Monday, July 1, 2013

Ethanol increases emissions, fuel costs, engine damage, & food prices

"Dirty" corn ethanol could soon be on the chopping block

Tom Buis, CEO of Growth Energy -- a pro-corn ethanol lobby -- cheered a recent Supreme Court victory over automakers and petroleum lobbyists who looked to block the sale of E15 blends.  He comments, "Now that the final word has been issued, I hope that oil companies will begin to work with biofuel producers to help bring new blends into the marketplace that allow for consumer choice and savings."

Bob Dinneen, president of the Renewable Fuels Association (RFA) -- another top corn ethanol lobbying group -- echoes these sentiments.  Even as automakers warn of dire engine damage, he comments, "This is another example of oil companies unnecessarily scaring people, and it’s just flat-out wrong."

I. Corn Ethanol -- Good News or Bad?

But basic science suggests there may be more to it than that.  In order to handle higher ethanol blends, engine and fuel system parts made of rubber, plastic, metal, and other materials in engines must be coated with special sealants to prevent permeation of ethanol and degradation.  Older vehicles do not have that sealant -- so Mr. Dinneen appears to be basing his perspective on the fact that newer vehicles do, and thus will not be affected.

But aside from the engine life issue, there's other major concerns about corn ethanol.  First, after years of government subsidies for the use of corn as a sweetener, the commercial food industry is deeply dependent on corn syrup -- and by proxy corn crops.  Corn ethanol and corn syrup both compete for the same crop -- the most sugary breeds of corn.  And even when corn ethanol producers ferment with lower sugar feed corn, they still raise prices of livestock feed, bumping meat prices higher.  As a result, the corn ethanol industry has been shown to elevate food prices in multiple ways, according to experts.

The issues with corn ethanol run far deeper than engine damage. 

Further, while ethanol is more efficient (per cost) in single-mode engines, in dual-mode engines (using blends), it's been shown that the customer gets less fuel economy when using various blends than if they went all ethanol or all gas.  In many cases this makes blended fuels more effective on a per-mile basis than gas.  Ethanol proponents insist the market will adjust, but it's yet to be seen if that actually happens.

Lastly, there are questions over whether corn ethanol is greenwashing.  When only emissions at the pipe are considered corn ethanol appears to cut emissions.  But when the entire life cycle -- from plough to pipe -- is considered, it appears that corn ethanol actually increases emissions (unlike a number of alternative biofuels).  Further, some have claimed the entire production process of ethanol has a net loss of energy, meaning that the industry uses more [fossil] fuel to grow, harvest, and ship corn ethanol than it gets out.

But for all the criticism, the fact remains that ethanol increases are currently the law of the land.  The U.S. Environmental Protection Agency (EPA) proposed this year raising blending targets 16.5 billion gallons, up 8.5 percent from a year ago.  By 2022 production will double.  If those targets remain in place, it will be virtually impossible for refiners to sell anything but E15.  Refiners obtain a certain amount of credits for blending in ethanol; and if they don't blend enough they face stiff fines.

In fact, under the current rollout, it would be unsurprising to see E20 or E25 mixtures being forced into service to keep pace with the doubling of production quotas.

Many new vehicles -- including those from Chrysler Group LLC, Toyota Motor Corp. (TYO:7203), Nissan Motor Comp., Ltd. (TYO:7201), Bayerische Motoren Werke AG (BMW), and Volkswagen AG (ETR:VOW) still do not support E15; using E15 in them will void your warranty, according to the automakers, regardless of what the federal policy mandates.  But this situation may worsen in years ahead, as even automakers like Ford Motor Comp. (F) who support E15 do not support E20 or E25 in most of their models (some "E85" capable vehicles are sold, but they remain a minority).

In other words, even if your vehicle can use E15 without damage, you may be in the same position Chrysler, Toyota, Nissan, BMW, and Volkswagen owners are in today, just down the road.  When higher blends arrive, you may be just a fillup away from voiding your warranty.

II. Is it Time to Reform or Roll Back the Energy Act of 2007?

Amidst that backdrop, there is some growing momentum in Washington D.C. to roll back the 2007 Energy Act, which was signed by President George W. Bush.  Rep. Fred Upton (R-Mich.) chairman of the Energy and Commerce Committee is quoted by The Detroit News as saying that a bill to reform that 2007 law is incoming, with the aim of passing it by the end of this year.

Much of the debate in the House currently centers on whether the best option is to kill the original law altogether, or whether it'd be better to modify it in some regard scaling back targets.  Rep. Joe Barton (R-Texas) proposed killing it, but his colleague Rep. Ed Whitfield (R-Kentucky) is fighting to simply rework it, commenting, "We want is an RFS (renewable fuel standard) that can work for everyone involved, be it farmers, renewable fuel producers, refiners, and automakers. And most importantly, we want a policy that benefits the American driving public."

These stands represent largely who the representatives received their money from.  Rep. Barton is funded/sponsored by the likes of Pickens Comp., and Exxon Mobil Corp. (XOM) [source].  Rep. Whitfield is funded/sponsored by Koch Industries, who owns ethanol plants, and Caterpillar Inc. (CAT) who makes machinery used harvest corn [source].

The big question is what will happen if a repeal or reworking makes it to the Senate floor.  The Democratic controlled Senate has shown very little interest in trimming back corn ethanol blending targets.  The blame cannot be pinned solely on Democrats; both Senators from both parties have been more heavily funded by "big corn" than their House colleagues.  That said, the Democrats are leading the push to protect corn ethanol at present, with the likes of Senators Tom Harkin (D-Iowa); Tim Johnson (D-South Dakota); Amy Klobuchar (D/"Farmer-Labor Party"- Minnesota); and Al Franken (D/"Farmer-Labor Party"-Minnesota) fighting rollbacks.

corn profits
Big corn has won over politicians with via its friend "bill". [Image Source:]
In fact these Senators proposed increasing ethanol quotas via the trickily worded Biofuels Expansion Act of 2011.  Thus it remains to be seen whether an effort to scale back targets can survive, amidst heavy lobbying from the corn industry (even as the other side lobbies hard as well).

Meanwhile the E15 mass rollout creeps closer.  Currently only a handful of stations in the Midwest carry the blend, as most refiners have not yet started its mass production.  But with the Supreme Court refusing to hear appeals on the standard, it seems just a matter of time before E15 is pouring out the pump across the nation -- even if that fuel damages your older vehicle, RV, boat, or motorcycle.

Why do we burn our food?
Prior posts on ethanol
Biofuels even less green than previously thought











  10. US Agriculture Secretary says he doesn't know if ethanol helps the climate or economy