What Is the Real Deal With Biofuels?
by Wilton D. Alston
About a year ago I penned the essay from which the above quote is taken. I had no idea it would be so well-received, but apparently I struck a nerve, at least with readers of LRC. Thanks to everyone who found a modicum of value in my modest musings. Fast-forward to today and right on cue, another thrilling subject arises about everyone’s favorite multi-purpose grass. Yes, I’m talking about corn, and this time, I’m talking about the apparently widely-held belief that it can be grown as a means of mitigating the US dependence on fossil fuels. What the heck? We’re saved from the Terrorists! Not quite. If you haven’t heard, biofuels are apparently the next big thing. And corn is the king of court. Given that the conversion to biofuels from oil has been going on for so many years without success, it would probably be better called the court jester. Can corn be used to create a fuel? Yes. Can that fuel be burned in automobiles, just like fossil fuels? Yes. Would the raw material for that fuel be considered as a "renewable" resource? Sure. Would the use of fuel from corn replace oil as a fuel in the US market? No. (More accurately, "Hell no!" Details below.) I won’t bore the reader with further discussion of the first two questions I answer above, because, frankly, those answers are apparent to anyone who has a pulse, even a weak one. Certainly corn can be used to create fuel and certainly cars are currently using it. The other issues, however, deserve a little more discussion. According to Wikipedia, there is a fair amount of controversy and evidence on both sides of the debate over the usefulness of ethanol fuels. From reading a few of the references and putting them into context, I’m not quite so sure. As far as I can tell the mainstream media isn’t covering the most pressing technical issues, such as the amount of energy needed to produce ethanol versus the amount of energy produced by ethanol, instead focusing more on political concerns such as replacing foreign oil with something grown domestically, and how good that would be. An example of this type of reporting can be found in a 2006 CBS News piece entitled, "The Ethanol Solution" which includes an interesting quote from professor Daniel Kammen, who heads the Renewable Energy Lab at the Berkeley campus of the University of California, where he studies ethanol and other alternative fuels. Says Kammen, "Fifteen years ago Brazil made a commitment to burning ethanol made from sugar cane as a primary vehicle crop. And lots of energy analysts have scoffed at the idea." According to CBS, Kammen goes on, "They saw the price trends of ethanol from sugarcane going down, and, of course, the global price of gasoline going up." He continues, "And so they emerged at this wonderful time with a program that had been thought through. They made it work — and it wasn't even that hard." Really? Subsidized Food Burning The scenario described by Kammen seems to fly in the face of research conducted by Cornell ecologist David Pimental. According to Roger Segelkin, in his web report entitled, "Subsidized Food Burning" Pimental’s calculations illustrated that such a fuel as that created from corn (or sugarcane) simply cannot replace fossil fuels for reasons of basic physics. Why not? Quoting Selgelkin’s prose directly, we get this rather terse answer:
Further:
Given the devastating nature of these findings and their attack on the premise of using corn-based biofuels, one would expect, even if he were less cynical than I, that the corn lobby would fight back. They did. According to Cecil Adams, of StraightDope.com, Michael Graboski, a professor of engineering at the Colorado School of Mines, published a rebuttal of Pimentel's paper. The Wiki link noted above lists some of the rebuttals of Pimental’s conclusions, many of them coming from a website by the name of "Green Car Congress" which would seem, at least by its name, to have a relatively obvious goal. It turns out that Pimental was incorrect in the calculations above. The net loss in energy from creating biofuels is less than he initially computed. It also turns out that Graboski is a consultant to the National Corn Growers Association (NCGA). While that alone would not make his calculations incorrect, it does make me a little dubious. (Yes, I’m cynical; I admit it.) Luckily, Pimental has updated his calculations and published them as well. According to his 2005 paper, "Ethanol Production Using Corn…" we find:
Given this data, it would seem pretty obvious that biofuels don’t make much technical sense. I’d be remiss if I didn’t admit that competing data to that mentioned above exists. Anyone interested in reviewing that competing data can follow the links and references in the Wiki link above, or the link to Graboski’s work for the NCGA. However, none of the observations made by Pimental are really that surprising when one examines this issue via the rubric of Austrian economics. The fact of the matter is this: The most obvious justification as to why biofuels cannot replace fossil fuels has little to do with energy output and can be deduced from the actions of the State and the consumer. Nice Work If You Can Get It If biofuels really made sense as a substitute for fossil fuels they would not also require help to be in the discussion. Simply put, if biofuels were actually worthy of consideration to replace fossil fuels as a routine energy source, they would not also need to be subsidized by the State. Even if they did need a subsidy to "get off the ground" – that itself a suspect premise – certainly the technology should have gained sufficient traction in the many years since corn was initially subsidized by the State. As is the case with recycling, when one must be paid to take the option it is because that option is not otherwise economically attractive. Checking in with the website, TaxPayers for Common Sense, in an article entitled, "Creamed By the Corn Belt" we have:
Wait. That cannot be correct. Ethanol has been subsidized for over 30 years and still it’s not cost-effective? (I have also seen it reported that there was a federal program that gave ethanol producers free corn.) How can there be any doubt that ethanol is a complete waste of time? Let’s use the case of recycling as an object lesson. If it made economic sense to make new stuff out of old stuff, would the State have to force people to do it? Of course not. Some ambitious entrepreneur would drive through the suburbs, collecting newspapers, plastic, glass bottles, cans, etc. He would go back to his factory, garage, hovel, Bat-cave, etc. and produce the various goods with the recycled material, making a small fortune (or at least a modest profit) in the process. Along the way, some other entrepreneur(s) would hear about this guy’s success and decide to compete for the trash he’d been collecting for free. Before one could say, "big blue trashcan" people would be bidding for trash of all types! Homeowners would dedicate whole rooms of their houses to maximizing their additional income from selling their recyclables. Before you knew it, a cottage industry would grow up around recycling, with products, devices, tools, and other means to allow everyone to maximize the benefits. Instead, we have laws that require a behavior that pretty much everyone knows is busywork. The reason should be obvious. Recycling does not make economic sense. Then again, Library of Economics and Liberty columnist Mike Munger already covered that in "Think Globally, Act Irrationally: Recycling." Similarly, people like General Motors (GM) Chairman Rick Wagoner have no reason to not use ethanol, particularly if it makes economic sense to do so. Wagoner ran GM’s Brazil division, so clearly, if converting to ethanol was the "slam-dunk" its proponents claim, he should know the truth. (By the way, ethanol isn’t even new to the auto business: the first Model T's ran on it.) In fact, GM is spending millions promoting flex cars, yet I sense no massive rush to ethanol cars, despite the long history of subsidization. Why not? Call me naïve, but I seriously doubt it’s because OPEC doesn’t like biofuels. Conclusion So why does this corn-is-good-for-everything paradigm seem to be everlasting? Why do the massive subsidies continue? As is almost always the case, one simply has to "follow the money." Quoting an article by the Cato Institute’s Doug Bandow which originally appeared in the Investor’s Business Daily we find:
ADM is the world's largest grain processor, and produces 40 percent of the ethanol used to make gasohol. ADM also supports candidates on both sides of the aisle. Not surprisingly, the answer here is exactly the same as we found when we investigated the reasons for high-fructose corn syrup being ubiquitous as a sweetener in the US market. The State, successfully lobbied by special interests, uses taxpayer money to make it so.
I wish I could say I’m shocked, but I’m far from it. I will say something else that I’ve said before though: It is nice work if you can get it. January 25, 2008 Wilt Alston [send him mail] lives in Rochester, NY, with his wife and three children. When he’s not training for a marathon or furthering his part-time study of libertarian philosophy, he works as a principal research scientist in transportation safety, focusing primarily on the safety of subway and freight train control systems. Copyright © 2008 LewRockwell.com |
If
the 30+ years of history and human action is any guide, corn has
no chance – none – of replacing oil as a power source for cars,
and yet corn farmers and corn processors continue to have money
funneled their way, supposedly so that one day the US can become
energy independent via biofuels.