A recent Wall Street Journal article descrbes how and why US ethanol producers -even subsidized by the government- are experiencing losses and closing plants countrywide.
Subsidies and higher corn prices -both "success" factors that ethanol producers initially consider "stimulus"- seem to be rather negative factors hampering the ethanol.
Check these conflicting reports:
Ethanol scam
Corn prices frive farmers out of business
Ethanol plant construction stops in Nebraska
New ethanol plant inaugurated in Idaho (beginning 2008)
How to make ethanol work
Post comments to these discussion questions:
- Is ethanol a good business idea?
- Evaluate an ethanol project using Mega concepts.
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3 comments:
Since that biofuels account for global attention, due to global warming and high oil prices, there have been important and controversial studies that show increasing ambiguity and doubt that the future of a promising business around this energy source renewable.
To try to reduce dependence on imported oil, U.S. has approved a new law, which is set for a 2022 production target of 35 billion gallons per year (just over 2.35 million barrels of oil a day) or a quarter of the current consumption of gasoline. A figure that means at once to five times the current production of ethanol from corn, while pointing to the 20% reduction in gasoline consumption through efficiency in combustion engines that produce the local automotive industry. In this context the business of alternative fuels seem promising.
However, while everything indicates a gradual increase in the production and use of biofuels in many parts of the world, was published an impressive scientific report - conducted by ecologists at Princeton University - which argues that the use of biofuels is not an advantage in terms of reducing greenhouse gases, but will increase the generation of CO2 and global warming. The report, published in the journal Science, asserts that when the balance between the possible reduction of CO2 by the use of biofuels in engines and energy consumed to produce agricultural products, ethanol from corn goes wrong stopped, negating had the advantage of ethanol as a gasoline substitute. In the end, then, would generate more CO2 than before.
In addition the loss of large areas of savanna or deforested jungle upgraded and that would be used to provide new land for crops, with a net loss of vegetation that could no longer absorb CO2 from the atmosphere generated by various sources, mostly burning coal and oil. The authors consider that using arable land to produce corn, this item has to be grown in other areas, thus reducing the green areas that would absorb CO2, otherwise we will be affecting the food supply.
This is something that each country will have to look seriously at the time of joining the fashion for biofuels, which excited all up but whose benefits are highly questionable. It is probably that initially the project was motivated by principles Megas but today is challenged with these studies showing that damage the environment and threaten food production for society.
Good points, Alberto. Our Mega indicators should reflect both the positive impacts -such as a reduction in foreign oil dependency- and the negatives -such as the high CO2 emissions level and the zero-sum balance in terms of energy efficiency you mention-
If we can measure, we can manage it.
The use of ethanol is a good option in the energy future of the world, but not in all countries that produce it, Brazil has managed to replace much of its gasoline consumption with ethanol. However, ethanol from Brazil comes from sugar cane, in United States, ethanol comes mostly from corn, a much less suitable raw material. In fact, corn is a very poor source of ethanol that researchers at the University of Minnesota estimate that converting the entire corn crop into ethanol would replace only 12 percent of our gasoline consumption.
Does this thinking may not help to contribute to the environment? Well no, since it would be too expensive compared to the obvious alternative: conservation. The Congressional Budget Office estimates that reducing gasoline consumption by 10 percent through an increase in standards in fuel economy would cost to producers and consumers around 3.6 billion dollars per year. Achieve the same result by expanding ethanol production would cost taxpayers at least 10 billion dollars per year, based on subsidies ethanol already receives, and probably much more because they increase production would require higher subsidies .
What's more, ethanol production has hidden costs. Even the Department of Energy, which is relatively optimistic, says that the net energy savings by replacing a gallon of gasoline with ethanol are only the equivalent of about a quart by the energy used to grow corn, transport, operate plants ethanol and so on. And these energy raw materials come almost entirely from fossil fuels, so it is not clear whether promoting ethanol actually helps to reduce emissions of carbon dioxide.
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