Ethanol misses mark as silver bullet

Vancouver, Canada (Vancouver Sun) - Wouldn’t it be wonderful if there was a product that could be grown and harvested, distilled and refined, to produce fuel that would power our vehicles without despoiling the environment?

Many believe ethanol is that single silver bullet but, sadly, they are wrong. To be sure, the ethanol market is booming. Recently, VeraSun Energy Corp., the second largest producer of ethanol in the United States, made its stock market debut with a 34 per cent gain on its first day of trading because, analysts said, supplies are tight and demand is rising.

However, the demand for ethanol is not being driven by its potential to replace gasoline but rather by government edict. The United States Department of Energy, backed by U.S. President George W. Bush, last year mandated ethanol as a replacement for the fuel additive methy tertiary-butyl ether (MTBE), which raises the oxygen content of gasoline so it burns more completely and cleanly. MTBE was itself a replacement for lead.

That move prompted Canada to follow suit. The federal government will require gasoline at the pump to contain not less than five per cent biofuels, such as ethanol, by 2010.

The market is indifferent to the merits of ethanol as an alternative fuel. It recognizes that government policy will manage supply and demand and keep ethanol producers in business. Ontario, for example, has budgeted $520 million over 12 years, mainly to subsidize producers if volatile ethanol prices swing against them. Ethanol producers are thus insulated from the discipline of profits.

This might all be well and good if there was sufficient scientific data to support the contention that ethanol will reduce dependence on fossil fuels, produce less greenhouse gas emissions and create less environmental damage than does the extraction and refining of oil.

But the research is not convincing. In fact, the definitive study remains one by David Pimentel, an agricultural scientist from Cornell University and former chairman of the Environmental Studies Board in the National Academy of Sciences. He concluded that for every gallon of ethanol produced, there is a net energy loss of 54,000 BTU. In others words, more energy – from 30 to 70 per cent more – is required to produce a gallon of ethanol than the energy provided by a gallon of ethanol.

Studies that challenged these findings were only able to make their case by stripping out more than a dozen secondary inputs, including the energy used by farm labour and machinery, required to plant, grow, harvest, ferment, and distill corn and other grains used to make ethanol.

The most recent study from the University of California at Berkeley argues weakly that using ethanol is “probably no worse” than burning gasoline. Putting the best spin on what must have been a disappointing outcome for the ethanol lobby, researcher Dan Kammen ventured that ethanol might be 10 to 15 per cent better than gasoline in terms of greenhouse gas emissions. “It isn’t a huge victory,” he said. “You wouldn’t go out and rebuild our economy around corn-based ethanol.”

Indeed, growing corn causes more soil erosion and requires the use of more insecticides, herbicides and nitrogen fertilizers than any other crop, contributing to air and water pollution. Using corn to make ethanol diverts feed from livestock and raises the cost of food.

Ethanol can be made from other plant matter such as switchgrass, sugar cane and even sweet potato but corn growers have their eyes on the prize – subsidies and a protected market.

New technologies, improved processes and higher crop yields might tip the scale in favour of ethanol eventually but taxpayers shouldn’t be forced to support this speculative undertaking until that happens. If they really want to invest in an ethanol play, they can buy shares in a company like VeraSun Energy.

For politicians, perhaps, ethanol is a no-brainer; placate farm voters with handouts and an artificially inflated market for what otherwise is a cheap crop and, at the same time, be seen as responding responsibly to the challenge of global climate change.

There’s no apparent downside other than the waste of taxpayers’ money and since when did that matter?

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