A recent e-mail brought my attention to a coast-to-coast road trip that is being sponsored by Kick the Oil Habit. The purpose of the road trip is primarily to raise E85 awareness and to promote E85 as “clean burning, American made fuel.” You can read a blog of the road trip here:
While I am dedicated toward the goal of energy independence for the U.S., E85 boosters are ignoring facts in their zest to promote E85. There is a great deal of misinformation and flat out factually incorrect information out there. For example, I just finished listening to a conversation between Mark Pike, who is the guy driving the E85 car cross-country, Tom Daschle, and Vinod Khosla. The conversation is archived at the blog at:
Sen. Tom Daschle & Vinod Khosla talk Ethanol
There are quite a few examples of misleading and factually incorrect statements, as well as a distinct lack of critical analysis regarding a number of claims. Here are some excerpts:
Daschle: One only has to look at the Middle East to see how critical energy independence is to us.
I agree. How is E85 going to achieve this? The fossil fuel inputs into E85 are substantial. Those fossil fuels are coming from, among other places, the Middle East.
Daschle: With the environmental issues that we face today, Global Warming, etc., the answers point to E85.
Come again? Multiple studies confirm that the greenhouse gas reduction from burning E85 is very small. How then is E85 an answer?
Daschle: E85 is a viable fuel, and ultimately could be the fuel of America.
How so? Where are you going to get the ethanol?
Pike: He talked about visiting Nebraska, and how E3 Biofuels is making a closed loop system.
I have blogged on E3 Biofuels before. While their efforts are to be emulated and applauded, their plant has not yet been built, and it still has fossil fuel inputs. So, let’s wait a bit to pass judgment until they have real production numbers.
Pike: If the technology is good enough for Mr. Khosla, it’s good enough for me. I know that guy has done his research, so I trust him. I will leave all of the scientific data and research to him.
This is exactly the reason Khosla’s claims have to be vigorously challenged. People do trust him. For some reason people transfer his credibility and success in the computer industry to expertise in ethanol. I believe he is misleading people, and helping promote a diversion that is going to delay real, sustainable solutions. I see him as the guy on TV who says “I’m not a doctor, but I play one on TV”. Well, if you are not a doctor, I don’t care for your medical advice. And from what I can tell, Khosla is grossly misinformed on the potential for ethanol to relieve our energy crisis. It is not going to happen.
(Pike had mentioned getting ethanol in South Dakota at $2.39/gallon). Khosla: You talked about $2.39/gallon; most people would kill to get that kind of price.
Most people? Perhaps if they are mathematically challenged. Since your fuel efficiency will drop by 25-35%, $2.39 a gallon E85 is the same overall cost as ($2.39/0.75) = $3.19/gallon gasoline. Throw in the federal subsidy of $0.51/gallon, state subsidy of $0.20/gallon, and a corn subsidy equal to $0.18/gallon, and now you have the same overall cost as if you were paying $4.37/gallon for gasoline. Yeah, Vinod, people would kill for that.
Khosla: Not only do you get a cheaper fuel, but you get a completely renewable fuel.
Do you really believe what you are saying? Cheaper? Not on an energy equivalent basis. Even on a per gallon basis, the rack price of ethanol has been higher than gasoline for 25 years. You can see that here:
http://www.neo.state.ne.us/statshtml/66.html
Just last month, for instance, the average price of ethanol was $3.58 and the average price of gasoline was $2.22. I just can’t assign any credibility to Khosla when he is making such misleading claims. And “completely renewable”? How so? The process is running on fossil fuels. Those are not renewable, unless we want to wait millions of years. Claiming that the process is “completely renewable” is another indication to me that Khosla’s enthusiasm has affected his objectivity.
Pike: Companies like Ford and GM are really pushing these flex-fuel vehicles.
Right. Because it allows them to dodge penalties from not meeting CAFÉ standards:
Khosla: There are few E85 pumps in California. It’s criminal that we won’t let an American-made fuel be sold on the roads due to the interests of people who want to protect oil profits.
How disingenuous. Is anyone keeping Khosla from opening up E85 stations all over California? No, they aren’t. He could put his money where his mouth is, instead of claiming that oil companies are preventing E85 pumps from being installed. In fact, there is not nearly enough ethanol to justify the pumps, so why on earth would Khosla, or anyone else expect oil companies to put in the pumps? There isn’t even enough ethanol produced to make a nationwide E10 blend. However, E10 at least can be pumped through a normal gasoline pump, and can be burned in a normal vehicle. It would make far more sense to roll out E10 to more locations than this misguided effort to try to force E85 pumps in, when supply is insufficient to justify them.
After that, Khosla started talking about his clean-energy initiative in California. I am writing an essay to address that, but I do want to call attention to a debate challenge I have issued to Khosla following an essay he wrote for The Huffington Post:
The Big Oil Companies Have Been Ripping Californians Off — And Not Just at the Pump
Check my comment following his post. I think he is misleading people, and needs to be held accountable for his statements. I reiterate my offer to engage in a written debate any place he chooses. Statements he has made regarding ethanol will be held up to scrutiny.
E-mail Response
Finally, here is the response I sent to the person calling my attention to this road trip. This came after an initial exchange of e-mails involving a few of us from The Oil Drum:
I guess I should probably weigh in as well, since I may be the most hardcore ethanol skeptic among us. Let me tell you just a little bit about myself. I work for Big Oil, but don’t let that scare you off. I came to work for Big Oil to work on alternative energy. I passionately believe in sustainable alternative energy, and I preach conservation. My graduate work was in the area of cellulosic ethanol, and I have looked at that process from every conceivable angle.
I agree with you that E85 is the most practical fuel for consumers in the short term (provided the massive subsidies keep flowing), but it is in no way sustainable. I have documented the marginal EROI from grain ethanol. On top of that, you have unsustainable soil mining, and waterways are being polluted with pesticide and herbicide runoff.
The best locations are already planted in corn, so to expand you are going to have to plant ever more marginal areas, potentially destroying ecosystems in the process. This worsens the EROI as you move to marginal lands, meaning less energy return for your energy investment. I have done some calculations that show that ethanol produced in a state requiring irrigation and shipped to the coast is an energy-losing proposition. You mention the revitalization of the agricultural sector. What about the increased food costs for poor Americans as ethanol competes with our food supplies? Those are the kinds of tradeoffs you have to consider. You can find a lot of really good information on the costs of ethanol, from a pro-environmental site, here:
I encourage you to spend some time evaluating their claims. I think you will come to understand why I, as well as many of us at TOD, am skeptical.
Cellulosic ethanol is a promising area of research, and one in which I spent a good deal of time working on. However, it can’t be expected to be a silver bullet. The economics are still not quite there. The EROI may be better, but the capital costs are much higher. In my opinion, it is not responsible energy policy to build out a nationwide infrastructure of E85 pumps when the only hope of supplying them is from a cellulosic ethanol breakthrough. What if it doesn’t come? First we make the breakthrough, demonstrate cellulosic is economically viable, then you start blending it into regular gasoline. Over time, you start building out E85 infrastructure as the process scales up.
I agree with you that E3 Biofuels is trying to make ethanol in a responsible manner. I have plugged their efforts on many websites, and wrote an essay at The Oil Drum detailing their plans:
E3 Biofuels: Responsible Ethanol
However, a couple of important notes regarding the comments about E3. I have corresponded with them, and I have the energy model for their plant. They will have a significant fossil fuel input according to their model. They forecast that they will be able to get it down to a very low level, but the blog entry claiming less than 3% input of fossil fuels is not accurate. Also important to note that these are projections, and the process has actually not yet been demonstrated. You may recall the excitement over TDP a few years ago:
They projected their costs would be $15 a barrel. Their actual costs were $80 a barrel. So, it is easy to be a bit too optimistic with projections. I am excited about what E3 is attempting, but let’s be a bit cautious until they start up their plant and prove just how “closed-loop” they really are.
Cheers,
Robert Rapier
Frankly, if there is something to be done at gas stations it might be encouraging people to fully inflate their tires and reminding people to drive the speed limit – but that might actually reduce demand for their product, so I doubt they will do so without legislation.
Khosla: Not only do you get a cheaper fuel, but you get a completely renewable fuel.
Robert,
If Khosla really believes that, you’ve got to assume the millions of dollars he has made was only a matter of luck.
There is one simple fact about E85 Khosla and everybody in the ethanol lobby either doesn’t know or always forgets to mention:
It takes four gallons of E85 to do the same work as three gallons of gasoline.
Using that ratio, figuring out whether the price of E85 is a good deal is trivial mathematics.
So trivial I suppose, that people such as Khosla and Daschle must feel it is beneath them to attempt understanding it.
Best,
Gary Dikkers
If Khosla really believes that, you’ve got to assume the millions of dollars he has made was only a matter of luck.
The more I listen to him talk and read his arguments, the more I feel the same way. I don’t know how he made so much money, unless he just happened to be in the right place at the right time and surrounded himself with good people. I am writing an essay right now devoted to debunking Khosla’s claims.
RR
Two cheers for R-Squared’s efforts – one cheer for his own dedication to our nation’s energy challenges and one for his work to promote science education in this country. I cannot, however, muster up a third cheer for his post on the Daschle-Khosla conversation with our road trippers.
I noted with interest that Sebastian Mallaby takes some of R-Squared’s concerns head on in this morning’s Washington Post. Here’s a shot at his other concerns.
First, check out the well to wheels chart by NRDC to compare carbon savings for various transportation fuel options:
click here for image
They are substantial – contrary to R-Squared’s assertion. (This image is from a presentation Dan Lashof of NRDC made in May. Check here to read more.)
Second, where are we going to get the ethanol? The corngrowners recently estimated that based on increasing yields they can get corn for 15 billion gallons of ethanol by crop year 2015-2016. That will cover the ethanol blend market – and do so with some good savings if it is all produced with the closed loop that we all agree is going to do great things. The challenge is to bring cellulosic ethanol to commericialization. To do that we need to generate the E-85 market over and above this 15 billion gallon blend market.
The other pieces needed to solve the energy puzzle are conservation and efficiency, two issues that R-Squared would certainly agree with. Remember that today we consume about 150 billion gallons of gas a year. If nothing changes, NRDC calculates we will consume 289 billion gallons a year by 2050. Talk about oil addiction – and take a look at a recent proposal from Tom Daschle and Vinod Khosla to promote vehicles that run on alternative fuels, be they FFVs or hybrids or plug-in hybrids, to beat that addiction.
Third, R-Squared can’t be against expanding the availability, marketing and distribution, and thereby decreasing the price, of E-85 and then turn around and use high price as a reason to avoid expanding production. That would be tautological (even more so if he used the average price of the spot market for ethanol even though upwards of 80% of contracts for ethanol are long-term fixed – which he did).
Note, as well, that had our road trippers made it a bit farther north they could have hit the BP on 6th Street in Aberdeen, SD where you can E-85 at $1.79 a gallon, an example of the kind of price differential you can get with homegrown product.
I have to add here, too, that while I appreciated his math on government support for ethanol, I would love to see an apples-to-apples comparison on government support for ethanol versus petroleum. A recent speech by Senator Biden on energy security raises some interesting questions about what should count as a subsidy to the oil industry.
I anticipate – and look forward to – an ongoing discussion with R-Squared.
I also look forward to an exchange of ideas. I suspect we are both after the same goal, but differ in how we should get there. I just don’t think E85 is the way to do it, and I think betting the farm on the success of E85 is poor energy policy. I will address the specific claims in your post tomorrow, as I have already written a ton today and I am a bit tired. In the meantime, you can check out the essay I just posted debunking some of Khosla’s claims:
Vinod Khosla Debunked
The more I listen to the guy, the more I am reminded of Ross Perot. Regarding their New York Times editorial, I addressed it in a previous blog essay:
Daschle and Khosla Ethanol Propaganda
More tomorrow.
RR
Here is a more detailed reply to the comments above on E85.
Regarding the greenhouse gas reduction, you wrote:
They are substantial – contrary to R-Squared’s assertion.
Look at the chart you posted. Ethanol, as we make it today, and gasoline are bracketed on either side of yellow bar in the middle (which is coal-ethanol). The difference between the two is in no way substantial. The substantial reduction would come if cellulosic actually proves viable on a large scale. But that’s my problem with this debate. All of the rosy projections are being based on cellulosic ethanol delivering on its promises, but cellulosic is still essentially a research project even though it has been researched for over 30 years.
Finally, if the reduction is substantial, why did Vinod Khosla say it wasn’t? As I documented from his video presentation, he said “Unlike here, ethanol in Brazil has a substantial greenhouse gas reduction”. Ethanol advocate Daniel Kammen said much the same thing in a recent interview on 60 Minutes. When asked about the potential for the reduction of carbon emissions from ethanol as we make it today, he said the reduction was “modest”. So, I stand by my assertion. The reduction is not substantial. The 4 billion gallons of ethanol we make in the U.S. today results in very little greenhouse gas reductions. In fact, most of the studies showing a reduction are based on the energy balances of the USDA, which admittedly omitted some inputs into the process. The “substantial” reduction comes from ethanol we have yet to produce.
The corngrowners recently estimated that based on increasing yields they can get corn for 15 billion gallons of ethanol by crop year 2015-2016.
There are multiple issues here to address. First, 15 billion gallons is still less than 10% of our gasoline demand. So again, why the push for E85? You could roll out E10 nationally, and not have the problems of putting in new pumps. You simply can’t make enough E85 to justify the pumps. You build up the capacity, and as you do, you put in pumps if the capacity warrants it.
Second, perhaps the corn growers can get the corn up to 15 billion gallons, but how many people are going to starve in 3rd world countries as a result? How many poor Americans are going to find their food budgets stretched because this is the path we went down, instead of a very aggressive conservation program? Perhaps you saw these recent news stories:
Heatwaves and biofuel demand in Europe and US to fuel bread, pasta and beer price rises
The combination of heatwaves in Europe and the US, low global grain stocks and an increase in production of biofuels has seen wheat prices rise to 10-year highs and may lead to big increases in the cost of bread and pasta. Corn and barley prices are also likely to rise, which may push up the cost of beer and breakfast cereals.
And:
Grain Drain
Brace yourself for crises at the cash register. Major price hikes for food are coming, as Peak Grains join the lineup of life-changing events such as Peak Oil and Peak Water. Unless this year’s harvest is unexpectedly different from six out of the last seven, the world’s ever-decreasing number of farmers will not produce enough staple grains to feed its ever-increasing number of people.
Even modest price changes can have a big wallop this time, too, especially in a world that’s already suffering from crisis overload. For a third of the world’s people who subsist on less than $2 a day, even a few pennies increase in food prices can make a life-and-death difference.
There will be an echo of that desperation in wealthy North America, where about 10 per cent of the population – mostly single-parent families and immigrants – faces some form of food insecurity. If looming food shortages make it onto the radar of government officials charged with safeguarding public health, a raft of new policy issues will need to be addressed.
A big question mark has to be put next to ethanol fuels, except those made from crop wastes. Food sovereignty – the right of a people to set their own food policies – emerges as a precondition of food security, and should put the world free trade agenda on hold.
For me, it is immoral to ramp up corn to fuel, considering these consequences. And it is irresponsible to play the bait and switch and say “cellulosic is right around the corner”. What’s going to happen is that we will continue to ramp up corn ethanol, and future plants are likely to turn to coal as a cheaper fuel for their plants. Ethanol plants like E3 Biofuels probably won’t take hold, because their capital costs are probably going to be too high.
The other pieces needed to solve the energy puzzle are conservation and efficiency, two issues that R-Squared would certainly agree with. Remember that today we consume about 150 billion gallons of gas a year.
I am fully on board with kicking the oil habit. If we don’t kick it, it’s going to kick us. But I have come to the conclusion that the only way biofuels will allow us to kick the oil habit is by aggressively promoting conservation. More on that below.
Third, R-Squared can’t be against expanding the availability, marketing and distribution, and thereby decreasing the price, of E-85 and then turn around and use high price as a reason to avoid expanding production. That would be tautological (even more so if he used the average price of the spot market for ethanol even though upwards of 80% of contracts for ethanol are long-term fixed – which he did).
I am not against expanding the availability of E85. What I am against is choosing a technology winner, and then mandated that this is the way it will be done. That is exactly what is taking place here. As of now, sufficient ethanol to justify E85 pumps can’t be produced. As ethanol production increases, you then expand the pumps. There is not a glut of ethanol. If there was, you could justify installing a bunch of pumps. And nothing is stopping Mr. Khosla, with his billions, from building his own E85 stations.
Finally, I used the average spot price for ethanol, but I compared it to the spot for gasoline. Apples and apples, and gives a true price comparison. Most gasoline contracts are also long-term fixed.
Note, as well, that had our road trippers made it a bit farther north they could have hit the BP on 6th Street in Aberdeen, SD where you can E-85 at $1.79 a gallon, an example of the kind of price differential you can get with homegrown product.
Or, instead of picking one outlier, we could look at the rest of the country. Many places have E85 priced higher than regular gasoline, even though it has less energy. This is an example of the kind of price differential you can get with mandated products.
I have to add here, too, that while I appreciated his math on government support for ethanol, I would love to see an apples-to-apples comparison on government support for ethanol versus petroleum. A recent speech by Senator Biden on energy security raises some interesting questions about what should count as a subsidy to the oil industry.
It is impossible to do such comparisons, because nobody can agree on what constitutes an indirect subsidy. I presume most would agree that the war in Afghanistan is not about oil. OK, how about the war in Iraq? How much do you attribute to oil, and how much to Bush’s misguided belief that there were WMDs? Regarding ethanol, can we count as subsidy the higher food prices for everyone? How about topsoil erosion? What’s that worth? What is the worth of the pesticides and herbicides ending up in our waterways? From The Green Bullet:
Corn farming is rough on the environment. Soil erosion due to wind and water is rampant. Fertilizer and pesticide runoffs produce algae blooms that result in “dead zones,” including one in the Gulf of Mexico that is so polluted it cannot support aquatic life.
The point is, we can add up indirect costs forever. But if you want to look at direct subsidies, ethanol is subsidized somewhere in the neighborhood of $7 per gallon of gasoline that it displaces. Along with that, we get all of the negative impacts described above. If ethanol actually had all of the advantages that proponents state, it would not require all of these subsidies and mandates in order to compete. The subsidies are hiding the inefficiency of the process.
There is a better way. We must substantially increase taxes on fossil fuels. At the same time, we can decrease income tax rates for poor Americans. Processes with poor energy efficiency will be discouraged, and processes like E3 Biofuels will be encouraged. Conservation would be valued. Cellulosic ethanol would then have an economic advantage, because of the better EROI. In this way, we tilt the market toward biofuels, without mandating something that we can’t possibly achieve.
Cheers,
Robert Rapier
…perhaps the corn growers can get the corn up to 15 billion gallons, but how many people are going to starve in 3rd world countries as a result? How many poor Americans are going to find their food budgets stretched because this is the path we went down…
Robert,
The food v. fuel issue is already starting to loom its ugly head in the U.S.
In the first, Ace ethanol in Stanley, WI is having trouble getting corn because local corn farmers are holding it to feed their livestock. Ace is needing to import corn form long distances. (What does that do to their production costs?)
< A HREF = "http://www.wqow.com/news/articles/article_7175.shtml/" > Corn shortage at Ace ethanol < / A >
In the second, the pork industry is worried about the competition corn ethanol represents for feeding swine. They pretty much feel distillers grains have little value for feeding swine.
< A HREF = "http://www.porkmag.com/directories.asp?pgID=720&ed_id=4244" > Pork producers worry about corn ethanol < / A >
I’ve brought both of these cases up with a pair of agricultural journalists who run a domestic fuel blog — they cavalierly dismiss it as “not being an issue.”
Best,
Gary Dikkers
Gary,
I fixed your links:
Corn shortage at Ace ethanol
Pork producers worry about corn ethanol
Cheers,
RR