all over to fuel needs, we produce 28 days of fuel for the country [3, 6]. Make no mistake, ADM is doing us no favors by turning our corn into ethanol.

There are better alternatives to corn as a source of ethanol, such as Bush’s beloved switch grass (though the technology for that is a ways off) and willow trees harvvested on a three-year cycle. Making ethanol from willow is relatively complex but pilot plants are online and commercial plants are in the works in upstate New York where governor Pataki is putting up alternative energy money that actually might make sense [3, 4, 5]. One study found that 125 miles square of willow could provide the electricity output of 10 Candu nuclear reactors and all the petroleum needs for Canada. For that matter, better methods that would use agricultural residue such as corn stalks would also be a huge improvement, but we won’t see that for a while.

For the time being, though, ethanol production is primarily in the hands of ADM, which you might remember as the Enron of the 1990s – a huge and corrupt lobbyist. The oil companies have not, in recent history, been convicted of price fixing, but ADM paid the largest anti-trust fine ever because of its price fixing schemes in the 1990s. So we are turning our energy policy back to an Enron-like corporation. In addition, corn production requires relatively high quantities of water, which is running out in the West (see Marc Reisner, Cadillac Desert), and our fuel and food security are increasingly bound together and we are entrusting that to one of the least trustworthy corporations in America.

Over on the biodiesel side, there is no 500-pound gorilla skewing policy like ADM and corn-state senators do for ethanol, but the fact is there just isn’t anywhere close to enough soy and canola (and by the way, one of the major movers in the soy market is… ADM). The best option appears to be high-yield algae, which would only require 9.5 million acres to meet all current transportation needs. In other words, instead of 80 million acres to meet a few days of energy needs, with only 11% of that land, we could potentially produce enough to meet our current needs in transportation [7]. Meanwhile, there is very little government subsidy for algae production. It is, of course, merely coincidence that there is not major Big Algae Lobby.

What’s to do? Obviously, write to your representatives and senators and ask them to do something serious to protect America’s energy future, our water future and our economic future by abandoning subsidies to unsustainable and pork-barrel alternative energy programs.