Setting the Ethanol Record Straight

Based on my Site Meter, it appears that a lot of new readers are stopping by because of my recent inclusion in the Top 10 list of ethanol enemies. Because the article presents a highly inaccurate view of my position, I issued a quick and concise rebuttal to the baseless claims. But perhaps this is a good time to review my paradigm, as that defines why I write the things I do. We all view the world through a set of lenses, and there are three basic tenets that largely define my positions.

Tenet One: We must transition from fossil fuels with a sense of urgency.

I believe we have built structural dependency on a depleting and unsustainable resource. That resource is crude oil, and it has enabled the world an unprecedented level of comfort and freedom over the past 100 years. But as we have become more dependent upon oil, we are forgetting how to live without it.

Fossil fuels have been consumed at an unsustainable rate over the past century. We won’t get away with it for another century. Nature is going to inevitably force the world to a more sustainable way of life, which I think has the potential to hit the U.S. quite hard as supplies deplete and fossil fuel prices climb.

My friend Hannes Kunz told me a story last week that I thought was analogous to our increasing dependence on oil over the past century. Once a truck carrying a load of nuts crashed into a tree. A family of squirrels living in the tree discovered this new resource and began to live the high life on the nuts they had just found. But as their population grew, so did their demand for nuts. But that truck crash was a one-time event, and the squirrels were rapidly depleting their nut windfall. How do the squirrels cope when they have eaten all the nuts? Some would suggest a nut-based biofuel refinery as a solution to their problems, but I am getting ahead of myself.

Besides the fact that we are stretching resource limits, our dependency on oil has some very negative aspects. We need look no further than the Gulf of Mexico to see an obvious example, but that just scratches the surface. So for the sake of the negative externalities, we need to wean ourselves off away from oil.

Tenet Two: We need to develop systems and services with a much lower fossil fuel dependency.

My second tenet is that as oil supplies decline, any source of energy that is fungible with oil will ultimately come under intense price pressure. This includes natural gas, which will come under increasing pressure to fill some of the supply shortfall of declining oil supplies. This will also drive up prices across the economy for products and services that are dependent upon oil and natural gas; the higher the dependency the more extreme the price moves will be. Thus, as we move away from oil, it will be important to develop sources with low fossil fuel dependencies.

Tenet Three: We must take care of our topsoil.

My third tenet would be that we must have sustainable agricultural practices. We are going to have a lot of people to feed in the future, and we can’t afford to strip mine the soil and deplete fossil aquifers. We have to farm in a way that encourages good stewardship of the land, and not encourage unsustainable farming practices. I say that as someone who grew up on a farm and who has been around agriculture all my life.

IF YOU UNDERSTAND those three key tenets, then you should start to see the basis of my opinions around this great big ethanol experiment currently underway in the U.S.

Corn ethanol is heavily dependent on fossil fuels. Corn farming requires petroleum for herbicides, pesticides, diesel and gasoline. It requires natural gas for fertilizer. Ethanol refineries rely almost exclusively on natural gas to produce steam for cooking mash and distilling ethanol, and their electricity supplies are often coal-based.

In essence, we have a fuel that we call renewable, and that we subsidize as renewable, but a gallon of ethanol contains a significant fraction of a gallon of fossil fuels. It is enabled by fossil fuels, and hence when we subsidize ethanol we also subsidize fossil fuels. I believe the high dependency on fossil fuels – more than any other factor – explains why corn ethanol boosters continue to insist they require subsidies and mandates after 30 years of subsidies and mandates. If you are heavily reliant on fossil fuels, you can’t effectively compete with fossil fuels. The only way to win that race is to break the dependency.

Further, corn farming has one of the higher environmental impacts among the crops we grow. It is a high fertilizer consumer, and we apply lots of fertilizer, pesticides, and herbicides that end up running off into our waterways. That is indisputable. And whereas I can talk about the negative externalities of oil, the corn ethanol apologists make excuses for dead zones and depleting topsoil. I am unaware of anyone in the corn ethanol camp who speaks frankly about the downsides of corn ethanol; they all seem to play the defense attorney at all times as if they can see no downside. To the contrary, with three major lobbies – The Renewable Fuels Association, the American Coalition for Ethanol, and Growth Energy – the amount of propaganda surrounding the industry is mind-boggling. And because I fight misinformation that sometimes arises from the various lobbies, people who can’t distinguish between information and misinformation simply see me fighting against ethanol.

I also have a long-term view of the energy industry. It is a risky, cyclical business and energy producers go through some very rough times. What happens with the ethanol industry when a terrible drought hits the Midwest at the same time that natural gas prices spike? (The natural gas price spike of a couple of years ago was cited as a factor in pushing some ethanol companies to bankruptcy). One has to consider the risks of the systems we put in place. Even though nothing like that has happened yet, the risk is still there, just as we live with the risk of having our oil imports curtailed.

So to tie these ideas together, what I see the U.S. doing is building another fossil fuel system in place of the one we have, squandering precious time in the process, and incentivizing vast monocultures of corn that will deplete topsoil for very little benefit. I view this as a harmful illusion that is keeping us from focusing on real solutions that I unfortunately believe are going to require sacrifices either by us now, or more severe sacrifices by our children later. And by creating the system we are creating, I think it further disadvantages future generations by encouraging farming practices that we should try to avoid. As I have said before, I would rather pay a farmer to keep land in the Conservation Reserve Program than incentivize him to plow it up and plant corn on it to produce a marginal biofuel.

These views also explain why I have spoken up favorably about sugarcane ethanol. The best thing about ethanol from sugarcane is that the process has a much lower dependence on fossil fuels than does ethanol from corn. That is both because sugarcane has a lower fertilizer requirement, but more importantly because sugarcane residue (bagasse) ends up at the facility washed, shredded, and piled up ready for use in the boilers. This is the sort of system that I believe can be sustainable (with caveats) as oil supplies deplete.

While I think the role that corn ethanol can play in lessening our oil dependence has been greatly exaggerated, I do think there can be an important role to play. The only reason we would ever produce ethanol from irrigated fields in Nebraska and ship it to California is if market-distorting mandates and subsidies dictate that we must. But that doesn’t make it sustainable, and eventually the bills will come due.

On the other hand, there are large parts of the Midwest that may be capable of producing a significant amount of their fuel locally. I believe that localized food and energy production will take on much greater importance in the future, and we will recognize how silly it was to try to grow corn and ship ethanol all across the country. Such a system is not designed to lessen our fossil fuel dependence; it is designed to float a false solution that squanders time, money, and resources.

What I would like to see the U.S. ethanol industry do is focus on more penetration of E85 in the Midwest. That would be by far the most efficient usage of ethanol. Since we don’t make enough ethanol to even fully supply the Midwest with E85, I think it is very inefficient that we are actually trying to put ethanol into coastal markets or even export it.

So those are my views on ethanol in a nutshell. My view is not based on politics or financial interests. If you understand my paradigm, you will understand why I write what I do. It has nothing to do with a personal dislike of ethanol. To the contrary, I sincerely wish ethanol were capable of displacing a large fraction of our petroleum usage, and am happy to see when the industry makes improvements. And contrary to the charge that I wish to discredit every positive development in the ethanol industry, I have a history of publicizing positive developments in the industry (See here, here, or here). So if you don’t try to put me in a box I don’t belong in, you won’t be bewildered when I write stories like that.

I am also a developer of energy systems that I think have a true chance of sustainability in the future. These are systems that can efficiently convert biomass into energy with little or no fossil fuel inputs. I have looked at – and continue to look at – lots of ethanol schemes. I don’t discount that some day I will find one that I am happy with (nothing against ethanol; about 99% of what I look at doesn’t pass through my admittedly restrictive filter). In addition, my views are not etched in stone. For me, truth is tentative and subject to change as new data are produced. So something I don’t like today might be something I like tomorrow based on new data.

But to be honest, I think this is why I am viewed as such an enemy of ethanol. Perhaps because I don’t always appear to be an enemy, my views may be seen as based on objectively looking at the problem. Reaching the conclusions I do as an objective observer – when those conclusions are negative – probably makes me far more dangerous to the ethanol boosters than if I was simply an obvious anti-ethanol fanatic. But I think I have far too many essays out there that consistently describe my views as I have laid them out here to be characterized as simply an ethanol hater. The truth is quite a bit more complex, but lazy reporters aren’t always willing to put in the effort to get the truth.