Monday, December 06, 2010

The end of stupid government ethanol policy?

Found this morning, a ray of hope on the corn-ethanol stupidity:

Ethanol on the Run

It's been well known for a long time that utilizing corn to produce ethanol for usage as an automobile fuel is basically a stupid idea, because it results in a net energy loss. Massive government subsidies aren't even enough to keep it going, the government actually has to mandate a particular level of consumption:

...also last week, the Environmental Protection Agency ruled that under the 2007 energy bill Americans must use at least 13.95 billion gallons of ethanol next year, or about 8% of total U.S. fuel consumption.

This is a colossal waste of money, and, while it does tend to reduce harmful emissions where it's used, a better method would be to reduce the amount of gas being burned. No doubt we could use the money saved from eliminating stupid ethanol subsidies towards that end.

In any case, a few Senators are now speaking out about a need for change:

Last week, no fewer than 17 Senators signed a letter calling ethanol "fiscally indefensible" and "environmentally unwise." Led by Democrat Dianne Feinstein and Republican Jon Kyl, the group said Congress shouldn't extend certain subsidies that expire at the end of the year, including the 45-cent-per-gallon tax credit for blending ethanol into gasoline and tariffs on cheaper imports. Conservatives like Tom Coburn dislike this costly industrial policy, while liberals like Barbara Boxer and Sheldon Whitehouse are turning against the hefty carbon emissions that come with corn fuels.

The Secretary of Energy is also getting on the bandwagon, which is surprising to me. As far as I can recall, the Obama administration has always been very pro-ethanol, so perhaps this is a switch on their part?

Speaking at the National Press Club last Monday, [Energy Secretary Steven] Chu said that "ethanol is not an ideal transportation fuel" and that the government's focus should be "on ways that we can actually go beyond ethanol." Like most greens, he still supports so-called advanced fuels that aren't made from corn and also aren't commercially viable, but we'll take his partial conversion.

I also consider myself a supporter of "advanced fuels", although on the whole I am extremely pessimistic about how much actual utility we'll ever be able to derive from them. Certainly they will not lead to the sort of free ride that we've been getting from fossil fuels for over a century.

In any case, 17 Senators, while significant, is only a start. There is undoubtedly massive support for maintaining the status quo, as evidenced by the reaction of the ethanol lobby:

The ethanol industry is responding by predicting disaster if it loses its taxpayer feeding tubes, with the Renewable Fuels Association evoking massive job losses and another Dust Bowl. But what kind of business can't survive without subsidies when government also mandates that consumers buy its products? As the Senators dryly noted, "Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use. We understand that ethanol may be the only product receiving all three forms of support from the U.S. government at this time."

Now, I wonder what kind of support for this can be drummed up in the House? The ideal thing, of course, would be to have the President come out against ethanol, but that doesn't seem very likely, unless he feels like throwing away the Iowa caucus and a lot of other rural-state primaries in the 2012 campaign.

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