Vantage Point: The ethanol industry wants your sympathy

Jan. 10, 2008
The Renewable Fuels Assn., among others, is urging Congress to pump billions of dollars in subsidies into ethanol.

Robert Bryce
Institute for Energy Research
Houston, Tex.

Edited by Kenneth Korane

Their rhetoric begs lawmakers to create an artificial market for ethanol and condemns anyone who speaks about its shortcomings as part of a “coordinated offensive of mistruths.” These statements undermine the effort to have a serious debate about the right way to diversify our energy sources and increase America’s energy security.

Despite accusations of an insidious campaign by the fossil-fuels industry against biofuels, there are a myriad of legitimate concerns about ethanol. These include, but are not limited to, ethanol’s effect on food prices, its huge water demands, and the ability to replace substantial amounts of oil.

The U.S. Energy Information Administration believes the practical limit for domestic ethanol production is about 13.8 billion gallons/year by 2030, or about 3% of America’s current oil consumption on an oil-equivalent basis. That’s hardly enough to provide “energy security.” Then there’s the promise of cellulosic ethanol as the solution to all our problems. For years, ethanol boosters have been claiming they will soon be producing vast quantities of ethanol from sources such as wood chips, corn stover, and switch grass. But commercially viable cellulosic ethanol is akin to the tooth fairy: an entity that many believe in, but no one ever actually sees. Among the doubters: the Dept. of Agriculture, which recently reported that while cellulose-based fuels hold “some longer-term promise,” much research is needed to make the technology commercially economical. In short, there’s no reason to expect it to be a practical reality anytime soon.

What about greenhouse gases? Virtually all studies show that greenhouse gases associated with ethanol and gasoline are about the same once the entire life cycle of the two fuels are compared. Further, as more land is harnessed for corn production, less fertile soils will be brought into production, requiring more energy-intensive farming, primarily through increased use of fertilizers and irrigation. By reopening previously dormant land, we may be unwittingly emitting tons of carbon dioxide with simple land-use changes.

The Institute for Energy Research supports energy diversity, tapping into the most efficient traditional, alternative, and renewable sources capable of sustaining themselves in a free market. Propping up inefficient producers with endless subsidies and mandating production of biofuels will not increase our energy security, and will likely produce a host of negative unintended consequences.

These are legitimate concerns that require serious thought before Congress mandates the use of billions of gallons of renewable fuels. The ethanol industry has been getting supersized subsidies for more than two decades. We should be looking to innovators and entrepreneurs to develop the next great technological breakthroughs in energy — not to lobbyists seeking more handouts in Washington.

The Institute for Energy Research ( conducts research and evaluates public policies in the oil, gas, coal, and electricity markets.

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