Trying to Make Sense of Ethanol Tariffs

48 thoughts on “Trying to Make Sense of Ethanol Tariffs”

1. A small fly in the oinment:

   “….Researchers say the total impact of the [2005 Amazon] drought was an additional five billion tonnes of carbon dioxide in the atmosphere – more than the combined annual emissions of Europe and Japan….”

   http://www.abc.net.au/science/articles/2009/03/06/2509425.htm

   http://www.sciencemag.org/cgi/content/full/323/5919/1344

   Cane crops in the Cerrado will displace cattle grazers to the Amazon, which will further fragment the forest making it more vulnerable to drought and on, and on. We cannot destroy the biosphere to fuel our cars.

   http://www.biodiversivist.com

2. I live in the US. I work in the US in the energy production business. I pay lots taxes. My company pays lots of taxes. When the government takes money and gives a little make to those who work for a living, it is not a subsidy. That is about as nice as I can say it..

   True story! I attended a hearing last year in another state for a proposed nuke plant. A person from DC who makes a living opposing nuke plants spoke. He accused the county commissioners of bribery and giving away $500 million of county tax funds. After such a personal attack, the NRC moderator allowed of of the county commissioners to speak.

   The county commissioner who happened to be black started by saying that he takes no contribution of any kind. He then explained how the county had been one of the poorest counties in the state before construction of the nuke plants started almost 40 years ago. A new nuke plant would increase not decrease by $500 million of county tax funds. After 15 years (about the time the old nukes are due to close), the tax incentive will end and the nuke plant will pay property taxes at the normal rate.

   In this case, county commissioners have insured a stable tax base and 500 jobs for the next 70 years.

   I wish Brazil well. Frankly, I do not care how sustainability of anything in Brazil or than the fact my company does business there and sustainability is a criteria for us. I do care about the sustainability of doing business in the US. I am very happy that my company is bring the Brazil model to the US.

   A bipartisan group of senators? I hate the NYT and the Yankess.

   “The bill was introduced yesterday by Sens. Dianne Feinstein (D-Calif.), Judd Gregg (R-N.H.), Jeff Bingaman (D-N.M.), Susan Collins (R-Maine), Maria Cantwell (D-Wash.) and Mel Martinez (R-Fla.).”

   These folks are all part of the same anti-farmer group of east and left coast liberal.

   “To the extent that we require fuel imports, I fall into that camp of preferring to deal with Brazil over Venezuela.”

   I fall in the camp of preferring to deal small farmer COOPs.

   I have a hard time finding anything wrong with corn ethanol for the US market. Clearly the 2005 Energy Bill was effective at increasing production of corn ethanol. Clearly the results show that corn ethanol has sustainability metrics. Clearly, it is creating jobs in the US.

3. “The key to this – as I explained here – is that a true waste product (bagasse) is generated that is used to fuel the boilers, mostly eliminating the need for fossil fuels for the production of the ethanol.”

   Ahh, the waste product thing always makes sugarcane look good and corn look bad. Robert, what is corn stover then? Just because corn stover is an “elective” waste, which is actually why corn is a more (the most) efficient commodity ag product, doesn’t mean the same benefits couldn’t be gained by eventiually using the stover. But there’s no need to use it within the Big Ethanol model. The corn starch IS a waste product that just ends up in animal manure. Better to capture it before you waste it. Still waiting for the corn ethanol bashers to gain some expertise in animal feeding studies so they can understand the real value of corn starch within a systems model.

4. Another link:

   http://www.sciencedaily.com/releases/2009/03/090317094729.htm

   “…Forests, grasslands and oceans are absorbing carbon dioxide (CO2) from the atmosphere faster than ever but they are not keeping pace with rapidly rising emissions…”

5. Cane crops in the Cerrado will displace cattle grazers to the Amazon, which will further fragment the forest making it more vulnerable to drought and on, and on. We cannot destroy the biosphere to fuel our cars.

   Russ, agree completely with that and in fact have written about this very issue before here.

   I think sugarcane ethanol is a good solution for many tropical countries, but if they try to supply the world it will be a disaster. There is a balance there, but we have never been very good at finding that balance.

   RR

6. I fall in the camp of preferring to deal small farmer COOPs.

   That’s a false choice, given that they can’t possibly make enough ethanol to replace oil imports. So then the question is, who would you rather deal with? If you say only the small farmer co-ops, then get ready for a huge reduction in the available amount of fuel.

   Clearly the results show that corn ethanol has sustainability metrics. Clearly, it is creating jobs in the US.

   Why don’t we create more jobs by mandating that everyone buy a new computer or a new Ford every 3 or 4 years? I am sure we can count on fans of ethanol mandates to support computer mandates. Heck, maybe we can use mandates to make sure everyone has a job. Unless of course it doesn’t work like that. Here is something I posted before:

   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.

   It shouldn’t be surprising that there is a catch to jobs created via mandate.

   RR

7. Ahh, the waste product thing always makes sugarcane look good and corn look bad. Robert, what is corn stover then?

   Corn stover falls into a different category. With bagasse, they end up with mountains of it following the sugarcane processing, and they don’t have anything else to do with it. From accounts I have read, removal of the bagasse does not lead to any significant soil erosion – and they wouldn’t transport it back to the fields regardless. They would just burn it to get rid of it. Further, the burning of the bagasse in boilers doesn’t cause significant tar formation (and is low ash), which can be a big problem when other sources of biomass are burned.

   I would be in favor of using corn stover to the extent that it doesn’t worsen the soil erosion problem which is already an issue for corn. But there is a reason it isn’t used whereas bagasse is. Bagasse is a much cheaper option than are fossil fuels. Corn stover isn’t, otherwise everyone in Iowa would be running their boilers off of stover.

   RR

8. Actually, no Brazilian producer has ever, to my knowledge, paid such a tariff. You see, 7% of the prior year’s U.S. production (this year that would be about 630 Million Gallons) can be imported through the Caribbean Basin Tariff-free. So, this year we can expect, as taxpayers, to subsidize about 500,000 Gallons of Brazilian Ethanol.

   Which is kind of tough to take, because Brazil has just about the highest Import Taxes in the world. We have tried many times to work out trade deals with Brazil to no success.

   There are approx. 150 Million Acres of arable land lying unused in the Cerrado as we type.

   What would we do about the “Cellulosic” Blender’s Credit? It is, absolutely, Vital for the Development of the Cellulosic Ethanol Industry. Do we really want to throw the nascent cellulosic industry under the bus just so we can switch our energy dependence from Riyadh to Rio?

   You, and George Soros might have money invested in Brazil; but, my family, and I, have money invested in N. Mississippi, and we’re pulling for the new Enerkem Cellulosic (Municipal waste, and forestry waste to Ethanol) in Pontotoc, Ms. My kids might get some jobs out of it, and they may pay some taxes to improve our roads, drinking water, and social services.

9. BTW, Robert, if I sound familiar, it is, I, the irrepressible, Kdolliso. I explained the “Rufus” moniker in a new comment on the Valero, thread.

10. The corn starch IS a waste product that just ends up in animal manure. Better to capture it before you waste it.

    While that would be a good argument – use the starch or it would just be wasted – I don’t believe it is accurate. In fact, I have never heard anyone make that claim before. A quick search and I came across a study of starch digestion in cattle:

    Performance, Ruminal Fermentation, and Site of Starch Digestion in Early Lactation Cows Fed Corn Grain Harvested and Processed Differently

    The report certainly indicates that starch is digestible, but it depends on processing just how accessible it is to the microbes. Also, given that starch and cellulose are both sugar polymers – and cows can certainly digest cellulose – it shouldn’t be surprising that they host the proper microbes to be able to digest it.

    However, if your thesis were correct, why wouldn’t you harvest the starch from the manure after the cattle had gotten all of the benefit they could?

    RR

11. I, also, believe starch is digestible to cattle. The argument I have seen is that they get all the starch they need from grass before going to the feedlot.

    The DDGS that remain after the distillation process are very high in protein, hence, a ten percent, lb for lb, energy gain (more muscle) over animals fed straight corn; but there is less body fat, I think.

    Having said that, however, it does seem that the future of corn ethanol production might be the Poet/Project Liberty model. Remove the Oil through fractionation, use the cobs for cellulosic ethanol, and the remaining lignin for plant energy.

    Considering the DDGS, Ash, and CO2 produced as coproducts, and the cellulosic ethanol, and corn oil produced, and the lack of need for a fossil fuel energy source for this process I think it would be hard to make a case for Brazilian ethanol being all that more “efficient.” Especially, considering that cane needs much more water than corn.

    Senator Feinstein is “Big Energy,” all the way. She’s, also, at present trying to drum up support for killing the proposed Solar Project in the Cal Desert. Turtles, I think it is.

12. “If you say only the small farmer co-ops, then get ready for a huge reduction in the available amount of fuel.”

    I am ready! I am more than ready to stop funding terrorists.

    Demonstrating to our enemies that we do not depend on their energy. We could send a message to the world, this year we are going to use a lot less energy and stop importing oil. By the way, we will be sending a lot less grain and the US navy will not be keeping the see lanes open. Good luck with pirates.

    So here is the fallacy of RR argument. Nobody in California is being forced to buy energy.

    Second, if the worse thing that happens in your life is that your gasoline has 5% ethanol produced by corn, get over it. If you want your ethanol produced in Brazil, move to Brazil.

    I like living in the US. Furthermore, I like 5% ethanol in my gasoline produced in the US because it is a better environmental choice. I like my electricity made with coal and nukes because it cheap and causes insignificant environmental impact.

    If anything surprises me about the way ethanol has turned out, it is California has not taken the lead.

13. The main reasons stover is not used for cellulosic or for burning like bagasse is because it is not ‘waste’ material, but a valuable source of nutrients (maybe $40-50 / ton of NPK). It also returns carbon to the soil, and nothing is better for ‘healthy’ soil than compost / carbon. Soil erosion prevention is also a significant benefit, but nutrients are the main economic driver. Carbon benefits are hard to monetize (as are erosion benefits), but are very, very real. It also is harder to collect stover efficiently and transport to biorefinery than bagasse. Oh, and or course, cellulosic ethanol production is still way too expensive, no matter what BS you hear from DoE. To get a dose of reality about how far away it is, look at the presentations from the DoE ‘peer review’ last week of their commercial scale and 10% scale biorefinery research http://www.obpreview2009.govtools.us/IBR/

    If cellulosic were so close and profitable, someone would have paid a lot more than 25 cents on the dollar like Valero did for the VeraSun assests, because those plants would be very cheap capital for future stover cellulosic a la POET. But clearly no one valued them as such.

14. Second, if the worse thing that happens in your life is that your gasoline has 5% ethanol produced by corn, get over it.

    You have completely missed the point. If you want to depend on the farmers co-ops for your fuel, you won’t have any gasoline. Well, some, but probably 1/3rd of what you have now. Price would probably be $10/gal or more.

    If you want your ethanol produced in Brazil, move to Brazil.

    Again, you miss the point. I am talking about putting Brazilian ethanol at a disadvantage to Venezuelan crude. I have explained in this essay why the tariff – in the context of not having U.S. taxpayer dollars supporting Brazilian ethanol – makes sense.

    RR

15. I am not missing the point at all. I just have a different viewpoint that I am sharing with your readers.

    I am not saying that giving up cheap foreign energy would not cause hardship. Between domestic production, ethanol, and natural gas; the US can be self sufficient. When Iowa farmers ramp up production so quickly, every US embassy should fly the ‘Don’t tread on me’ flag next to old glory.

    Getting ethanol from another country just defeats the purpose. Even if wind and ethanol are a small fraction of production, the experience of doing it in the US is worthwhile. We even learn from our failures.

    The other important point is US production is taxed if it is only indirectly. Jobs are created, we pay taxes. When my tax dollars buy a school lunch, I am happy that a child has a lunch but it irks me to subsidize smokers. It does not help the tax base. On the other hand, when farmers produce more corn and the rural area has 25 jobs making ethanol, the tax base increases.

    I will go back to the 104 operating nukes. All are paying taxes making cheap electricity. For a while, it looked like most would be bad investments.

    Will the 100+ ethanol facilities turnout so well? Before we build a 1000+, maybe we should be able to answer that question. I am just tired of those who do not produce anything being against everything.

16. Brazil has a bright future?
    I am not sure I share RR’s worries about Peak Oil. Here we are in 2009, deep into the era of Peak Oil as predicted by some doomsters, and the problem for the oil industry is the same as ever–keeping on lid on production to avoid an all-out glut. Texas Railroad Commission deja vu.
    That being said, I do agree with RR that Brazil could have a bright future. They have ever-increasing finds of oil, ethanol, and could grow palm oil. Energy they will have, and huge surpluses of it.
    Still, Latin American nations have a way of destroying everything through corruption, elitism and opacity.
    It seems we are about to experience prolonged soft natural gas markets–again, hard to square with the doomster outlook, or with Brazil having an especially bright future due to energy resources.
    Another view: Most European nations now have per capita incomes exceeding that of the US. They have even less natural resources.
    It ain’t natural resources that determine a country’s outlook: It is the behavior of people and governments.
    Japan has very high living standards, and safe streets, and no oil.
    I would rather be a street sweeper in Japan than King of Saudi Arabia,

17. If US could be like Brazil, I’d agree with Kit, but as RR knows, we will never come close. Brazil sugar cane EROEI crushes corn, and even US cellulosic, and same with GHG reductions. Plus Brazil has the land to expand, while we’ve already put all of our good land into production. Anything we divert to biofuels means land that probably has to get developed somewhere else in the world. If corn ethanol was as energy ‘efficient’ as cane, and as cheap, we’d be crazy not to go the biofuels route. But corn is a far inferior feedstock, and also has huge environmental problems.

    Brazil can be energy independent because they have almost as much land as US, and 2/3’s the population, but only use as much transportation fuel as California. If we used that little fuel, we could be independent too. That being said, biofuels still need too much land to even supply 20% of world’s fuels anytime soon (w/in 15-20 yrs?), so they can never make much of a dent displacing petroleum.

    I’d like to think we’ll have far better alternatives by 2030 (conservation, better batteries, nuke plants, etc), and think that by 2020 we’ll know what is going to work and what won’t. Right now we need to make sure we don’t go ‘all in’ on the wrong alternatives.

18. “Most European nations now have per capita incomes exceeding that of the US.”

    Got a cite for that, Benny?

    On other matters, the whole argument about how to correct one stupid mistake by the Political Class by making an additional stupid mistake is, well – stupid.

    The economic problem with the foolish idea of well-intended mandates, taxes, subsidies is that they lead to growing inefficiencies. Like trying to run a marathon, but first strapping on a heavy backpack. In the end, the economy can’t run the marathon — and everybody is worse off. (Except for the Poltical Class, of course).

    You might argue that part of the economic weakness we see in the US today is the consequence of almost 40 years of such subsidies, mandates, and differential taxes.

    Which leads to the obvious question: why are people worrying about US self-sufficiency in unnecessary ethanol, and not worrying about the economically much more significant fact that the US is no longer self-sufficient in the supply of automobiles?

19. RE: stover and erosion/npk aka Soil vs Fuel Argument.

    1) Cover crops (end of debate)
    2) Recycled nutrients (“there is no away”)
    3) Alternate methods of processing. No need to burn (“tar”). Agri-char fractionation method seems to be the current idea. Stover-for-fiber, a historical industry, could displace more fuel by local production of toilet paper than by making ethanol. Byproducts could be used for biofuels process (solubles and amorphous cellulose from acid process). Feed stover to ruminants (duh) and then use the manure for energy.

    There’s no problem here.

20. Kit P writes here
    “I live in the US. I work in the US in the energy production business. I pay lots taxes. My company pays lots of taxes. When the government takes money and gives a little make to those who work for a living, it is not a subsidy. That is about as nice as I can say it..“

    Kit P writes in
    http://i-r-squared.blogspot.com/2009/03/coskata-on-life-support.html
    “That is $75k per truck. Can we say Pickens scam. It just amazes me that RR is okay with huge subsidies for Texas and Oklahoma“

    I’m not really sure what “gives a little make” in the first paragraph means, so maybe I’m misunderstanding, but I think Kit is saying that since the corn farmers and/or ethanol producers and/or ethanol blenders pay lots of taxes, that the ethanol tax credit is not a subsidy. And yet, it is a subsidy if a working, tax-paying citizen or trucking company gets a tax credit to buy a natural gas-fueled truck that was built by tax-paying truck manufacturers. (Putting aside whether a subsidy is good or not,) why is one a subsidy and the other not?

21. Clee punked Kit.

22. ~ One person’s subsidy is another person’s tax.

    ~ The same goes for a tariff.

    ~ Governments can not give something to someone they have not taken from someone else.

23. There’s no problem here.

    If you believe that, you have to ask yourself why ethanol producers haven’t made a massive move to stover-fired boilers. It is apples and oranges to compare to bagasse, which is something that ends up at the sugar factory that they have to dispose of somehow. It is free energy (except of course the capital cost of the boilers).

    I agree with your point in theory. But the fact that it isn’t happening in a big way in reality suggests that it would be more expensive to use stover than to use natural gas. The same can’t be said of bagasse.

    RR

24. “why is one a subsidy and the other not?”

    Both are subsidies. I am against those who make up false argument for and against something. For example,

    “You might argue that part of the economic weakness we see in the US today is the consequence of almost 40 years of such subsidies, mandates, and differential taxes.”

    Each incentive should be evaluated based on effectiveness. We just finished our federal taxes. We received an incentive for home ownership and chartable giving. Our present lifestyle is not based on the tax code. My wife does not rescue reusable items from the compactor at the transfer station and take them to Goodwill for a tax deduction. However there was a time when a tax deduction enabled us to own a house where we could control the energy use instead of a very inefficient apartment.

    I think that incentives for wind and ethanol have been effective at increasing production of domestic energy. I think it is good policy that benefits all tax payers. If the wind turbines and ethanol plants are producing cheap energy 30 years from now with out subsidies, then they will be a good investment.

    I enjoy a serving of ethanol with dinner. Some people abuse ethanol, get mean drunk, and beat the wife and kids while costing society lots of money.

    I think that 5-10% ethanol is a good thing for US society. For those who do not like it because of how they do thing in Brazil or because ethanol can not supply 100%, I have noted your concerns.

    For those who think that the current US congress is acting like drunken sailors and have increased ethanol too fast, I would tend to agree.

    What historically happens with building booms is too much gets built causing some to fail because over production.

25. “If the wind turbines and ethanol plants are producing cheap energy 30 years from now with out subsidies, then they will be a good investment.”

    If … If only …

    And if wind turbines 30 years from now are dangerous worn-out corroded structures which cost huge sums to dismantle safely and which cannot be replaced without subsidy, then it will turn out that they were a very bad investment.

    Hey, we agree!

26. The US is the Brazil of biodiesel:

    European tariffs stun U.S. biodiesel industry

    I guess the EU didn’t care for the US dumping its cheap biodiesel in their markets any more than US ethanol producers like Brazilian ethanol.

    The law of unintended consequences is alive and well! US taxpayers subsidize European diesel.

    If you like the ethanol and biodiesel nonsense, just wait until Congress gets into CO2 cap and trade!

27. Kinu:
    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita

    However, I will concur with any sentiments that measuring income/wealth across nations is freighted with methodological difficulties. How to measure health care? In most advanced nations it consumes about 6-8 percent of GDP, not 13 percent as in USA.
    I believe that life is actually even better in Europe and Japan than in USA due to “wealth” that cannot be measured, such as safe streets, health care, education, etc.
    In my last quizzing of a taxi driver in Bangkok, I concluded that the Bangkok taxi-man has a better life than a Los Angeles taxi-man. In Bangkok, his kids are in good, safe schools, he has a government card for health care (Thaksin did that), but he does live in a cold-water flat. He owns a scooter.
    In Los Angeles, a taxi-man could not afford good and safe schools, would live in a possibly dangerous neighborhood, and but could afford a flat with running hot and cold water, heat etc. The L.A. taxi-man could buy consumer goods through Craigslist, and have a pleasant apartment on the inside, with some elbow grease. He probably could buy a used car, although insuring it might be prohibitive.
    I conclude it is the behavior of populations and government that determine living standards. Nations with work ethics, and basically honest governments will fair well.
    I agree with you that subsidies, in the American context, are not the way to go. We have tried farm subsidies for decades, and the farm lobby only wants more and more. They never get off the government teat.

28. Kinu,

    Historically wind and solar have been poor investments for generating electricity because it does not produce enough value to maintain the systems which were installed to be politically correct. With a PTC for wind, there is an incentive for production.

    Kinu is most likely right that 30 years from now, wind turbines will only be mechanical failure test platforms.

29. It’s ludicrous to subsidize ethanol because ethanol uses 1. fossil fuels to grow it and 2. valuable land and resources that could be used to feed people.

    We need local food more than we need ethanol.

30. “If you believe that, you have to ask yourself why ethanol producers haven’t made a massive move to stover-fired boilers. It is apples and oranges to compare to bagasse, which is something that ends up at the sugar factory that they have to dispose of somehow. It is free energy (except of course the capital cost of the boilers).”

    Robert, did you notice my use of the word “elective” when discussing stover? Collecting stover, or the low-hanging fruit part of it already in the combine, the cob, is something that one elcts to do, like a Hollywood boob-job. Yes, the bagasse is an integral part of the sugarcane process: you collect the juice only by collecting the whole cane. It’s a package deal. But to say something isn’t useful otherwise it would have already been done is rather vulgar. You and I could probably explain current choices with those subsidies that reward/favor uneconomical choices. Collecting stover is no more expensive than collecting any other fodder or cellulosic feedstocks. You also don’t need to harvest all at once and store the stover in those huge biomass lots: simply collect as needed, maximizing time values for off-season use of machinery and even improving stover quality as ash leaches out during the winter and hemicellulose breaks down earlier leaving the crytalline lignocellulose. The final harvest collection pass would be integrated with the springs first seed bed prep pass or the first cultivation pass.

    There is no problem with erosion, nutrient or even cost/benefits.

    Also realize I’m not touting huge centralized biorefineries. This is small scale for all the 1,000,000 farms and farm associated businesses.

31. Robert,

    You know I’m a fan of your posts, and you are providing a great public service. But you need to read up a bit on trade law and principles before pontificating in this area.

    First, while I don’t disagree with your first recommendation (“eliminate both the blender’s credit and the tariffs”), you should know that your second recommendation (“require that some percentage or some volume of ethanol blended into the fuel system must come from [domestic producers]”) would be a violation of WTO rules (Article 3 of the Agreement on Subsidies and Countervailing Measures), which prohibit measures “contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods.”

    I think it is also debatable whether the first-best policy is to keep the mandated volumes in place. The mandates still create a priority for fuel over feed and food (up to the point at which the mandate is fulfilled), and cause all manner of price and market distortions. It might be cheaper in many instances to allow certain producers to go bankrupt and to pay for unemployment benefits and retraining. I don’t know, I’m just suggesting that it might be.

    But my main concern with any defense of the ethanol tariff because it is designed “to prevent them [foreign producers] from taking advantage of a provision designed to spur U.S. ethanol production with taxpayer money” is that it sets a bad precedent. Whether it violates the “national treatment principle” is not for me to say. (I am not a trade lawyer.) But it certainly runs counter to its spirit.

    Imagine what the world would look like if countries took that approach to other products: telephones, cars, olive oil, petroleum. “This tax credit isn’t protectionist because it is available to foreign-produced goods. And this tariff isn’t protectionist because it is simply there to prevent our taxpayers from subsidizing foreign producers!”

    Sound reasonable, doesn’t it?

    And if more countries did that for more products, international trade would come to a screeching halt.

    We would be back to the world of the 1930s. And we all know what that led to.

32. you should know that your second recommendation (“require that some percentage or some volume of ethanol blended into the fuel system must come from [domestic producers]”) would be a violation of WTO rules

    Ron, this is the same think Geoff Styles told me. You are right, I am not well-read on trade law. The good thing is that my readers come from a broad enough cross-section that when I post something wrong, they flag it. I appreciate that I still have plenty to learn. It is surprising to me to learn that requiring a certain amount of the ethanol be American-made is a violation, but slapping tariffs on to achieve the same ends is not.

    As you can see in my latest post, turnabout is fair play. European taxpayers can make exactly the same arguments on not subsidizing American bio-diesel producers.

    RR (sitting in the airport in Houston, awaiting my flight to Amsterdam)

33. I am getting so tired of the myth perpetuated by defenders of ethanol subsidies and mandates that pretend that the starch in corn has no value.

    Starch is less important for ruminents, true, in part because they can digest some of the cellulose residues that end up in distillers grains. But non-ruminent livestock still depend on the carbohydrates in grains for energy. Distillers grains are tolerated well by ruminents, but not by hogs or poultry.

    Part of the ethanol-industry myth making involves pretending that corn is fed only to cattle. That is far from the truth.

    I can’t put my finger quickly on consumption figures for the country as a whole, but here is the disposition of the 607 million bushels of corn consumption for livestock in Iowa in 2006 (the latest year for which data are available):

    Ruminents ……… 22%
    Hogs ………….. 63%
    Poultry ……….. 10%
    Other livestock … 5%

    Note: Distiller’s grains and corn silage fed to cattle were converted to corn equivalencies.
    Source: Peter. J. Lammers and
    Mark S. Honeyman, Corn Use as Livestock Feed in Iowa, Iowa State University Animal Industry Report 2009.

    Note that ruminents accounted for less than 25% of the corn consumed by livestock in the Hawkeye State, one of the main livestock-feeding states in the nation.

34. It is surprising to me to learn that requiring a certain amount of the ethanol be American-made is a violation, but slapping tariffs on to achieve the same ends is not.

    The multilateral trading system likes to convert trade barriers to tariffs as much as it can: tariffs are transparent and are ameanable to formulas for their reduction. Over the years, with each successive trade round, tariffs have been ratcheted down. It would be very hard to do that for “local content” measures, which are among the most trade-distorting kinds of policies one can dream up.

    But the U.S. tariff on fuel ethanol of 2.5% plus $0.54 per gallon is a special case. For one, it was imposed in 1980, long before the GATT became the WTO. Moreover, it is only levied on fuel ethanol (all other ethyl alcohol carries the 2.5% ad valorem tariff only). And the U.S. government stuck it in Chapter 99 of its tariff schedule. That is a special chapter, traditionally reserved for imported products that are in high demand as inputs for the production of U.S. goods, for which there are few supplies of such goods available domestically, and to which lower duties are temporarily applied. Many of the products so designated are industrial chemicals.

    Ironically, of course, the creation of a special “secondary” tariff line for fuel ethanol was neither temporary nor for the purpose of lowering duties.

    The U.S. Government maintains that Chapter 99 provides a “safe haven” for the ethanol tariff, protecting it from across-the-board tariff reductions that are applied to normal goods (as in the Uruguay Round). Brazil, naturally, disagrees.

35. “I believe that life is actually even better in Europe and Japan than in USA due to “wealth” that cannot be measured, such as safe streets, health care, education, etc.”

    Benny — Get a grip! There are a lot of ordinary Europeans living in places like, say, London who dearly wish that they had access to safe streets, government health care that wasn’t a travesty, an educational system that was not thoroughly debased.

    Check out some of the English newspapers available on line. Or the English-language versions of Scandinavian or German papers. Some of these places are as bad as California — for many of the same reasons.

    The reality is that all of us in the West are circling around the same toilet bowl. It is quite unnecessary, but that is what we all have let the smart guys in our respective governments do to us.

36. Brazil should first abolish their import tariffs on all kinds of stuff. It’s a matter of principle.

    When that happens, we can talk about dismantling the US import tariff on ethanol.

    And by the way, cane crops do not drive cattle grazers to the Amazon. That’s just a myth. That is not to say that cattle grazing hasn’t been expanding in the Amazon, but the comparatively modest cane crop expansion is not the reason at all.

37. Ron Steenblik beating up on strawmen with a i-know-you-are-but-what-am-i falacy to spice it up.

    DDGS net reduces crop acerage used to produce all livestock feeds thanks to replacement of not only corn but the much less efficient “50 bu is a good year” grain soybean.

    MPB (meat per bu) improves with ethanol in the economic mix.

38. Ron Steenblik beating up on strawmen with a i-know-you-are-but-what-am-i falacy to spice it up.

    Um, translation please?

39. Not sure what you are trying to say there corn porn. Roughly 70% of a kernel of corn is lost to the human food chain when used to make alcohol.

    It takes 56 pounds of corn kernels to produce 2.8 gallons of ethanol, 11.4 pounds of distiller’s grain, 3 pounds of Glutan meal, and 1.6 pounds of corn oil. So, 56 – 11.4 -3 -1.6 = 40 pounds of corn lost that cannot feed people (or the cows that people eat). In other words, about 70 percent of a bushel of corn is lost to the food chain when you use it to make ethanol.

    http://www.ethanol.org/distillersgrain.html

    http://www.iowacorn.org/ethanol/ethanol_3b.html

40. How mang gallons of oil were used in growing that corn? It takes more than a gallon of oil to grow a gallon of ethanol..

41. How mang gallons of oil were used in growing that corn? It takes more than a gallon of oil to grow a gallon of ethanol.

    Actually, no, Be Cool Carpool. This is a common misconception. It takes a lot of energy (which, can of course be expressed in barrels of oil equivalent — hence the easy confusion) to produce ethanol, but of the fossil fuel energy used, most is natural gas (or coal, in some plants) and electricity (mainly generated by coal in the Midwest). Some oil is used on the farm, and to transport the corn kernels to the ethanol plant, and to transport the ethanol to filling stations, but it is nowhere near equal to the energy value of the ethanol.

42. What about the nitrogen-based fertilizers?

43. What about the nitrogen-based fertilizers?

    Most N fertilizers are based on ammonia, made with a process that uses natural gas.

    According to a 2007 USDA report, “Impact of Rising Natural Gas Prices on U.S. Ammonia Supply“, in 2006 the share of U.S.-produced ammonia in the U.S. aggregate supply of ammonia dropped from to 55 percent.

    To quote:

    “U.S. net imports of ammonia maintained a relatively constant level from 1991 to 2000. Since 2001, however, with the decline of domestic ammonia production, imported ammonia has become increasingly important to the U.S. ammonia supply. From 2000 to 2006, annual U.S. imports of ammonia increased from 3.9 to 8.4 million tons, an increase of 115 percent, while ammonia exports remained constant (ERS (d)) (fig. 7). During that period, most U.S. ammonia imports came from Trinidad and Tobago, Canada, Russia, and Ukraine … . In 2006, Trinidad and Tobago accounted for 57 percent of U.S. ammonia imports.”

    Of course, the more domestic U.S. natural gas is used to produce corn ethanol, the more it gets used up faster; prices rise, and so do imports of ammonia.

44. Ron Steenblik said…
    “Um, translation please?”

    BWAHAHA! Do I love to toy with your breed.

    Ron Steenblik said…
    “I am getting so tired of the myth perpetuated by defenders of ethanol subsidies and mandates that pretend that the starch in corn has no value.”

    Myth? Oh, you mean the “myths” you internet dogs reference to sound smart. Well, in the feed formulation industry this “myth” is called a “Known Art.” Feed more DDGS to all feedstock and you need to use less of other classes of feeds including both corn and soybean.

    Ron Steenblik said…
    “Starch is less important for ruminents, true,..”

    This is a “I should prolly shut up right about now moment.” But no.

    Ron Steenblik said…
    “…in part because they can digest some of the cellulose residues that end up in distillers grains. But non-ruminent livestock still depend on the carbohydrates in grains for energy. Distillers grains are tolerated well by ruminents, but not by hogs or poultry.”

    SOME residues? Have you ever measured the energy balance of a 1,000 pound animal? Ever collect it’s manure because you thought that was a good idea? Ever measured the qualities of the feed before it went in the animals front end?

    You’re some guy on the internet that thinks he knows what he’s talking about.

    Just because you can feed an animal 100% corn doesn’t mean you should. All economic activity is a bundle of values, like a stereo equalizer with multiple bars jumping up and down at any one moment. Agronomists find patterns in this jumble and make standardized recommendations. Believe it or not, feeding more corn protein rather than corn i.e. non-processed corn starch and oil generates a better return on investment, even when you factor in the whole feed processing “fiasco” – we call it a process – that Pimentel, like the old dog fool he is, suggested no feed processor would ever do on purpose.

    I don’t go to work if I don’t have to, but I seem to have to in order to actually make a living among the atoms. I wish I could make a living among the electrons like Bernard Madoff and every Blogger Everywhere. People working in the real world do things, like continue the value-added processing of soybeans – toxic without processing, and certainly of less value without it based on the many measures of biomass values known to those who work in the business.

    BTW, I am 100% free of this argument coming back to bite me because I don’t give a flying Frak what you fake internet consultant-wannabees think. I make no claims, I just shoot them down. I don’t make up statistics, I just point them out. Get an agronomics degree or two or otherwise shove it.

    Ron Steenblik said…
    “Part of the ethanol-industry myth making involves pretending that corn is fed only to cattle. That is far from the truth.”

    DING DING BULLSHIT BULLSHIT
    Strawman Alert.

    If 100% of feed corn was converted to ethanol we would have a problem. The concept of “flattening the curve” is used in information science. It’s about perfectly matching transfer with bandwidth. There are other terms uses throughout the various independent disciplines, so I assume you can google if you have an issue with my choice of wordsmithy.

    Once a critical demand is met for a specific commodity, THEN you will see problems. The answer to the POTENTIAL problem isn’t to pretend non-problem examples (making corn into ethanol) can be targeted to prevent problem examples (too much corn going to ethanol even though happiness would serve a bit more going to taco shells). That’s bigotry.

    Corn causes ecological distater. Hick farmers are stupid hicks looting the American Taxpayer. Black males commit crime.

    The market can adapt to even the most moronic fascist insults. If pig farmers can’t get the grade of corn they want then they will make new arrangements.

    But we are not at that point yet. Does anybody expect “oil” to crash anytime soon? Then why expect the “oil” companies to stop producing gasoline? Think about that for a moment. The STRAWMAN of 100% replacement of gasoline has made the argument for ethanol seem stupid.

    But who really argues for 100% replacement? Brazil replaced a large % of it’s motor fuel. But Brazil is a tiny Nation-State living in a Giant Bioregion. Ohhhhh. Yeah. Obviously Big Old America can’t use the lessons learned in Brazil, like how to deploy MILLIONS of 100% 5% water ethanol vehicles in a few years.

    Oh, wait. Brazil kinda looks like the midwest. They don’t have many oil wells out there. They do, but most people prefer having a biomass farm in their backyard. And the biomass can be processed locally along with the food values. Hmmm, why id the Brazil example not applicable to the equal human-use acreage of say Iowa? Do “we” need subsidy? How about telling the Iowa governemt to invest (“save”) in technology that can save taxpayer money while providing a “subsidy” (market preference) to those that can provide the solution of a CHEAPER fuel, along, perhaps with eco-nutter benefits.

    Ron Steenblik said…
    I can’t put my finger quickly on consumption figures for the country as a whole,..

    Because you CAN’T and because you SHOULD check the feed disposition stats.

    Note: Distiller’s grains and corn silage fed to cattle were converted to corn equivalencies.

    Armchair livestock feed formulators probably don’t understand how this simple statement is misleading. I’ll let you all guess. You obviously have the free time.

45. Corn porn, you say, “I make no claims, I just shoot them down. I don’t make up statistics, I just point them out.” Um, I think if you inverted that sentence it would be closer to the truth.

    Just because you can feed an animal 100% corn doesn’t mean you should.

    I agree. And few livestock farmers feed their animals 100% corn. Cattle were meant to eat grasses. But we are talking here about actual use. And, as the Economic Research Service of the USDA puts it, “Most of the [corn] crop is used as the main energy ingredient in livestock feed.”

    What’s your problem? Do you dispute that cattle are better able to digest the fiber in DDGS than do hogs and poultry?

    I admit that I have not found national figures on consumption of corn by different livestock. Have you? If so, please provide. The ERS’s table only provides statistics on total use for livestock feed. By the way, the footnote: “Note: Distiller’s grains and corn silage fed to cattle were converted to corn equivalencies” comes from the original table. But for some bizzare reason you don’t think it should accompany the data.

    I repeat again: part of the ethanol-industry myth making involves pretending that corn is fed only to cattle. I don’t see much mention of hogs and poultry when ethanol enthusiasts are extolling the wonders of DDGS.

    One has to ask, also, if the diversion of corn into ethanol is so great, why are the livestock producers (especially hog and poultry producers) so against increasing subsidies and mandates for ethanol?

    ********

    Cornporn: The answer to the POTENTIAL problem isn’t to pretend non-problem examples (making corn into ethanol) can be targeted to prevent problem examples (too much corn going to ethanol even though happiness would serve a bit more going to taco shells). That’s bigotry. Corn causes ecological distater. Hick farmers are stupid hicks looting the American Taxpayer. Black males commit crime.

    You’re one sick puppy. Go see a doctor, man! Or take two asprins and write back in the morning.

46. From the American Meat Institute

    “The very high fiber content, nutrient variability, limited digestibility, and different mineral profile of distiller grains are the key limiting factors of its ability to be used as a substitute for corn. Swine and poultry in particular have difficulty digesting high fiber feed.”

    From “MinnesotaPublic Radio, March 24, 2009:

    “The U.S. Food and Drug Administration has taken a mostly hands-off approach to the use of antibiotics in the ethanol industry. But amid increasing concerns over food safety in recent years the agency is taking a closer look. “A year ago we put a survey out to the FDA field people to collect samples of those distillers grains and start analyzing for antibiotic residues,” said Linda Benjamin, a chemist with the FDA’s Center of Veterinary Medicine. Samples were requested from sixty ethanol plants, including some in Minnesota. She said testing showed that many contained antibiotics, mainly four types: “Penicillin, virginiamycin, erythromycin and tylosin,” said Benjamin.

    “[T]hat raises two potential concerns. One is that these treatments might promote the growth of bacteria that are resistant to antibiotics. The development of these ‘super-bugs’ is a major concern in health care because they reduce the effectiveness of medicines.”

47. I am going to have to go back through this thread and clean out a bunch of profanity and personal attacks – and even racist language.

    To Cornporn and all his aliases: I do not tolerate excessive profanity nor do I tolerate personal attacks. If you wish to rebut arguments, do so. If all you can do is hurl insults and curse, there is no place here for you. Stick to your arguments. If they are solid, you have no reason to get in the gutter.

    RR

48. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

    Kaylee

    http://grillsblog.com

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