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Ethanol’s Grocery Bill

Very good article in today’s Wall Street Journal regarding the use of ethanol and how it costs a great deal to add it to our liquid fuel supply.  The article points out that depending on the technique used to create ethanol, it adds 5%-34% more greenhouse gas to the environment than pure petroleum.

There is also a case to be made that there is pressure put on food prices due to ethanol production as well.

I am not totally against using ethanol as an additive. I think there is some advantage to keeping the market alive and viable to spur development of new techniques of creating the liquid and new crop energy sources other than corn.

For instance, the article doesn’t cite any greenhouse gas figures if the source of heat during the distillation process is electricity from nuclear (to the best of my knowledge this technique is not used commercially, presumably due to cost).  There is a great explanation of the dry-milling process here.

While I think the US government should continue to mandate the 10% ethanol blend, I see no economic or scientific reason to increase that blend to 15%.

Below are key excerpts from the article at WSJ.com but you can click here to read the full opinion.

The Obama Administration is pushing a big expansion in ethanol, including a mandate to increase the share of the corn-based fuel required in gasoline to 15% from 10%.


The biofuels industry already receives a 45 cent tax credit for every gallon of ethanol produced, or about $3 billion a year. Meanwhile, import tariffs of 54 cents a gallon and an ad valorem tariff of four to seven cents a gallon keep out sugar-based ethanol from Brazil and the Caribbean. The federal 10% blending requirement insures a market for ethanol whether consumers want it or not — a market Congress has mandated will double to 20.5 billion gallons in 2015.

The Congressional Budget Office reported last month that Americans pay another surcharge for ethanol in higher food prices. CBO estimates that from April 2007 to April 2008 “the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices.” Ethanol raises food prices because millions of acres of farmland and three billion bushels of corn were diverted to ethanol from food production. Americans spend about $1.1 trillion a year on food, so in 2007 the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery bills.

A second study — by the Environmental Protection Agency’s Office of Transportation and Air Quality — explains that the reduction in CO2 emissions from burning ethanol are minimal and maybe negative. Making ethanol requires new land from clearing forest and grasslands that would otherwise sequester carbon emissions. “As with petroleum based fuels,” the report concludes: “GHG [greenhouse gas] emissions are associated with the conversion and combustion of bio-fuels and every year they are produced GHG emissions could be released through time if new acres are needed to produce corn or other crops for biofuels.”


Both CBO and EPA find that in theory cellulosic ethanol — from wood chips, grasses and biowaste — would reduce carbon emissions. However, as CBO emphasizes, “current technologies for producing cellulosic ethanol are not commercially viable.” The ethanol lobby is attempting a giant bait-and-switch: Keep claiming that cellulosic ethanol is just around the corner, even as it knows the only current technology to meet federal mandates is corn ethanol (or sugar, if it didn’t face an import tariff).

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