Obama Under Pressure Over Role of Ethanol in Energy Policy

Posted on November 22, 2008. Filed under: Blender's Tax Credit, Hydrous Ethanol | Tags: , , , , |

The following article appeared in the November 21, 2008 issue of U.S. News & World Report.


Obama Under Pressure Over Role of Ethanol in Energy Policy

Environmental Groups are Unhappy with his Support of Corn-Based Ethanol during the Campaign

By Kent Garber

Posted November 21, 2008


Environmentalists agree with President-elect Barack Obama on many points, but his policy on ethanol isn’t one of them.


In the ongoing debate over the future of the country’s energy policy, biofuels occupy a unique and precarious position: reviled in some quarters, championed in others. Ethanol producers have enjoyed meteoric rises in the amount of ethanol they can make and sell, but they also have been accused of harming the environment, prompting food riots abroad, and throwing away government money on unsustainable endeavors.


Environmentalists are asking Congress and the next administration for a far-reaching overhaul of the current biofuel policy.


They want sharp cutbacks on ethanol subsidies, tougher environmental regulations, more investment in advanced biofuels research, a new appreciation of scientific data, and acknowledgment of the ripple effects that biofuel production can have around the world. Some of these requests will conflict with energy policies likely to be set forth by Obama, who strongly supported ethanol subsidies when he was in the Senate.


This is not to say there is no room for compromise. Much of the desire to change the status quo rests upon the use of corn as the primary—virtually the only—source of commercially available ethanol. In the campaign, Obama and his advisers, while reiterating his support for corn-based ethanol, stressed that the future of biofuels lies not with corn but with nonfood alternatives like grasses, husks, and waste products. Those biofuel sources, they argued, are more energy-efficient and have a smaller impact on the environment and food prices. Congress said the same thing when it approved a giant tax credit for cellulosic ethanol earlier this year.


But since cellulosic ethanol has yet to reach large-scale commercial production, the present situation presents some difficult choices for the next administration. What should the government do about corn ethanol subsidies? What can it do to get advanced biofuels developed more quickly? And do the benefits of ethanol, corn or otherwise, outweigh the costs?


For environmentalists, the answer to the funding issue is straightforward: Cut the subsidies. According to the Energy Information Administration, ethanol receives more than three quarters of all federal subsidies for renewable fuels, a category that includes wind and solar power. Many see such expenditures as not only a waste but also as an insidious danger. “We don’t want to see any investments in what we consider to be false solutions, such as biofuels that can increase global warming pollution,” says Shawnee Hoover, legislative director for Friends of the Earth.

Such a move would save several billion dollars annually. But it also would likely undercut, if not cripple, an industry that already is struggling financially and employs thousands of people. One alternative, some in the industry say, would be to reduce the handouts for corn ethanol (one such reduction took place earlier this year) and instead help companies working on more advanced biofuels. “All we are asking is that policy be technology neutral—that lawmakers don’t advantage one party,” says Paul Woods, CEO of Algenol Biofuels, which has developed technology to produce ethanol from algae. “Right now, we have no support at all, which is ridiculous.”


Another dispute is playing out between environmentalists and the industry over the question of measuring the impact of biofuels on the environment. By law, biofuels have to be cleaner, in terms of greenhouse gas emissions, than gasoline. Last year, Congress instructed the Environmental Protection Agency to prepare guidelines to make sure that the rule was being followed. (The EPA’s response is due soon.)


But determining what counts or doesn’t count under such measurements isn’t an easy task. Because land is often cleared to grow crops for fuel, many say biofuel production “leads to substantial releases of soil- and plant-carbon” that should be counted as emissions, as several prominent environmental groups wrote in a letter to the EPA last month. Biofuel proponents disagree, arguing that current models are unreliable and immature. The outcome of this debate, both sides say, could have a profound impact on the future of biofuel policy in the United States.


Environmentalists are asking that Congress or the EPA put in place protections for water, soil, and wildlife habitat to guard against overzealous or reckless production. “You really need best-practice performance standards for all biofuels, which means looking not only at the impact on food prices but also at the impact on biodiversity,” says Carter Roberts, president of the World Wildlife Fund. “We’ve seen perverse outcomes with biofuels, like the destruction of some of our richest rain forests in the world.”



About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops. 




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One Response to “Obama Under Pressure Over Role of Ethanol in Energy Policy”

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Excellent article! Such lucidity on this subject is rare. Just one point, lest some readers misunderstand your meaning. You write, “One alternative, some in the industry say, would be to reduce the handouts for corn ethanol (one such reduction took place earlier this year).” The tax credit was indeed reduced (by 10%) earlier this year, but the actual reduction does not go into effect until 1 January 2009.

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    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.


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