High oil prices and America’s growing oil import dependency have sharpened the ethanol motor fuel debate. President Bush’s 2006 State of the Union Address added further fuel with its call for cutting America’s Middle Eastern oil imports by 75 percent over the next 20 years. Ethanol supporters claim using greater amounts of ethanol as a motor fuel can reduce our dependence on foreign oil, create jobs, and reduce greenhouse gas emissions. Opponents decry the large subsidies ethanol producers receive, and also worry that making ethanol is a net energy-losing venture where a $10 investment only returns $9.
Ethanol production in the United States is currently driven largely by politics. Two key swing factors in determining ethanol’s future will be world oil prices and the ability of scientists to commercialize a new, cellulose-based ethanol production process.
 | CARE'S POSITION |  |
America must reduce its dependence on overseas oil in order to free up our foreign policy, short-circuit terrorism, and enhance national security. As part of this quest, CARE supports any ethanol production that is economically competitive. If subsidy-free grain or cellulose–based ethanol becomes competitive with gasoline, this would benefit consumers by reducing our dependence on foreign oil. Importing ethanol from Brazil and other producers if the per gallon cost is lower than that of gasoline would also be a way to diversify our energy supply and reduce oil consumption. Producing ethanol from corn in the USA is currently estimated to cost more than $50/barrel, while producing ethanol from sugarcane in Brazil only costs $25/barrel.
| Ethanol Facts | |
Ethanol is currently produced by fermenting wheat, corn, or sorghum as follows:
1. The grain is ground in a hammer mill to expose the starch.
2. The ground grain is then cooked in water with enzymes that convert the starch to sugar.
3. yeast is added to convert the sugar to ethanol
4. Once fermentation is complete, the ethanol/water mix is distilled to capture the ethanol.
• In 2004/2005, one out of every 8 bushels of corn produced in the U.S. was used for ethanol production
• Moving away from corn-based ethanol production would seriously affect American corn farmers
• A recent study by a team led by UC Berkeley’s Alex Farrell shows that corn-based ethanol has a much higher energy profit than previously thought
• A new process is being developed that can use any cellulose material—wood chips, corn stalks, and rice hulls—as feed for ethanol production. The Department of Energy estimates that this process can now produce ethanol at $2.40/gallon
• In 2005, Congress authorized loan guarantees for cellulosic ethanol plants aimed at covering up to $250 million for the construction of each of the first four plants.
• International oil companies including Shell are major investors in cellulosic ethanol ventures such as Ottawa, Canada based Iogen.
• Cellulosic ethanol production is supported by a broad political coalition including environmentalists, national security hawks, and auto companies.
| Pros | |
• Lower carbon dioxide emissions than gasoline
• Non-toxic and will not pollute groundwater
• Renewable supply
• Domestically produced
• If producing ethanol from cellulose becomes economically viable, America could reduce its oil imports
• With high gasoline and ethanol prices more private companies are working on developing cellulosic ethanol for commercial use
| Cons | |
• Grain based ethanol production requires cultivating huge areas of land
• Ethanol cannot be transported through existing pipelines
• Ethanol-fueled vehicles are more expensive
• Ethanol use is costly to owners of older motor vehicles, particularly boats. Owners of boats more than 20 years old must replace fiberglass gas tanks that are damaged by ethanol’s corrosive nature. Gas blended with ethanol can damage the tanks, causing leaks that could lead to explosions.
• According to the Department of Energy, ethanol has about 30% less energy than gasoline and ethanol powered vehicles get lower gas milage
• Production of corn-based ethanol uses a lot of conventional fuel. While processes are becoming more efficient, some scientists calculate that ethanol production actually uses up more liquid-fuel energy than it produces, thereby making us more dependent on foreign oil.
• Ethanol production is subsidized by a 51-cent per gallon federal tax credit that, when added to state subsidies, costs the country more than $2 billion a year.
• At present, most ethanol production is driven by politics, because ethanol comes from politically-influential corn-belt states
• Ethanol subsidies reduce Highway Trust Fund revenues. Loss estimates range as high as $500 million/year from FY1979 to FY2000
| The Future | |
In the past few years, high oil prices and oil-related security problems have prompted the U.S. government to increase its spending on alternative energy research. Research into new ways to produce ethanol is beginning to bear fruit. Researchers are developing a process that can produce ethanol from wood, corn stover, and other cellulosic biomass. This process would be able to use a much wider range of feedstock than today’s fermentation process, and would also be able to use waste that would otherwise be thrown away.
The cellulose process is one key variable in the ethanol equation. The second variable is the most important of all—world oil prices. If prices fall again, ethanol research funding will dry up and producers will find it almost impossible to compete with petroleum based fuels. If on the other hand, world oil markets have undergone a true structural change that will keep prices high, then ethanol has a very bright future.
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