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The Ethanol Backlash
While I'm as susceptible to Malthusian thoughts as the next paranoid guy, I find much of the anti-ethanol case to be unpersuasive. In each instance, the haters would have us look at ethanol, and the ill effects its greater use would assuredly produce, largely in isolation. Might the production of corn ethanol cause pollution? Of course. Is it worse than the sort of pollution created by other types of energy production—i.e., coal and oil? Probably not. Does greater use of corn for ethanol help spur price increases for food? Sure, but so do many other factors, like, say, the transformation of China from a subsistence farming economy into a more modern one. Is ethanol more inefficient, and hence more costly, than gasoline? Yes. But our heavy use of gasoline imposes all sorts of other costs—from pollution to the hundreds of billions of dollars we spend each year in Iraq. Factor those in, and ethanol no longer seems like such an economic loser. Finally, the long-term worries of the ethanol haters are in large measure based on the assumption that ethanol will continue to grow for many years at the same blistering pace it has recently. Such proclamations of boundless growth, which are a recurring feature of bubbles, frequently don't materialize as promised. Remember Dow 36,000?
© 2007
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Member Comments
Posted By: SacramentoE85 @ 07/03/2008 1:23:39 AM
Comment: I certainly would not want to switch dependence on imported oil from OPEC to dependence on imported ethanol from South America. Just as Brazil built their ethanol industry with subsidies and protection, so will the United States continue to do so. Besides, Brazil already had a tariff-free way to export to the U.S. through a Carribean trade agreement, but failed to get close to meeting the amount allowed during 2007. Thus, removing the tariff would have done nothing to increase imports from Brazil in 2007. Big Oil would like to see imports from Brazil bankrupt the U.S. ethanol industry, buy up Brazilian ethanol production, and continue their reign of control over the fuel business. Shell and BP are looking into ways to buy up Brazilian ethanol production right now, while working to remove the tariffs. Brazilian ethanol on the world market will be good to keep the price of ethanol in check; yet the U.S. needs to continue to use primarily domestically produced ethanol. No sense switching one problem for another. --SacramentoE85
Posted By: almir @ 07/01/2008 11:34:09 PM
Comment: (continuing previous post): In comparison to corn-based American ethanol or biodiesel derived from soybean oil, ethanol from sugarcane do not compete with food and is not subjected to cost pressure. Actually Brazilian food production has doubled in the past decade.
Another persuasive fact for incentiving ethanol production in Brazil is the electric energy that is generated as a by-product of ethanol processing: taking into consideration the energetic balance, the electricity generated in sugar cane processing in Brazil is almost as large as its ethanol equivalence. It's like a two large scale hydroelectric plants generating electricity exactly when it's more necessary: in the Brazilian dry season! So the producers of ethanol are also having increasing revenues by selling electricity to the country's national electric system, which has become an strategic and reliable source of electricity. For all these reasons, ethanol in Brazil is a win-win game for the country, the farmers, the consumers and the environment.
Off course Brazilian ethanol does not intend to concur with petroleum, but it could ease up current oil crisis by supplying a small part of the world energy demand. It is only necessary to look at the increasing demand from the non-oil countries like India and China to understand that the very high price of oil is here to stay. With the existing price of oil, the permanent threat of war in the Middle East, the international geopolitics, and the environmental problems, there seems to be no other easy solution for the energy problem away from the liquid ethanol produced out of sugarcane. This is certainly a very important aspect of the Brazilian economy for the next few years and the rest of the world will have to accept the reality of the liquid ethanol from sugarcane as the right and best solution for the oil crisis.
The problem is that much of Brazil???s ethanol exports continues to face prohibitive tariffs and other barriers to developed markets in the US and Europe. The United States currently places a 54-cent-a-gallon tariff on ethanol imported from Brazil. Consumers in the country are being severely affected, particularly in areas such as the Southeast, where corn does not exist and the logistics to bring ethanol from the center of the country is practically impossible. It is difficult to understand the maintenance these tariff levels, except for political reasons. The developed world appears purposely myopic in relation to the opportunities Brazil presents, maybe it's because that would upset wealthy US and European farmers ??? a price apparently not worth paying.
Almir R. Américo ??? Sao Paulo, Brazil (almiramerico@gmail.com)
Posted By: almir @ 07/01/2008 11:27:26 PM
Comment: As rising food prices continue to threaten food security around the world, Brazilian ethanol is one obvious solution being largely ignored. Brazil set up its efficient fuel alternative program in the 70s, when the first oil crisis hit the world. Now Brazilians drive cars moved by ethanol or gasoline mixed in any proportion. And since long ago gasoline in Brazil is not pure, but blended with 25% ethanol, resulting that internal consumption of ethanol in the country is already superior to gasoline's. Ethanol in Brazil is already much cheaper than gasoline at current international oil prices.
Brazilian ethanol is produced from sugarcane without any governmental subsidies and the fuel has a very competitive price. Researchers are increasing the productivity (more fuel extracted per sq.km. of crops) by adapting sugar canes species to each type of land and topography. The productivity now is more than 3 times the records of 30 years ago and it keeps on raising, being expected to soar very soon when the technology to extract ethanol from cellulosic materials (crop waste) will be available for large scale production.
Ethanol production in Brazil uses just one percent of total arable land, and the country can expand its sugarcane fields without disturbing sensitive land areas (like Amazon), just by tapping land such as depleted pastures. Just raising intensity of cattle production from the current 0.8 animals per hectare to 1.2 animals (a target already far exceeded in many parts of the country) would release about 80m hectares of land for crops. There remains plenty of room for expansion: the country has 355 million hectares of farmable land, of which 7 million hectares under sugarcane of which the amount used to make ethanol fills 3.4 million hectares (compared to 200m hectares of pasture). Another 105.8 million hectares remained available, which allows Brazil to increase ethanol production without affecting the environment or food. By comparison, the additional terrain for Brazilian crops could surpass all of the land now under cultivation in the European Union.