Ethanol/Alternative Fuel FAQ

Of course you are against ethanol. You work for Big Oil.

Is ethanol reducing dependence on foreign oil?

What’s this EROI/EROEI/Energy Return Business?

Is EROEI the Same Thing as the Process Efficiency?

Isn’t the Energy Balance for Corn Ethanol Better than for Gasoline?

Does the Energy Balance/EROEI Matter?

Doesn’t the Ethanol Subsidy Actually Benefit Oil Companies?

Doesn’t Ethanol Usage Create Jobs and Provide Cash for Midwestern Communities?

Do We Have Enough Land to Grow Our Way to Energy Indendence?

If Brazil can do it, why can’t the U.S.?

Can’t Brazil and other tropical countries provide biofuels for the world?

What about the environmental benefits of using ethanol as fuel?

Isn’t ethanol useful as an oxygenate replacement for MTBE?

8/26/07 – Added section on environmental benefits.

8/5/07 – Added to section on the petroleum displacement claims. Building the section on Brazil.

8/4/07 – Updated section on the ethanol subsidy, and who it benefits. Also updated section on ethanol and job creation. Updated section on land requirements.

8/3/07 – Updated section on energy balance, and whether it matters.

I am starting to get a lot of traffic and e-mails off of this Rolling Stone article. A lot of the same questions/criticisms come up again and again, so I am finally being prompted to do something I have been meaning to do for a long time: Write a FAQ, where my position is summed up concisely, and is understandable by anyone. This is a work in progress, so if you can think of something that should be addressed, please speak up. I am going to throw them out there as I do them, and I will clean them up later. I hope to put up one or two new items a day, and if you find errors, I will certainly correct them. This will not be an opinion piece. It is going to be based on facts and numbers.

Of course you are against ethanol. You work for Big Oil.

This one is where opponents tend to go when they are lazy, or have no better arguments to offer. But not only is it an ad hominem argument, it is wrong on 2 counts. First, I have a long track record of being supportive of alternative fuels, I did my graduate school thesis on the subject, and in fact I have done a lot of work in this field. Many people who read this blog can attest to the fact that I have done a lot of pro bono work, on a lot of projects: From biodiesel to biobutanol, right through cellulosic ethanol and yes, even corn ethanol. Furthermore, I am currently involved in a cellulosic ethanol project.

But the second reason that this argument is invalid is that the corn ethanol industry is heavily dependent upon fossil fuels for the entire production process. These fossil fuels include gasoline and diesel, but are primarily natural gas embedded in the fertilizer for the corn, and for the distillation energy. Guess who produces this natural gas? Big Oil, and my company in particular, produces a tremendous amount of it. The tripling of natural gas prices since 2002 happened just as we had a dramatic increase in ethanol production. Coincidence? No. And this has been a windfall for Big Oil.

Don’t take my word for it. Here’s the view from Ethanol Producer Magazine:

Diversifying Energy Options

One source tells EPM that when ethanol production reaches 7.5 billion gallons (assuming all of that capacity was fueled by natural gas) demand from the industry could represent a 1.2 percent increase in total U.S. demand for natural gas. That’s a significant rise when you consider that the total increase in natural gas consumption from 2004 to 2005 was only about 1.4 percent. What happens if the ethanol industry goes to the apparent next production plateau at 12 billion gallons per year? Ultimately, increased natural gas use resulting from the ethanol industry’s expansion affects total U.S. demand of fossil energy, helping to keep supplies tight and prices elevated.

That’s right: Corn ethanol is a boon to Big Oil, because it has helped tighten up fossil fuel supplies, which has helped with the price increases – while displacing little to no fossil fuel itself. And I can tell you that a lot of people in the oil industry recognize the irony. A number of oil companies, including my own, have come out and endorsed ethanol. So my arguments against corn ethanol are actually contrary to the official position of my company.

Is ethanol reducing dependence on foreign oil?

There are many claims around these theme. From the Renewable Fuels Association’s (RFA) “Energy Facts”:

FACT: In 2006, the production and use of ethanol in the U.S. reduced oil imports by 170 million barrels, saving $11 billion from being sent to foreign and often hostile countries.

The RFA’s page on industry statistics shows that ethanol production in 2006 was 4.86 billion gallons. This is 116 million barrels. Oil has a BTU value of 138,000 BTUs/gal, versus 76,000 BTUs/gal for ethanol; therefore 116 million barrels of ethanol contain the BTU equivalent of 64 million barrels of oil. (Source: ORNL). The claim then is that 64 million barrels of oil equivalent (BOE) displaced 170 million barrels of oil.

The RFA’s source on that was the consulting firm LECG, where director John M. Urbanchuk has also been quoted:

The production of nearly five billion gallons of ethanol means that the U.S. needed to import 206 million fewer barrels of oil in 2006, valued at $11.2 billion. This is money that stayed in the American economy.

Source: Contribution of the Ethanol Industry to the Economy of the United States in 2006 (PDF download)

While you might expect to find such claims from the ethanol industry, even grander claims are being made by the U.S. Government. From DOE Assistant Secretary Alexander Karsner’s keynote address to the RFA’s National Ethanol Conference in Tucson, Arizona:

Last year, we contributed something on the order of a displacing 500 million barrels of oil, oil that we didn’t have to import from regimes that are hostile to our interest or might leverage energy economics over our future.

Here’s the same claim by Paul Dickerson, Chief Operating Officer at the DOE’s Office of Energy Efficiency and Renewable Energy:

Over 6 billion gallons of ethanol were produced in the United States last year, and we have an additional 5 billion gallons of refining capacity under construction.

That effort means 500 million fewer barrels of oil that we have to import from the Middle East.

That’s from the U.S. Department of Energy. That is the department of the U.S. government that is charged with formulating and carrying out U.S. energy policy. How on earth are people coming up with these numbers? Can 64 million barrels of oil equivalent displace 170 million, 206 million, or even 500 million barrels of oil? And recognize that we haven’t even touched upon the fact that the 64 million barrels is the gross output, and not the net. To get a true displacement number (for just petroleum), we have to subtract out all of the petroleum inputs that went into making those barrels of ethanol.

The way they are coming up with such unreasonable numbers is because they are making some invalid assumptions. They are assuming that since only 1/6th or so of the BTUs embedded in a BTU of ethanol come from oil (the rest are from natural gas or coal), that a barrel of ethanol can actually displace more than 1 barrel of oil. The higher estimates are also completely ignoring the fact that the half of the barrel of oil that doesn’t provide gasoline goes into diesel, jet fuel, heating oil, etc. In these analyses, those are simply unaccounted for. So when that barrel is “displaced”, we just lost a lot of fuel.

But consider this for a moment. Consider if only 1/100th of the inputs into ethanol were from oil. In this case your multiplier is 100 (instead of 6). Do you believe that a barrel of ethanol then displaces 100 barrels of oil? Consider that 1/1,000,000 of the inputs into ethanol were petroleum, and you quickly start to see the sleight of hand employed.

So how much oil can ethanol really displace? No more than the BTUs that are contained in the ethanol. A 1 to 1 BTU replacement is is the best you could get even if the ethanol was free of any energy inputs, and just available for pumping out of a well. That is the maximum theoretical displacement.

Since ethanol is a gasoline replacement, the displacement should be most pronounced if we look at the gasoline demand curve. As ethanol has ramped up exponentially since 2000, one might expect to see this in the gasoline demand curve. Yet there is no obvious inflection on the gasoline demand curve. As shown in the link, as ethanol has ramped up since 2000, not only has gasoline demand increased by 10 billion barrels per year, but there isn’t even any obvious effect from ethanol on the gasoline growth curve. Even as ethanol has ramped up, the data indicate that we have become more dependent upon petroleum.

U.S. dependence on foreign oil is a demand-side problem. It is not going to be fixed by producing more ethanol – false claims about the amount of displacement notwithstanding. And it is not going to be fixed unless we confront the reality of the situation instead of the political spin.

What’s this EROI/EROEI/Energy Return Business?

The EROEI, (Energy Returned on Energy Invested), EROI, and energy return all refer to the same idea. It is the ratio of usable energy returned from a process divided by the energy expended (consumed) in the production process. Or, simply put, if I expend a total of 1 BTU of energy in a process that yields 5 BTUs of energy, the EROEI is 5/1.

This is an area rife with misunderstand and garbled definitions. Depending on where the system boundaries are drawn, one can come up with very different definitions.

Is EROEI the Same Thing as the Process Efficiency?

No, and this is a big source of confusion. The process efficiency refers to the percentage of net energy yielded in the process. In the above example, 1 BTU was expended to produce 5 BTUs. The net energy is then 4 BTUs, and the efficiency of the process is (4/5), which is 0.8 or 80%. An EROEI can be greater than or less than 1. A process efficiency is always going to be less than 1 (i.e., you are always going to use up some of the energy value in the process).

Isn’t the Energy Balance for Corn Ethanol Better than for Gasoline?

I think most people are starting to accept this as a debunked myth. But let’s review the history, because I do still hear this claim occasionally. A few years ago, Michael Wang from Argonne National Labs invented a metric, which was fossil fuel inputs into both the ethanol and gasoline production processes. This metric was neither an EROEI nor an efficiency, it was a hybrid, and has led to a lot of apples and oranges comparisons between gasoline and ethanol.

I have dealt with this claim several times in this blog. I addressed it here in response to a claim from the Minnesota Department of Agriculture (which they seem to have since removed):

In summary, the finished liquid fuel energy yield for fossil fuel dedicated to the production of ethanol is 1.34 but only 0.74 for gasoline. In other words the energy yield of ethanol is (1.34/0.74) or 81 percent greater than the comparable yield for gasoline.

I addressed it here, in response to a letter from a reader in which Michael Wang and Vinod Khosla were both copied, and both got involved in the debate:

If your assessment of the ethanol fuel cycle energy balance (and its comparison with the petroleum fuel cycle energy balance) is right, then not only is Vinod Khosla wrong, but many others of us in the energy community — including the U.S. Department of Energy and Argonne National Laboratory (see attached summary) must also be wrong.

Now I will address it here for the last time. What’s the issue? For Wang’s metric, the inputs aren’t considered in a consistent manner. For instance, the fossil fuel inputs into the ethanol process are burned. Gone. The fossil fuel inputs he is considering for gasoline production includes the barrel of oil that gets turned into liquid fuels. So, he is including only expended fossil fuels in the ethanol case (which is what you want to do for an EROEI) but in the case of gasoline he is also including fossil fuels that were not consumed and are still available as fuel. What Wang has done, by defining his metric as he has, is to measure the EROEI of ethanol – at 1.3, versus the efficiency of gasoline, which according to Wang’s most recent modeling, is 0.8 (from crude in the ground to gasoline in your gas tank). And I can tell you that this is reasonably accurate. But to compare the two different metrics causes the kind of confusion that you might expect.

So, let’s compare EROEI to EROEI and efficiency to efficiency. At an ethanol EROEI of 1.3, that means that burning 1 BTU to produce 1.3 BTUs only results in a net of 0.3. Therefore, the efficiency is 0.3/1.3, or 23%, versus Wang’s estimate of 80% for gasoline. Comparing EROEIs, an 80% efficiency for gasoline means that to produce 1 BTU consumed 0.2 BTUs, for a net of 0.8. The EROEI for gasoline then – the energy return over energy invested – is 1 BTU/0.2 BTUs, or 5/1. This was the source of the claim to that effect in the Rolling Stone article.

In summary:

EROEI of producing ethanol – 1.3/1
EROEI of producing gasoline – 5/1

Efficiency of producing ethanol – 23%
Efficiency of producing gasoline – 80%

Does the Energy Balance/EROEI Matter?

It depends. A society that operates with a high average EROEI is going to look quite a bit different from a society that doesn’t. In the former, a relatively small proportion of the overall economy can be involved in the production of energy which drives the rest of society. But as the EROEI of a society decreases, the energy production of the society must increase. Society becomes more dependent upon energy production. For instance, the world uses 85 million barrels of oil a day. If the EROEI of society is 10/1, then 8.5 million of those barrel equivalents were used to produce the oil. For the sake of this exercise, let’s assume that oil was used to make oil. That leaves us with a net of 76.5 million barrels.

Now, drop the energy return of that same society to a biofuel range of 1.3 to 1. We have to solve two equations here: Net Energy = Energy out – Energy in, and Energy return = Energy out/Energy in. Solving these two equations for a net of 76.5 million barrels of oil means we have to produce a total of 255 million barrels of oil equivalent. In the fossil fuel society, it takes 85 million barrels of total production to sustain it. In the low energy return society that approximates today’s biofuels, it takes 255 million barrels per day to sustain it. That means that if we tried to run the world on low energy return biofuels, we would need to triple the overall energy output over what we produce today.

But what if, in the second case, we could use biomass as our energy source (but not for the first case)? Or what if, in the first case there are lots of other negative externalities that go along with the energy source? Or what if the second case utilizes a very cheap energy source to make a fuel that sells for a much higher value? In reality, EROEI is a part of the overall evaluation, but by itself does not tell you much.

Consider that your goal is merely to make money. You may be able to make lots of money with a process having an EROEI of less than 1. You can take a BTU of coal and use it in an ethanol process to make less than a BTU of ethanol. Considering only your energy inputs, you have increased the $ value of your BTUs by a factor of 10. So, even if you take 1 BTU of coal and convert that into 0.7 BTUs of ethanol, there may be plenty of economic incentive to do it, despite the energy returns.

EROEI matters. Sometimes. And as a part of the overall context.

Doesn’t the Ethanol Subsidy Actually Benefit Oil Companies?

Here’s Vinod Khosla from a story in Wired, Six Ethanol Myths:

Yes, ethanol producers and blenders share in a 51-cent-a-gallon federal credit that costs taxpayers about $2 billion a year. The majority of that accrues to oil companies, not farmers.

Before pondering this too much, consider for a moment just who has lobbied to keep the credit intact. Has it been oil companies? No. Has it been politicians from oil states like Texas and Alaska? No. The groups always arguing in favor of the ethanol tax credit have historically been farm state politicians, ethanol lobbying groups, and corn lobbying groups.

Last year I documented the reaction of Brian Jennings, the executive vice president of the American Coalition for Ethanol, when ExxonMobil (XOM) CEO Rex Tillerson called for an end to the subsidies. Jennings said “it is outrageous for an executive for big oil to actually suggest getting rid of the tax credit for ethanol.” That’s very odd behavior if Big Oil is actually the beneficiary.

But of course as you might guess, Jennings isn’t making the case for Big Oil, because Big Oil isn’t the actual beneficiary. Here’s what’s going on. The blender’s credit does in fact accrue to the purchaser of the ethanol. That’s because the wholesale price of ethanol, at only 67% the energy content of gasoline, historically has been more higher than that of gasoline. (At times ethanol has traded cheaper than gasoline, but never on an average annual basis in the past 27 years. See the chart in this essay). So, without the incentive, it would not be economical for oil companies to purchase ethanol for blending. The blender’s credit has resulted in an artificial inflation of the price that ethanol producers can get for their product, which is why they are defensive about keeping it.

However, I have noted a change in attitude from oil companies lately with respect to this credit. Whereas they were once strongly against it, I think the fact that ethanol is now mandated has some of them changing their tune.Even the American Petroleum Institute has changed their tune. I recently posed the question to API president Red Cavaney on the API’s stance on the subsidy, and he stated that they are agnostic on the issue.

Why the change? Because now, with ethanol mandated, eliminating the credit would mean that oil companies would be forced to pay the true price for ethanol without getting a credit, meaning they will have to pass these costs on. This would result in an increase in the cost of gasoline (consider that this would cause the price of E85, for instance, to rise by 85% of the value of the subsidy – $0.43/gal). This would likely reduce overall product demand. So oil companies may be realizing that with mandated ethanol, they are better off with the credit in place – even if the primary beneficiaries are ethanol interests.

Doesn’t Ethanol Usage Create Jobs and Provide Cash for Midwestern Communities?

Of course it does. But how are jobs created? If we mandated that everyone had to consume a pound of potatoes or a pineapple each week, it would also create jobs and revitalize communities. So why don’t we do this?

We don’t do this because the jobs are created by flowing money out of one region of the country into another. If job creation had no impact on jobs in other regions, we could just enact one mandate after another, forcing us to buy various products until everyone was happily employed. But the economy doesn’t work that way. The jobs that are created in Iowa are a result of money flowing out of the rest of the country.

Paul Rogers, a reporter for the San Jose Mercury News, gives the following account in which he asked Iowa governor Tom Vilsack why the rest of the country should be forced to use ethanol:

“Because it helps farmers from my state expand their markets, Vilsack explained. ‘So I guess you’d support a new federal law to require everybody in Des Moines to buy a computer, to help people in Silicon Valley expand their markets?’ I asked. He didn’t concur.”

That’s a pretty good example of why job creation isn’t free. Forcing people in Iowa to buy computers would result in less money to spend on other things. It is just less obvious with ethanol, because the money is extracted in smaller increments.

Do We Have Enough Land to Grow Our Way to Energy Indendence?

Again, Vinod Khosla from Wired, Six Ethanol Myths, addressing the “myth” that the U.S. doesn’t have the available land:

Former secretary of state George Schultz and ex-CIA director R. James Woolsey estimate that 30 million acres can replace half our gasoline. I estimate that 40 million to 60 million acres can replace our gasoline needs. By taking land now used to grow export crops and instead planting energy crops, it’s feasible to eliminate our need to import oil for gasoline.

Let’s think about that for a minute. Presume that gasoline demand doesn’t grow at all from today’s 140 billion gallons. Now consider that, because ethanol only contains 67% of the energy of gasoline, it’s going to take 210 billion gallons of ethanol. In Khosla’s “worst case”, he would have 210 billion gallons of ethanol being produced on 60 million acres. This would require an ethanol yield of 3500 gallons per acre, around 10 times the current per acre ethanol yields. While you will sometimes hear of ethanol yields of 500 gallons per acre of corn, the nationwide average yield is around 350 gallons per acre.

So, we require an improvement in yields by a factor of 10 if we use corn, or we need something that has a better ethanol yield per acre than corn. But let’s assume for a second that it can be done. Now, here is where the EROEI issue becomes important. That 210 billion gallons of ethanol is the gross amount of ethanol required. But, how much energy is required to produce that much ethanol? At the current EROEI of 1.3 (with animal feed byproducts included), it would take the BTU equivalent of 210 billion/1.3, or 162 billion gallons worth of ethanol just to drive the process. In reality, we are treating animal feed by-products as BTUs that can be burned for transportation. If we were only considering fossil fuel inputs in and ethanol BTUs out, it would take pretty close to 200 billion gallons of ethanol equivalent to drive the process.

So with the generous assumption on by-products, the actual energy production required in this scenario is 210 billion gallons of ethanol, plus 162 billion gallons worth of BTUs to drive the process for a total of 372 billion gallons. Furthermore, you would end up with more animal feed by-product than you know what to do with.

Clearly, it is a stretch to presume we could supply U.S. demand by using corn, which means another biomass source will be required. That technology is not presently commercially available. Furthermore, if/when such a technology does become available, unless the EROEI is much improved we will find ourselves in the position of having to produce almost twice as much energy as we do now, just to have the same amount of net energy at the end of the process.

If Brazil can do it, why can’t the U.S.?

First off, let me state that I think sugarcane ethanol is a good solution for Brazil. Brazil is located in the tropics, and receives far more solar insolation than temperate locations like the U.S. Furthermore, a study commissioned by The Netherlands Agency for Sustainable Development and Innovation concluded that sugarcane ethanol production in Brazil is sustainable. I wrote an essay addressing that situation:

Report: Brazilian Ethanol is Sustainable

So, if Brazil can do it, why can’t the U.S.? I have heard the claim many times that Brazil has shown us the way to a bio-fueled future. I have also addressed the fallacy of these arguments in the following essays:

Lessons from Brazil

Daschle and Khosla Ethanol Propaganda

Letter to CNN on Inaccuracies

For the purpose of this FAQ, I will briefly summarize the issues. First, Brazil still relies on oil for 90% of their transportation needs. Ethanol in fact only serves 10% of the market there. Their “energy independence miracle”, as Mr. Khosla has referred to it, actually happened as a result of a major oil find by Petrobras. The following short report shows the stark contrast between the amount of oil Brazil produces, and the amount of ethanol Brazil produces:

Brazil Achieves Energy Independence Through Increased Domestic Crude Oil Production

So that’s the first issue: The contribution of ethanol has been exaggerated. The second issue is that the per capita oil consumption in Brazil is about 4 barrels per person per year. In the U.S., per capita consumption is about 27 barrels per person per year. Given that Brazil produces a little over 3 barrels per person per year, they have a very small gap to close, and sugarcane ethanol helps close that gap. In the U.S., we produce a lot more oil than does Brazil – around 11 barrels per person per year – but we then have a gap of 16 barrels per person per year to close. In other words, we would need to close a gap of more than 16 times that of Brazil, and do so in a temperate climate.

So, the answer to the question of why the U.S. can’t do “it” just depends on the definition of “it.” If “it” means cutting our oil consumption down to the level of Brazil’s, or for that matter even just cutting it in half (which would still be triple that of Brazil’s), then the U.S. could do “it.” But if “it” simply refers to growing our way to energy independence – as many biofuels proponents have suggested, then Brazil can’t serve as the model for what we wish to do in the U.S. If a dramatic cut in oil consumption is not part of the equation, then the U.S. and Brazil are apples and oranges.

Can’t Brazil and other tropical countries provide biofuels for the world?

What works well for Brazil does not necessarily scale to the rest of the world. As shown in the previous section, Brazil has much lower per capita energy consumption than the U.S. (and the European Union). Scaling up to supply the world with biofuels is already having some undesirable consequences:

Losing Forests to Fuel Cars

The issue is not, as some have suggested, that Brazil is cutting down rain forest to make way for sugarcane plantations. It is a bit more complicated than that.

In the past four decades, more than half of the Cerrado has been transformed by the encroachment of cattle ranchers and soybean farmers. And now another demand is quickly eating into the landscape: sugarcane, the raw material for Brazilian ethanol.

The roots of this transformation lie in the worldwide demand for ethanol, recently boosted by a U.S. Senate bill that would mandate the use of 36 billion gallons of ethanol by 2022, more than six times the capacity of the United States’ 115 ethanol refineries.

In addition, as use of corn-based ethanol grows in the United States, rising prices are influencing American soybean farmers to switch to corn. And as the United States, the world’s largest soybean producer, cuts soybean plantings, buyers are looking to Brazil, the No. 2 soy producer, to expand its production. Brazilian soybean production is already at record levels and is predicted to increase another 4.5 percent this year, according to Abiove, an industry association.

To summarize, the issue is that land in the Cerrado, a tropical savanna with a great deal of biodiversity, is being deforested at a much faster rate than is the Amazon. The expansion of ethanol into the Cerrado is pushing cattle ranchers and soy farmers into unspoiled regions of the Cerrado, and in the case of soy it is pushing soy farmers into the Amazon:

An interview with tropical biologist William F. Laurance

Soy farming is having a huge impact in the Amazon right now, for three reasons. First, industrial soy farmers are themselves clearing a lot of forest. Second, soy farmers are buying up large expanses of cleared land from slash-and-burn farmers and cattle ranchers, and the displaced farmers and ranchers often just move further out into the forest, maintaining a lot of pressure on frontier areas. Finally, the soy farmers are a very powerful political lobby that is pushing for major expansion of roads, highways, river-channelization projects, and other transportation that will criss-cross large expanses of the Amazon. This infrastructure is acting like Pandora’s box–it is opening up the frontier to spontaneous, unplanned colonization and exploitation by ranchers, farmers, hunters, and illegal gold miners.

Brazil already exports ethanol to other parts of the world. In the case of the U.S., this comes despite a $0.54/gallon tariff in place to protect U.S. corn ethanol producers. So, whether or not Brazil can supply more biofuels to the rest of the world is not the key question. In my mind, the key question is “Given the potential for deforestation, do we want them to?”

What about the environmental benefits of using ethanol as fuel?

There are environmental benefits, but also negative environmental consequences from using ethanol as fuel. If the ethanol is produced from industrial corn farms, more negative environmental consequences can be added.

Because of ethanol’s marginal energy balance, there is a marginal reduction in greenhouse gas emissions per distance driven. Researchers have also found that ethanol produces less carbon monoxide when it is burned in an internal combustion engine.

On the other hand, ethanol raises the vapor pressure when blended with gasoline, which causes an increase in smog. In an August 1, 2007 article in the Houston Chronicle (now archived, but available at the following link):

Five questions with Cal Hodge

Q: We’re already using more ethanol in our fuel now, because of the outcry over the fuel component methyl tertiary butyl ether or MTBE and its propensity to foul groundwater. You had warned that replacing MTBE with ethanol could hamper efforts in cities like Houston to improve air quality because of these problems with volatile organic compounds and nitrogen oxides. So has that actually happened?

A: Yes, it has happened. Los Angeles is the cleanest example. They began switching from MTBE to ethanol in 2001. But when they made their major switch in 2003, there was a significant decrease in air quality. They basically stopped making progress toward attainment on EPA’s ozone standards when they switched to ethanol. When using MTBE, with the cars getting cleaner each year, coupled with a very clean fuel, Los Angeles was on a straight-line path toward attaining EPA’s air standards by about 2002 or 2003. Now that they have switched to ethanol, the trend line indicates nonattainment for many years to come.

A 2007 research paper by Stanford University professor Mark Jacobson echoes that claim:

Effects of Ethanol (E85) Versus Gasoline Vehicles on Cancer and Mortality in the United States

In this paper, Professor Jacobson studied the potential impact to air quality as more E85 vehicles hit the roads, and he concluded:

“In sum, due to its similar cancer risk but enhanced ozone health risk in the base emission case, a future fleet of E85 may cause a greater health risk than gasoline. However, because of the uncertainty in future emission regulations, E85 can only be concluded with confidence to cause at least as much damage as future gasoline vehicles.

Because both gasoline and E85 emission controls are likely to improve, it is unclear whether one could provide significantly more emission reduction than the other. In the case of E85, unburned ethanol emissions may provide a regional and global source of acetaldehyde larger than that of direct emissions.”

In addition to the mixed environmental impact of directly burning ethanol as fuel, industrial corn farming has significant negative environmental impacts. From a 2006 paper that evaluated ethanol and biodiesel:

Environmental, economic, and energetic costs and benefits of biodiesel and ethanol biofuels

Both corn and soybean production have negative environmental impacts through movement of agrichemicals, especially nitrogen (N), phosphorus (P), and pesticides from farms to other habitats and aquifers (9). Agricultural N and P are transported by leaching and surface flow to surface, ground, and coastal waters causing eutrophication, loss of biodiversity, and elevated nitrate and nitrite in drinking-water wells. Pesticides can move by similar processes.

The markedly greater releases of N, P, and pesticides from corn, per unit of energy gain, have substantial environmental consequences, including being a major source of the N inputs leading to the ‘‘dead zone’’ in the Gulf of Mexico (11) and to nitrate, nitrite, and pesticide residues in well water. Moreover, pesticides used in corn production tend to be more environmentally harmful and persistent than those used to grow soybeans.

Two additional factors not discussed in the article are 1). Industrial corn farming depletes the topsoil, putting future generations at risk:

Peak Soil: Why cellulosic ethanol, biofuels are unsustainable and a threat to America

Row crops such as corn and soy cause 50 times more soil erosion than sod crops [e.g., hay] or more, because the soil between the rows can wash or blow away. If corn is planted with last year’s corn stalks left on the ground (no-till), erosion is less of a problem, but only about 20% of corn is grown no-till. Soy is usually grown no-till, but insignificant residues to harvest for fuel.

2). Corn farming and subsequent conversion to ethanol consume enormous amounts of fresh water:

Experts Differ About Ethanol-Water Usage

In this article, David Pimentel is the pessimistic expert who claims that when you add in the water required to grow the corn, it takes 1,700 gallons of water per gallon of ethanol produced. The “optimist” in the article, Derrel Martin, an irrigation and water resources engineer, said:

Martin said the question of whether increased corn production and the irrigation it requires will overburden the state’s water supply is an important one that does not yet have a clear answer.

Additional research has been reported by two Colorado researchers:

Biofuels: The Water Problem

In late June, two Colorado scientists, Jan F. Kreider, an engineering professor at the University of Colorado, and Peter S. Curtiss, a Boulder-based engineering consultant, presented their peer-reviewed report, “Comprehensive Evaluation of Impacts from Potential, Future Automotive Fuel Replacements” at a conference sponsored by the American Society of Mechanical Engineers. The two found that producing one gallon of corn ethanol requires the consumption of 170 gallons of water. That figure includes the amount needed for all irrigation and distillation. For comparison, the two scientists estimated that each gallon of gasoline requires just 5 gallons of water. If Kreider and Curtiss are right, the 5 billion gallons of corn ethanol produced in America in 2006 required more water than production of the 140 billion gallons of gasoline the U.S. consumed that year.

Ethanol proponents have largely downplayed the negative environmental impacts of increased ethanol production, while emphasizing the positive impacts. But by ignoring the negatives, all of us, and future generations, are being put at risk.

Isn’t ethanol useful as an oxygenate replacement for MTBE?

60 thoughts on “Ethanol/Alternative Fuel FAQ”

  1. The tripling of natural gas prices since 2002 happened just as we had a dramatic increase in ethanol production. Coincidence? No.

    Ethanol consumed about 0.1 Tcf more NG in 2005 vs. 1997. Powerplants burned about 2 Tcf more NG in 2005 than in 1997. Don’t thank ethanol for the big runup in NG prices, thank Enron, Calpine and electricity deregulation in general which spurred a massive NG powerplant building craze.

    As ethanol has ramped up exponentially since 2000, how much gasoline has been displaced? None.

    Well, we went through this before. It’s true ethanol has not reduced gasoline consumption, but displace is a different story. Trend-line 2007 gasoline consumption would have been 142 billion gallons. Instead we’ll consume 138 billion gallons of straight gasoline and 6 billion gallons of ethanol. How can that be interpreted any way other than 4 billion gallons of gasoline displaced?

  2. One question I seldom hear asked of the ethanol advocates is why they don’t use ethanol for the distillation process. Would that be a forfeiture of the 51-cent subsidy?

    Since ethanol spot has been hovering below $2/gal for quite some time the profit margin is nowhere near last years margin. IMO much of the planned future production will not be coming on line if current prices hold.

    Also 07 corn crop may not exceed 11 billion Bushels, too many acres have been stressed by drought.

    Will you be attending ASPO-07?

    Cheers, Dipchip

  3. Ethanol consumed about 0.1 Tcf more NG in 2005 vs. 1997.

    While I am certainly willing to modify the FAQ if the data indicate that this should be the case, you are forgetting about the natural gas inputs that go into the fertilizer. That is a very substantial input. Do you have a source for the information above?

    How can that be interpreted any way other than 4 billion gallons of gasoline displaced?

    I am about to run to work, but I want to revisit this. Of course there is one very simple reason that your interpretation can be wrong: The gasoline inputs into the ethanol production process are a lot higher than advertised. That will help eat up your hypothetical displacement. That’s off the top of my head, but it warrants a closer look. I will revisit our earlier discussion.

    Please continue to give your input. My goal is to have a FAQ that is not open to interpretation.

  4. In other words, if you are looking at the demand growth curve for gasoline, you can’t see any effect from ethanol. As ethanol has ramped up, we have become more dependent upon petroleum. That is not my opinion. That’s what the numbers say, in black and white.

    At the same time ethanol production was increasing weren’t both speed limits increased while the numbers of SUVs and big pickups on the road also increased. Actually one could say these events accelerated over the time span you are refering to. Anyway, how are you accounting for this in your proof?

    Your opposition to ethanol may be valid but I don’t follow your argument. My guess, if you analyzed all the factors that determine the consumption of gasoline and other fuels the two factors I mentioned would dwarf any effect that the ethanol industry has on fuel consumption.

    If you want to second guess some of my work please go to the following page on my website:

    I also welcome feedback!

  5. My guess, if you analyzed all the factors that determine the consumption of gasoline and other fuels the two factors I mentioned would dwarf any effect that the ethanol industry has on fuel consumption.

    Which then supports my point that the claims that ethanol is helping to decrease our dependence on foreign oil can’t be supported.

    I think the speed limit issues were earlier, but I would have to look. And if the speed limit issues were earlier (i.e., changing prior to the rapid ethanol ramp-up), then they are already factored in. To support your argument, you would need to show that speed limit and SUV adoption escalated at the same time as ethanol production. I don’t think that’s the case, but I am always open to changing my mind based on data. Show me the numbers, and then let’s discuss.

  6. I would like to see Figure 2 in redone with the ethanol on the same scale as the gasoline instead of 10 to 1.

    The problem with that is that ethanol would barely be a blip. I blew it up to show the rapid scale-up, but if placed in the context of 140 billion gallons per year of gasoline, then it’s nothing. That supports the argument that ethanol is doing nothing to combat oil consumption (the volumes are just too small to do much), but it wouldn’t have given much information about how ethanol has ramped up in the past few years.

  7. Might I suggest asking the question “How much arable land would be needed to displace all present U.S. gasoline consumption with ethanol?”

    I have found that the answer to this question, even assuming some of the rosier productivity numbers for cellulosic ethanol, to be useful context for this debate. The numbers that I’ve seen illustrate the enormousness (and enormity) of our demand, and indicates the importance of prioritizing improvements in transportation efficiency first. Others may obviously draw different conclusions.
    I don’t have time right now to dig up any specific citations or references relevant to this, but perhaps someone else has these figures handy?

  8. “Losing Forests to Fuel Cars
    Ethanol Sugarcane Threatens Brazil’s Wooded Savanna”

    Must read WaPo article on the dire ecological effects of converting wildlands into sugar cane and soybean production in Brazil.

    Our national policy on ethanol is having catastrophic downstream effects. This “green” fuel is is painting a very black chapter in a precious ecological areas of Brazil. An insane drive for profit is distorting our values and tipping the balance in favor of our short short term “needs” for liquid fuels with the long term ecological and environmental services that the entire planet is dependent upon. Our search for “sustainable”, “cleaner”, “independence” and “security” need to be examined in the context of what we need to do to sustain life on earth. We are failing horribly in the latter mission.

  9. why they don’t use ethanol for the distillation process

    Same reason they don’t use gasoline or diesel. Refined liquid fuels are uniquely capable of powering our fleet and thus much too valuable to use as a mere heat source.

    NG is about $6/mmBTU vs. almost $20/mmBTU for refined liquid fuels. When most of today’s ethanol plants were in the planning stages NG was only $2/mmBTU. The subsequent rise to $6 with a very unpleasant side trip to $14 sent operators and planners scurrying for alternate fuels. Some chose coal at $1-2/mmBTU but pictures of coal trains heading toward ethanol plants to make a “green fuel” didn’t play well in the press.

    Ag waste costs less than $1/mmBTU in the corn belt, and looks to be the next big fuel. I’m aware of a dozen or so plants using or slated to use biomass instead of natural gas, but I can’t find any good statistics on the overall industry. FWIW, using biomass instead of natural gas dramatically improves EROEI.

  10. you are forgetting about the natural gas inputs that go into the fertilizer.

    This USDA study puts 2001 energy input at 72k BTU per gallon of ethanol. 20k BTU of that is for corn, half of which is NG for fertilizer. 50k BTU is process energy. I assume 80% of process energy is NG on an industry-wide basis. So each gallon of ethanol embeds about 50k BTU of NG.

    Ethanol production was just under 4b gal in 2005 vs. 1.3b in 1997. Since 50k BTU is roughly 50 cu ft of NG, incremental NG usage would be:

    2.7b gal * 50 cu ft/gal = 135 Bcf NG

    But ethanol efficiency improved from 1997-2005 via mol sieves and such. If we assume NG usage was 60k BTU/gal in ’97 vs. 45k BTU/gal in ’05 then incremental NG usage comes in at 102 Bcf. That’s how I got 0.1 Tcf. The 2 Tcf of extra NG burned in powerplants came from EIA Data.

  11. If we assume NG usage was 60k BTU/gal in ’97 vs. 45k BTU/gal in ’05 then incremental NG usage comes in at 102 Bcf.

    Well, it hasn’t. In fact, I have some actual plant information on that, done in 2004 I believe. I think you are grossly overestimating efficiency improvements. But I will get to that in time.

    Besides that, after complaining about cherry-picking data in the original post, one wonders why you chose 1997 as your starting point instead of 2002. After all, my comparison was from 2002. Of course, natural gas inputs into power plants aren’t up that much over that time period.

    Besides that, I think we mostly agree that the fossil fuel inputs and liquid fuel outputs are pretty near parity for ethanol. Therefore, oil companies have absolutely nothing to be concerned about, and given any incremental effect that ethanol plant demand is having on natural gas prices, it is actually going to net out in favor of oil companies who also produce natural gas.

  12. It’s true ethanol has not reduced gasoline consumption, but displace is a different story.

    OK, I have had a chance to review the previous essay, and unless you have some new angle, I am going to consider this rebuttal complete.

    First of all, in the graph, the straight line 2006 gasoline usage would have been 139 billion gallons (after backing out ethanol from supply). Instead, it was 137.5 billion gallons. So, we have a drop in demand of 1.5 billion gallons to account for, and 5 billion gallons of ethanol produced. But, one thing that was also different in 2006, is that sustained prices were up quite a bit over recent years. Should that have affected demand? Sure it should have. So, the 1.5 billion gallon drop would be easily explainable in the context of higher prices.

    But, consider for a moment that 5 billion gallons of ethanol actually did displace gasoline. At an energy content of 67% of ethanol, it should have displaced 3.35 billion gallons of gasoline. Now, take that ethanol out of the pool, and the 2006 gasoline demand rises from 137.5 to 140.85 billion gallons – an increase above our gasoline growth projections, despite record high prices. Is it reasonable to believe that without ethanol, gasoline demand would have accelerated in 2006 in the face of high prices? I don’t think so. My conclusion? Ethanol hasn’t actually displaced any gasoline at all. I can think of 2 reasons for that, if you want to continue this line of argumentation. But I really want to jump on the FAQ again.

  13. One more note on the increase in natural gas demand due to ethanol, and I consider that one addressed as well. From a story in Ethanol Producer Magazine, lamenting the high costs of natural gas:

    Diversifying Energy Options

    One source tells EPM that when ethanol production reaches 7.5 billion gallons (assuming all of that capacity was fueled by natural gas) demand from the industry could represent a 1.2 percent increase in total U.S. demand for natural gas. That’s a significant rise when you consider that the total increase in natural gas consumption from 2004 to 2005 was only about 1.4 percent. What happens if the ethanol industry goes to the apparent next production plateau at 12 billion gallons per year? Ultimately, increased natural gas use resulting from the ethanol industry’s expansion affects total U.S. demand of fossil energy, helping to keep supplies tight and prices elevated.

    I rest my case. Oil companies are going to clean up as a result of this. So, it is tough to argue that I am against ethanol because of competition.

  14. Robert,

    One of the issues that come up is “top soil depletion”, which I think applies to both, ethanol and biodiesel.

    Here in Argentina some proponents of biodiesel (actually grain producers) say that that is incorrect. Still, I don’t know if that is because there is no depletion at all or if that depletion could be fixed.

    Any thoughts?



  15. Fernando,

    I am very interested in the subject of top soil, and plan to write a post pretty soon about my own composting experiments I am conducting. Soil loss, and the ability to rebuild the soil, are both very important subjects to me. But I don’t know if I can answer it in the context of an ethanol FAQ with something definitive. My main goal here is to respond with hard numbers, and I am not sure we have those for topsoil depletion. I have seen lots of estimates, but I am not so sure about really irrefutable numbers.

  16. Will we need ethanol at all? Check this out:

    Worldwide gasoline glut seen by 2010

    Fuels coming from outside the traditional oil-based supply chain will lead to a worldwide gasoline oversupply by 2010, and that will lower prices, a consulting firm predicted on Tuesday.

    “The growth in total supply is far beyond that required for demand growth,” said Aileen Jamieson, downstream research manager for Wood Mackenzie in a report entitled “Global Refining in 2010 – Out of Balance.”

    Wood Mackenzie forecasts an additional 8.1 million barrels per day of crude refining capacity by 2010. The firm also sees about 1.8 million barrels per day more fuel from non-refinery sources, such as biofuels and natural gas liquids.

    With estimates of demand increasing around 9 million barrels per day in the same period, Wood Mackenzie foresees a surplus of about 1 million barrels daily in 2010, Jamieson’s report said. As a result, prices will drop, she predicted.

    Maybe we should just mandate really high MPG cars…tax fuel in ever way we can…and enjoy a big glut of fossil fuels in the 2010s….

  17. I always chuckle when I hear OPEC claiming that part of the reason for high oil prices is a lack of US refining capacity.

    Lack of refining capacity means less demand for crude and would hence translate into lower crude prices. Prices of refined products would be high due to supply exceeding demand.

    We saw something like this in the US in late spring/early summer. Eventually the high prices for refined products (like gasoline) drew imports, which in turn increased gasoline stocks and lowered prices.

    By the same token, increased refinery capacity means higher oil prices, due to higher demand for crude. The only way to change that, would be if OPEC opened the taps. Question is, if oil prices of more than $75/bbl have not enticed them to do so, what price will it take? Does OPEC even have the ability to open the tap anymore? Guess we’ll know soon enough.

    So nice try, Ben, but no cigar.

  18. Prices of refined products would be high due to supply exceeding demand
    That should obviously be: Prices of refined products would be high due to demand exceeding supply.

  19. Using biomass instead of natural gas does not improve EROEI. It just changes the type of energy invested. Is this the same biomass we are suppose to make into cellulosic ethanol or decay in the ground for fertilyzer? Next step, the farmers use more fertilyzer which is made out of- you guessed it natural gas.

  20. Demand cannot exceed supply. Price will ration.
    What the gal at Wood Mackenzie wrote is that we will have plenty – an excess – of refinery supply within three years. If oil prices do not come down, we will also have abundant fossil crude.
    It will be interesting to watch if OPEC and hedge funds can maintain this price regime going forward. It is a wonderful time to be in the oil business – the same oil you sold profitably at $25 a barrel now goes for $75 a barrel.
    But Mr. Price Mechanism swings a big bat, if slowly. Look what happened to corn: Down from $4 a bushel, now trending towards $3 a bushel. No surprise.
    On ethanol: Eventually, only those ethanol plants which achieve energy returns of 3 or above will be able to stay in business. This will take a decade or two, but we have time (maybe not me personally, but the human race). If they burn cow dung and corn stalks, they can do it.

  21. Using biomass instead of natural gas does not improve EROEI.

    This is an important point, and probably worth expanding upon. When we say that Brazil is getting an energy return of 8/1, we don’t actually refer to EROEI for that very reason. The EROEI is probably down in the 2-4 range, but the biomass inputs into the boilers are not counted.

  22. Fernando said: One of the issues that come up is “top soil depletion”, which I think applies to both, ethanol and biodiesel.


    It is a huge issue. That’s why some have called our State of Iowa the “Worlds Largest and Shallowest Strip Mine.”

    It’s an issue that many overlook. It took tens of thousands of years to build up the deep, fertile soil that much of our Corn Belt once enjoyed.

    But since the advent of factory monoculture, and the large scale abandonment of sustainable agriculture, much of that soil can no longer support a crop without continuous applications of synthetic fertilizer — most of which is made from natural gas.


    Gary Dikkers

  23. Seems like a little circular logic going on here: ethanol production is too small to make a measurable impact on gasoline demand, thus ethanol doesn’t displace gasoline and we shouldn’t scale up ethanol. The few studies that have broken out the amount of oil used in the lifecycle production of ethanol have come up with similar numbers equal to about 5% of the btu value of ethanol. (Farrell et al.’s Science article from early last year did a good job of pulling the data together on an apples to apples basis. While it didn’t focus on oil inputs, I’m pretty sure that it broke that data out.) Basically it’s harvest equipment and input and output transport.

    At current scales and given the history of the ethanol market, the reason ethanol’s displacement is impossible to detect is that most ethanol is displacing MTBE not gasoline.

    There are lots of reasons that corn ethanol can’t scale up to displace lots of gasoline, but the amount of oil displaced per gallon in not among them.

    On the arguement that oil companies aren’t opposed to ethanol because they’re just as happy to sell natural gas to ethanol plants as petroleum, this would be much stronger if you could also present the profit margins for oil and natural gas. I would be fascinated to see that case laid out in more detail. All I can say is that from my work on Capitol Hill, the idea that big oil is fine with ethanol just doesn’t hold water. I’ve been on panels with Red Cavanaugh from API and heard from Hill staffers the arguments made by oil lobbyists and oil industry is certainly fighting biofuels policies. Of course that doesn’t make you as an employee inherently biased.

    Your discussion of EROEI and efficiency is helpful, but I would urge you to argue for the addition of GHG displacement as an additional metric. I don’t think Wang actually confuses efficiency and EROEI but rather argued for energy return on fossil fuels invested as a proxy for GHG displacement. That made sense in that very recent era when explicit reference to global warming was not so in vogue. But in ignoring renewable energy, EROFFI could lead to wasteful use of renewable energy. The GHG displacement metric helps especially if we couple it with an understanding of a technology’s ability to scale up and the time frame for development. We need reductions to start now and be very large.

  24. in the graph, the straight line 2006 gasoline usage would have been 139 billion gallons (after backing out ethanol from supply).

    EIA data shows Finished Motor Gasoline grew an average of 2.2 billion gal/year during the first 10 years of your graph (1991-2001). This includes a small amount of “gallon inflation” due to ethanol’s low volumetric energy density, so let’s call the trend 2b gal/yr.

    2001 (billion gallons)
    EIA FMG 132.0
    Gasoline 130.2
    Ethanol 1.8
    Gas Equiv 1.2
    Adj FMG 131.4

    131.4b gal of pure gasoline has the same BTUs as our actual 132.0b gal gasoline/ethanol mixture.

    Straight-line extrapolation for five years at 2.0b gal/year gives us 141.4b gal Adj FMG in 2006. Actual 2006 numbers:

    EIA FMG 141.5
    Gasoline 136.6
    Ethanol 4.9
    Gas equiv 3.3
    Adj FMG 139.9

    From this I draw two conclusions. First, gas demand grew below trend from 2001-06 due to higher gas prices. On a gallon of gas equivalent (GGE) basis, 2006 gas consumption of 139.9b gal was 1.5b less than the trendline value of 141.4b gal. (A 1% drop in gas consumption off a >2x price rise illustrates just how inelastic gas demand really is).

    Second, in 2006 we got 139.9b gallons of gasoline equivalent while only burning 136.6b gallons of actual gasoline. Ethanol therefore displaced 3.3b gallons of gasoline. The only way to conclude otherwise is to believe the high price of gas should have reduced gas demand even further below trend line.

    The numbers are small enough that it becomes a matter of opinion. I say high prices pushed 2006 gas demand 1% below trend and ethanol displaced 2% of gas usage. You say high prices pushed gas demand down 3% and the ethanol displaced zero gasoline. You say if we’d shut down every ethanol plant on 1/1/06 then 2006 FMG would have been only 136.6b gal. I find that highly improbable, especially when I look at VMT and fleet efficiency trends, but there’s no way to conclusively prove either interpretation.

    BTW, there is a small chance straight gasoline will actually decline in 2007 and/or 2008. Even if not, I believe 2008 straight gasoline will be pretty close to 2006’s 136.6b gal number. Of course it’s still possible to argue high prices cause 100% of this demand flattening/reduction and ethanol has zero effect, despite the obvious Occam’s Razor issues.

  25. Robert said

    “At an ethanol EROEI of 1.3, that means that burning 1 BTU to produce 1.3 BTUs only results in a net of 0.3. Therefore, the efficiency is 0.3/1.3, or 23%”

    I thought efficiency was Output/Input

    Output=0.3 (Gain)

  26. If the goal is to reduce petroleum usage then the proper metric would be energy return on petroleum invested.

    i.e. Energy out/Petroleum in

    Yes, this is different than EROEI. Maximizing them are two different goals. It is up to the leaders to decide which one is more important.

  27. Demand cannot exceed supply. Price will ration.
    To which I can only add: As has been happening.

    What the gal at Wood Mackenzie wrote is that we will have plenty – an excess – of refinery supply within three years.
    And, as I explained, this will help keep oil prices high, but put pressure on refiner’s margins (the difference between refined and crude products).

    If oil prices do not come down, we will also have abundant fossil crude.
    Huh? How is building more refineries related to finding more crude?

    It will be interesting to watch if OPEC and hedge funds can maintain this price regime going forward.
    It’s pretty straight forward: keep supply at current levels. With more refiners bidding, the price can only go up. Or did you mean OPEC would need to increase production quite a bit, just to keep oil prices as low as they are today?

    It is a wonderful time to be in the oil business – the same oil you sold profitably at $25 a barrel now goes for $75 a barrel.
    And set to get even better.

  28. That’s what the ethanol lobby keeps telling us. Since they use domestic natural gas or coal, they (claim to) reduce our dependence on foreign oil. But NG is also peaking and it could be replacing foreign oil in some other way like natural gas powered vehicles.

  29. If the goal is to reduce petroleum usage then the proper metric would be energy return on petroleum invested.
    The proper goals is a topic in much need of debate. There at least three somewhat contradicting goals:
    1. Cost-effective energy
    2. Security
    3. Environment

    The current strategy is to pursue goal #1, with little or no regard to the other two. How much are we prepared to pay more for true terror-free oil (unlike the media stunt that recently happended)?

    I would also propose another metric: Energy return on food-grade energy invested (ERFEI). The aim would be to point out that one unit of energy (BTU, calorie, kWh, Joule, pick your favorite one) is worth a lot more as food, than as fuel. Degrading food energy to fuel energy is not something our taxes should be used to encourage!

  30. Using biomass instead of natural gas does not improve EROEI. It just changes the type of energy invested.

    Now we delve into philosophy. Just what is “energy invested”? Does it include BTUs in the feedstock? What about energy from the sun that helped grow the corn? Or that helped grow the ancient plants that became oil? You may think I jest, but some of the Odum-style “emergy” approaches actually go back that far. If we count the BTUs in the feedstock, EVERY energy source has EROEI well below 1.0. It’s accurate in one sense, but pretty useless.

    Some people only count external energy, but this approach also has problems. The OPTI/Nexen oil sands project will be powered by gasifying 20% of the feedstock instead of purchasing natural gas. Is EROEI thus infinite because there’s no external energy input? Or is it 4:1, a result we get by counting SOME of the feedstock energy but not the rest?

    More philosophy: say Factory A inputs 90k BTU of crude oil plus 10k BTU of natural gas and outputs 80k BTU of refined liquid fuel. Factory B takes 10k BTU of crude plus 90k BTU of natural gas and outputs 200k BTU of refined liquid fuel. Do we say EROEI is 0.8 for Factory A and 2.0 for Factory B? Does the fact that Factory B also consumes a bushel of corn change the calculations? If so, how? Do we count some or all of the BTUs in the corn? Or does the presence of corn change our accounting for the BTUs in the crude oil and natural gas? Why should all the BTUs in the oil and NG count as inputs for Factory B but only part of those BTUs count for Factory A? Enquiring minds want to know.

    As a single number EROEI is pretty useless. You can arbitrarily define energy input as needed to produce the desired result. And then you can argue ad infinitum with people who define energy input differently and thus get different results. The honest way to define energy input depends on the question you wish to answer. Want to know if an energy source can “stand on its own”? Then define input as external energy only. Want to know if a source can displace or “stretch” fossil fuels? Then define input in terms of fossil energy only. Want to prove civilization is doomed? Then define input as ancient solar energy and you’ll “prove” that each barrel of oil we burn contains more “emergy” than the sun gives us in a day.

    The question I want answered is whether an acre of corn or cane produces meaningful net useful energy. As such it DOES change EROEI if I power my still with corn cobs or bagasse instead of natural gas. If I use 85k BTU of natural gas to get 85k BTU of ethanol the whole exercise is pointless, regardless of how I dress up my EROEI number with coproduct credits. On the other hand, if I use 85k BTU of corn cobs which would otherwise rot in the field to power the process I have a potentially useful fuel.

  31. Lots of comments to address, and I don’t have much time this evening. So, I am going to hit some of them quickly.

    Nathanael wrote: Seems like a little circular logic going on here:

    No, the argument addresses the claim that ethanol is somehow helping rid our dependence on the Mideast. This is a very popular and patriotic argument, but it is false.

    Nathanael wrote: the reason ethanol’s displacement is impossible to detect is that most ethanol is displacing MTBE not gasoline.

    No, MTBE was phased out very rapidly last year. That would show up as a one time, short-duration blip.

    Nathanael wrote: All I can say is that from my work on Capitol Hill, the idea that big oil is fine with ethanol just doesn’t hold water.

    If you haven’t noticed, there has been a decided shift in opinion in the last year on this. Look at the failure of ethanol to displace any/much gasoline, and the way it is impacting natural gas prices, and a lot of people I know figured out that this is good for the oil business. And the profits on natural gas sales will be in the annual reports.

    Nathanael wrote: I don’t think Wang actually confuses efficiency and EROEI

    Wang may not be confused, but a lot of others have been confused as a result of what he wrote. And I think the reason he wrote what he did was because Argonne, the USDA, etc. was pushing ethanol – not because they were making an impartial scientific study.

    Anonymous wrote: I thought efficiency was Output/Input

    It is the amount of net energy over the total amount of energy. If a process has net energy of 5 BTUs and total energy of 5 BTUS, the efficiency is a perfect 100%. Ethanol has a net of 0.3 and a total of 1.3.

    Anonymous wrote: If the goal is to reduce petroleum usage then the proper metric would be energy return on petroleum invested.

    I had intended to write some more on this today, and expand upon this very point. Just haven’t had time. If that’s your only goal, i.e., none of the externalities matter, then you may be correct. But then you better be very sure you have the metric correct (and I think we all agree that ethanol, excluding the animal feed, is very close to parity) and that this is the most effective usage of those petroleum BTUs.

    Optimist wrote: I would also propose another metric: Energy return on food-grade energy invested (ERFEI).

    Exactly. Or Energy return on water invested. Or lots of others.

  32. As a single number EROEI is pretty useless.

    That’s more of what I wanted to get into today, but didn’t have a chance. I have spent many hours talking to my good friend Nate Hagens about this. We did a number of hypothetical calculations, in which I showed him how we could swing the EROEI all over the place by defining a step-wise process in which we cannibalized part of the energy we produced. EROEI with no context is indeed useless.

  33. Now we delve into philosophy. Just what is “energy invested”? Does it include BTUs in the feedstock? What about energy from the sun that helped grow the corn? Or that helped grow the ancient plants that became oil? You may think I jest, but some of the Odum-style “emergy” approaches actually go back that far. If we count the BTUs in the feedstock, EVERY energy source has EROEI well below 1.0. It’s accurate in one sense, but pretty useless.
    This is where a free market can be such a great asset. Let the invisible hand sort it out, it’s making my head hurt!

    In a truely free market:
    1. Food energy would have a high value, precluding it from use for fuel production.
    2. Waste would have a low (even negative) value, encouraging its use.
    3. Demand for the final fuel would depend in part on how well it can compete in the market place, and on how easy it can be integrated into existing infrastructure (including transportation, distribution and vehicles).

    If only we had leadership (instead of appeasing Pelosi) in Washington, they’d get out of the way and allow American ingenuity to get on with solving the problem!

  34. Personally, when I look at EROEI, the thing I am interested in is sensitivity to the price of energy. If ethanol costs $2/gallon wholesale when oil is $75 a barrel, what will ethanol cost when oil is $200 a barrel?

    Don’t tell me $2/barrel because no oil is used in making ethanol. All input energy prices will track each other. There are too many people who can burn whatever is cheapest and arbitrage a fuel price differential for a gap to open up in the market long term.

    I’m not interested in solving an esoteric physics problem.

  35. More on straight gasoline consumption. Through 7/27/07 EIA FMG on pace to grow 1.8b gal over 2006. That’d put us at 143.3b gal for the year. Ethanol looks like it will increase 1.6b to 6.5b gal total in 2007.

    If these numbers hold, straight gasoline will increase 0.2b gal for the year, from 136.6b gal in 2006 to 136.8b gal in 2007. If an economic slowdown causes GDP growth to fall in the last half of 2007 it’s possible straight gasoline consumption will actually decline below 136.6b gal.

  36. after complaining about cherry-picking data in the original post, one wonders why you chose 1997 as your starting point instead of 2002.

    Demand growth will typically take a few years to eat up overcapacity. Once slack capacity is gone prices will rise, sometimes overnight. Over the next few years demand will either fall off and allow prices to return to normal, or will continue to grow and keep prices high. As such I always look at supply/demand trends for several years before and after a price jump. You can certainly argue I should have used 1999-2005 or 2000-2004 instead of 1997-2005. The numbers would change but not the conclusion — the increase in NG demand circa 2002 came primarily from powerplant construction and not ethanol.

    I think you are grossly overestimating efficiency improvements.

    Probably. My 60k BTU/gal in 1997 vs. 45k BTU/gal in 2005 example was not based purely on efficiency, but also included fuel switching. I assumeed all 1997 ethanol plants used NG at a 60k BTU/gal average. For 2005 I assumed a 10% efficiency gain plus one in six plants using coal, biomass, etc. That puts 2005 overall industry consumption at 45k BTU of NG per gallon of ethanol.

    But your magazine article says in 1996 although most ethanol plants were looking at alternate fuels, only 4 of 43 actually used them. I also found a 1995 USDA study saying some ethanol plants at that time used coal. So fuel switching during 1997-2005 was probably not a factor and we’re back to my first number of 0.14 Tcf incremental NG demand from ethanol between 1997-2005 vs. 2 Tcf incremental demand from powerplants.

  37. This is only slightly off topic but worth mentioning, and that energy security and oil prices.
    We seem to have an oil market currently, in which a small surfeit of demand relative to supply leads to price escalation. I am not sure that is the whole story, as hedge funds are very active on the NYMEX, and there is a panoply of mysterious websites financed by who knows who, which practice scaremonger/PR every day.
    But price rations supply, and in the short-run, that can lead to aggressive price hikes. That may be what we are seeing now.
    So, if we expand supply of liquid fuels somewhat even through corn ethanol, that can have very salubrious effects on world oil markets.
    Point No. 2 is that it is clear we cannot trust any oil-exporting nation, save possibly Canada.
    Oil nations will seize assets, they will destroy facilities (Nigeria, Iraq), they will renege on deals (Venezuela), they will trash human rights (think of women or religious minorities in Islam). Even Russia is a thug state, and Mexico horribly corrupt. Libya, Iran, Iraq, KSA – not exactly a ganag you can count on.
    But until PHEVs are commonplace, we are stuck with a need for liquid fuels.
    I think it is wise that developed nations are financing some alternatives in liquid fuels.
    I also think we need to give credit, when newer procedures are developed, such as the E3 plant, which promise better EROEI. To say the plant won’t work, so as to keep a possibly much too low EROEI figure upon which to make national projections. seems like willful head-in-the-sandedness.
    What if the E3 plant works as promised? What if orange peel and wood ethanol plants work, using waste matter?
    What if crop yields improve (they have been at 2 percent annually for a long time). In fact, farm inputs per output have been shrinking for generations. Why expect different going forward, if the crop is ethanol?
    It is true, we may develop an ethanol lobby which will be invincible. Farmers have proven themsleves the No. 1 pigs at the federal trough. They make welfare queens look like a bunch of smalltime sissies.
    But the need for liquid fuel may justify even such dubious ethanol industry.

  38. Robert Rapier,

    I notice none of the comments have addressed the large (and growing) negative impact ethanol production has on other sectors of the economy.

    This business week article gives a good introduction to this problem

    Ethanol’s Growing List of Enemies

    The ethanol movement is sprouting a vocal crop of critics. … The effort is uniting ranchers and environmentalists, hog farmers and hippies, solar-power idealists and free-market pragmatists.

    Their common contentions are that the focus on corn-based ethanol has been too hasty, and the government’s active involvement—through subsidies for ethanol refiners and high tariffs to keep out alternatives like ethanol made from sugar—is likely to lead to chaos in other sectors of the economy.


  39. Robert Rapier,

    This article provides a good starting point on Brazil and ethanol.

    ethanol output in Brazil, the world’s biggest producer, is only a small share of its energy consumption.

    Brazilian President Luiz Inacio “Lula” da Silva didn’t celebrate the oil independence milestone out in an Amazon sugar field.

    No, he smashed a champagne bottle on the spaceship-like deck of Brazil’s vast P-50 oil rig in the Albacora Leste field in the deep blue Atlantic. Why? Brazil’s oil independence had virtually nothing to do with its ethanol development. It came from drilling oil.

    Thanks for all the good work you are doing on this topic.


  40. Optimist wrote “In a truely free market:
    1. Food energy would have a high value, precluding it from use for fuel production.”

    I genuinely want to understand the reasoning for this statement. (I’m not an economist.) Surely food energy is influenced by the amount of spending power people are prepared to spend on competing things. I.e., if I really, really like a view nothing stops me spending over the odds on a piece of prime agricultural land and turning it into an estate, or if I really, realy like using petrol+ethanol-consuming items and I’ve got money left over after buying food I can choose to buy ethanol rather than some other energy source even if it’s over the level of what ethanols “rational consumer” price ought to be.

    I can see why food energy can’t go to very low sale values but I don’t see why a “free market” ought to make it significantly higher than other land uses.

  41. David,
    It is a simple as this: To a very rich person, like you imply yourself to be (or may that’s just your dream), money is no objection and (s)he is free to spend it on whatever.

    To most people, though, the money matters. Given a choice between eating and driving, I would suppose they are going to choose eating.

  42. Robert,

    Here’s a question to add to your ethanol FAQs:

    Is ethanol actually a renewable fuel?

    Of course my position has always been that it’s not, at least not until the ethanol industry demonstrates they can make ethanol without consuming unrenewable resources. And so far, they are no where close to doing that.

    To me it seems illogical to call a a fuel such as corn ethanol “renewable” when growing corn and reforming it into ethanol consumes unrenewable fossil fuels; unrenewable water for those farmers dependent on the Ogallala Aquifer; and fertile top soil at ever stage of production.

    The ethanolistas have repeated their mantra that corn ethanol is a renewable fuel over and over for so long that non-analytical people (such as most politicians) have fallen for it hook, line, and sinker.

    What misleads uninformed people into thinking corn ethanol is renewable is that corn farmers can raise a new crop of corn each growing season. But that is not the same as being truly renewable and sustainable, when that corn crop would never exist without the consumption unrenewable fossil fuels. (Ask a corn farmer some time if he thinks he could raise a corn crop without consuming any unrenewable fossil fuels.)

    The truth is that corn ethanol is not renewable, and that over the long term it is not even sustainable. (I’m sure you’ve heard that the word “Iowa” in the original Sauk language actually means, “World’s largest and shallowest strip mine.”) 🙂

    By the way: I used the line about corn ethanol being nothing more than reformed natural gas two years ago in testimony before a committee of the Wisconsin state senate. I realize though that Goodell got it from you for his Rolling Stone article. Good on ya’ mate.



  43. Regarding optimist’s reply, I still don’t completely follow the logic that a free market the “value” of food for food will necessarily be sufficiently high that food won’t be diverted to anything else. I acknowledged that it can’t go incredibly low because everybody regardless of income has to eat something. However, it’s unclear to me that, particularly in a country with a widening gap in incomes like Britain, there aren’t enough people with enough purchasing power that, if they were to decide they wanted ethanol (or some other use for agricultural products) and didn’t particularly care how much they were paying for this, that the value of using food energy for that usage wouldn’t be enough to cause food energy to used for that purpose. (Ie, it’s not just about my individual choices with my money but all the money that everyone is spending that will determine relative prices. I don’t know actual figures of the proportions in income bands in the UK so I can’t quantify the total purchasing power of various income levels.)

    The idea that if we had a free market food wouldn’t be used for fuel is very comforting, but I want to understand if it’s really the case.

  44. Robert

    What is the gallon of ethanol to barrel of oil conversion factor?

    Could you please show how you calculate this?

  45. I thought I was pretty explicit. A gallon of ethanol contains 76,000 BTUs. A gallon of oil contains 138,000 BTUs. Therefore, even if there were no fossil fuel inputs at all into the production of ethanol, that maximum that any volume of ethanol can displace of oil is 76,000/138,000. If we were talking about only gasoline displacement, then the theoretical is 76,000/125,000.

    I have seen people doing some funky calculations to try to justify the numbers that DOE and others have suggested, but they are always making invalid assumptions. For instance, they will say that you only get 20 gallons of gasoline out of a barrel of oil, therefore that’s all you have to consider. But that’s ludicrous reasoning. You can’t talk about oil displacement, and just ignore half of the barrel of oil in the calculation.

  46. Ethanol debate, Global Warming, Al Gore and environmentalism are distractions. As the mass media creates climate illusions, Big Brother clamps down by opening our mail, suspending habeas corpus, stealing private lands, banning books like America Deceived (book) from Amazon, rigging elections, conducting warrantless wiretaps and starting wars based on blatant lies. Soon, the sinking of an Aircraft Carrier(by Mossad) will occur and the US will ‘retaliate’ against Iran. Which AIPAC-lobbying country benefits from that? How much will the environment matter after a Nuke attack on Iran? Not much. Stop Iraq, Prevent Iran then work on the environment.

  47. …there aren’t enough people with enough purchasing power that, if they were to decide they wanted ethanol (or some other use for agricultural products) and didn’t particularly care how much they were paying for this…
    There is a simple contradiction in this: enough people and didn’t particularly care how much they were paying for this mix like oil and water. People do care how much they pay, especially rich people (if they intend to stay rich). Why pay a lot for ethanol, if you can get home-made biodiesel (for example) made from waste cooking oil for a lot cheaper?

    Food calories cannot be replaced by anything else. Hence the high value in that. Fuel calories can come from a number of different sources including waste materials.

    This is what makes the US Congress’ efforts to distort the market so distressing and shameful.

  48. The distressing and shameful thing about the alternative fuel movement is that the oil/biofuel industry controls the repeated DELIVERY of the fuel, something no industry would be able to control with solar or wind power.

  49. Anything to this?:


    An Israeli company drills for oil in algae
    By Karin Kloosterman August 24, 2007

    There may be a revolution blowing our way: The Israeli company Seambiotic has found a way to produce biofuel by channeling smokestack carbon dioxide emissions through pools of algae that clean it. The growing algae thrives on the added nutrients, and become a useful biofuel.

    For the last two years, the company has done something that other alternative fuel companies have dreamt about and are only starting to do now: they’ve tested their idea with an electric utility company – a coal-burning power plant in the southern city of Ashkelon operated by the Israel Electric Company (IEC).

    Looking high into the sky, it is far too obvious how badly power plants and factories are polluting our environment. One of the most worrying gases produced by power plants today is carbon dioxide, which is believed responsible for global warming.

    In Israel, as in the US and the rest of the world, it is estimated that power plants produce about 40% of all greenhouse gases. By employing tactics designed by nature, however, Seambiotic believes it can lock up carbon dioxide emissions through a process called biofixation. And they have employed a slimy plant from the algae family to do the job.

    Algae are marine-derived plants that thrive on carbon dioxide and sunlight.

    “Algae grow fast and continuously,” says Seambiotic CEO Amnon Bechar. “An algal pond can produce oil 365 days a year and much more oil per hectare of land than traditional plant crops.”

    Studies have shown that algae may be one of the world’s most promising biofuels. It is capable of producing 30 times more oil per acre than the current crops used for the production of biofuels; algae biofuel is non-toxic, contains no sulfur, and is highly biodegradable.

    The company’s prototype algae farm in Ashkelon uses the tiny plants to suck up carbon dioxide emissions from power plants. Seambiotic’s eight shallow algae pools, covering about a quarter-acre, are filled with the same seawater used to cool the power plant. A small percentage of gases are siphoned off from the power plant flue and are channeled directly into the algae ponds.

    Originally when the prototype started operating, a common algae called nannochloropsis was culled from the sea and used in the ponds. Within months, the research team noticed an unusual strain of algae growing in the pools – skeletonema – a variety believed to be very useful for producing biofuel.

    According to Noam Menczel, Seambiotic’s director of investor relations, the company’s developments have stirred interest around the world, specifically in Brazil, which has become one of the champions of R&D in the area of alternative and renewable fuels.

    “A Brazilian professor wrote to us recently, ‘if that algae of yours has the better features as you say it does, we will close our sugar cane operations and switch to algae,'” said Menczel.

    If all goes according to plan, Seambiotic plans to build its first large-scale biofuel reactor by next year and hopes to do so with a large international partner. Several potentials are already knocking on the door.

    Menczel reports that Seambiotic is meeting with electric plant operators from Hawaii, Singapore, Italy and India, all keen on hearing about Seambiotic’s technology.

    “As we have already developed and produced algae through the process, our main goal is to market the installation and development of our unique algae growing system around the world,” notes Menczel, who adds that Seambiotic’s approach includes a special system to filter out heavy smoke.

    IEC senior engineer Gabriel Jinjikhashvily says that besides offering their coal-burning site as a pilot plant for Seambiotic, the power station also lends its know-how to help fulfill the company’s dream. And in return, the IEC is getting some vital experience from Seambiotic.

    Recently, the IEC became part of a European consortium, working with universities from Holland, Germany and France, aimed at developing new water technologies in the scope of climate change – project GLOWA ‘Global Change in the Hydrological Cycle’.

    “Seambiotic provided an opportunity for us to test the applicability of membranes [gas filters] developed by our European consortium, where we aim to separate carbon dioxide from the other flue gases,” said Jinjikhashvily.

    “The greatest problem today when dealing with carbon dioxide emissions is separating them from the other gases. The target of this multi-national group is to develop new membranes that are both cheap and efficient,” he added.

    According to Seambiotic’s CEO Bechar: “By raising the level of carbon dioxide emissions in the water we increased the yield [of algae] one million-fold compared to the natural state in the sea.”

    While Seambiotic’s approach may be novel, using algae for biofuel or “biofixation” is not a new idea. An Israeli scientist now in the US had a similar idea for cleaning emissions and joined US-based GreenFuel some time ago. Earlier this year, GreenFuel announced that it would be building a prototype for a Louisiana power plant in New Roads. But current reports on funding issues, suggests that the fate of this project is not clear.

    When the project was announced David Crane, the CEO of the Louisiana plant said: “Coal is – and will remain – the premier domestic fuel source for power generation purposes in the United States for the foreseeable future. This means it is incumbent on us not only to build new coal plants using technology which limits or eliminates greenhouse gas emissions but also to find the best way to retrofit the country’s existing fleet of coal plants for post-combustion carbon capture.”

    John Laumer, an environmental consultant from Philadelphia and a writer for thinks that algal farming, when it aligns closely to that found in nature, will give the most promising results.

    “The use of cooling ponds and other artificial, shallow impoundments; and to learn how to cultivate and harvest sequential blooms. This is the path that will be proven economical and environmentally acceptable,” he says.

    This appears to be the approach taken by Seambiotic, which has modestly spent only $2 million on R&D funding up until now. Knowing how to use investment money, concludes Menczel, is the strength of Israeli entrepreneurs:

    “This is Israeli ingenuity for you – knowing how to conserve investor dollars. In Israel, we have creative ways for taking short cuts and don’t always live by the rules. This approach allows us to do much more with much less resources.”

    In the context of climate change and a future energy crisis, let’s hope Seambiotic uses its creativity and resources to make algae the next big thing. Perhaps even one day, the slimy green stuff that we scrape off of our boats and fish tanks, may be worth as much as gold.

  50. I read recently that sugar beet yields per acre are roughly double that of corn. France leads the world in sugar beet production for ethanol. Are these statements accurate, and if so, why is sugar beet not mentioned in your FAQs, or in most posts on the subject?

  51. Excellent FAQ.

    All markets are flawed. Short-term economics dominate politics and this (corn ethanol production) benefits a few at the small expense of many (taxpayers), which is why Americans, in general, don’t give a darn. However, as this blog has pointed out, significant net energy is lost on ethanol. The typical plant is a 10 MW user of power running at 100% load factor (24/7)! Corn ethanol production is essentially trading coal for oil, but with a significant energy deficiency.

    The real question is, “who has the most to gain/lose?” I believe that most electric utilities do not realize they are indirectly competing on a very large scale with the oil industry for the transportation sector in America (Finally competition!)

    In the interim, do everything YOU can to increase US GDP, whilst minimizing your carbon footprint (not easy to do if you think about it). I think the credits were offered to increase GDP in some fashion, and therefore I believe they made a good decision for now.

  52. We found an interesting article about the problems with Ethanol on

    “But there are some problems with increasing ethanol blends. Ethanol contains less energy than gasoline, so increasing the amount of ethanol in gasoline will likely result in lower fuel economy. Increasing standard fuel blends from zero to 10 percent ethanol, as is happening today, has little or no impact on fuel economy. In tests, the differences occur within the margin of error, about 0.5 percent. Further increasing ethanol levels to 20 percent reduces fuel economy between 1 and 3 percent, according to testing by the DOE and General Motors. Evaluations are underway to determine if E20 will burn effectively in today’s engines without impacting reliability and longevity, and also assessing potential impact on fuel economy.” would like to invite readers to post their own views and ideas in’s Investor Forum:

  53. “The combustion of ethanol is also associated with increases in
    emissions of acetaldehyde, formaldehyde … probable carcinogens.”

    Bibliographic details 2004, VOL 28; NUMB 2, pages 281-342

    No toxicology studies by refiners?

    Alkylates as ozone reducers have not been shown to have such properties. Diesel fuel is less sinister than converting food to ethanol. Natural gas use in vehicles is cleaner than acetaldehyde and formaldehyde smog from ethanol.

    Switching the world to 10% gas/ethanol might cause mass starvation and a worldwide depression as corn availble for export dissapears.

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