Note, this article deals directly with American energy policy and therefore may seem American-centric to some, but that’s simply because of the context of this policy
Ethanol is just another way of saying ethyl alcohol, which is generally the type of alcohol that a person means when they use the term “alcohol” in common conversation. It’s the exact same stuff that gives liquor its kick. If you’ve ever woken up with someone you don’t remember going to bed with, vomited all over your prom dress or photocopied your buttocks at an office Christmas party, it was probably because of alcohol.
Ethanol is also used as a motor fuel, most often as an additive to gasoline. In the United States, ethanol is now standard in most gasoline. The current standard for ethanol is 10% ethanol to 90% gasoline. Nearly all the ethanol found in US fuel comes from the fermentation and distillation of corn. Corn is a reasonably good crop for ethanol production, because it’s rich in starch and sugars and a large volume of corn can be grown per acre of land. Still, ethanol production is far from economical and as things currently stand, it would be all but it would be all but impossible to make money on production of ethanol fuel if not for extremely generous government subsidies and requirements that it be added to gasoline, whether or not the gasoline seller or the buyer of the fuel actually wants it.
Indeed the ethanol industry has become a prime example of environmental policy that sure seemed good at the outset, but has turned out to be disastrous. Ethanol’s proponents point out that it is produced domestically, as opposed to petroleum which is largely imported. While this is true, the total economics of ethanol are actually quite poor. It’s considerably more expensive and more energy intensive to produce than petroleum, so there’s no economic benefit to the nation by using it. It uses vast areas of land, huge amounts of fertilizer and enormous quantities of energy to produce ethanol and worst of all, it competes directly for resources with food crops, potentially driving up the price of critical staple crops.
As it has become more and more difficult to hide the dark side of ethanol, it the industry has been fighting tooth and nail to maintain (or even increase) the extremely generous government handouts that it has needed to remain solvent and make money with an inherently inferior and more expensive product. The US government is currently borrowing money at a rate greater than any other time in history (yes, even World War II!) and handouts to industries that do no good for anyone other than themselves would seem like a good place to cut back. For those making ethanol, this could mean the end of the gravy train.
Via The Associated Press:
Ethanol industry scrambles to keep incentives
WASHINGTON – The once-popular ethanol industry is scrambling to hold onto billions of dollars in government subsidies, fighting an increasing public skepticism of the corn-based fuel and wariness from lawmakers who may divert the money to other priorities.
The industry itself can’t agree on how to persuade Congress to keep the subsidies, which now come in the form of tax credits worth about $6 billion annually.
One industry group, Growth Energy, made the bold move Thursday of calling for the tax credits to be phased out completely in favor of spending the money on more flex-fuel cars and gasoline pumps that support ethanol. A rival group, the Renewable Fuels Association, said it’s too late in the year to make such proposals — the tax credits expire at the end of the year, and legislative days are numbered.
As the industry bickers over what to do, Congress is signaling it’s growing tired of paying for ethanol. The House Ways and Means Committee is considering slashing the tax credit by 9 cents a gallon, from 45 cents to 36 cents, when it looks at a wide range of energy tax credits as early as next week. That would be the second cut in the credit in as many years.
A key senator also expressed skepticism this week. Sen. Jeff Bingaman of New Mexico, Democratic chairman of the Senate Energy and Natural Resources Committee and a longtime supporter of renewable fuels, said Congress should “weigh all factors, including the credit’s very high cost to taxpayers,” when looking to extend the credit. Bingaman noted that the ethanol industry is protected by congressional mandates for its use.
Some supporters say they see the writing on the wall.
“The longer we have this support structure in place for ethanol, the more people begin to question it,” said Roger Johnson, president of the National Farmers Union, which supports Growth Energy’s plan. He says a new approach is needed as the public becomes more skeptical.
This is not the only place that the ethanol industry is working the politicians. They would also like to see higher concentrations of the fuel added to standard gasoline sold at thousands of gas stations in the United States. Today most gasoline has about 10% ethanol added, although specialty blends of up to 85% ethanol is available at a few service stations.
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