Turning Oil Into Salt (5): Alcohol as fuel

Given the low incremental cost of making vehicles flex-fuel, the key barrier to the liquid fuels half of the Open Fuel Standard aspiration is sourcing the non-oil-based fuel itself. The authors focus on two in particular, methanol and ethanol.

Their section on methanol is OK, but I still have questions around the feedstock. The throwaway line on biomass that “The raw material is plentiful, and most of the biomass products are currently discarded” is facile and unhelpful, as anyone familiar with the economics of biomass-to-power will know (the upshot is, not many plants are being built in the U.S. because the feedstock isn’t free and thus the economics aren’t great). Coal-to-liquids and gas-to-liquids technology is indeed fairly mature, but the current cost is not great and the GHG emissions (particularly for CTL) are terrible. And while the U.S. has abundant coal, their argument on gas sourcing is inconsistent, as I mentioned before.

Their section on ethanol is way off, and the worst part of the entire book. They correctly rail against ethanol tariffs, but become apologists for ethanol subsidies, calculating the absurd claim that $6 billion in ethanol subsidies reduced the world price of oil in 2008 by enough to save the U.S. alone $60 billion on fuel imports (“ten times the subsidy”). They misleadingly quote the energy requirements of gasoline vs ethanol:

The amount of fossil fuel in mega joules needed to make one mega joule of gasoline is 1.19 versus 0.77 for corn ethanol and 0.10 for cellulosic ethanol.

(That 1.19 includes the mega joule of energy from combusting the gasoline, which is why the wording is misleading.)

Even more flawed, though, is their thinking on the “food vs. fuels myth”:

How could that drastic increase in the price of food commodities from fish to rice possibly be attributed to ethanol? Nobody was growing corn in rice paddies or making biofuels out of fish.

Yikes. Agricultural commodities are largely fungible, like oil, from both the supply and demand sides. Increased corn cultivation reduces the land available to grow other cereals like wheat, and higher prices affect the prices of substitutes like rice as consumers shift their consumption patterns in response. Farmed fish are often fed corn, as are industrially-raised cattle, pigs and poultry, which are meat substitutes for fish. Ethanol is certainly not responsible for all of the rise in food prices, but the most credible estimates link it to ~30% of the rise in grain prices (more for corn and less for wheat and rice.

This lack of understanding infects their analysis of CO2 emissions from indirect land use change and deforestation. Yes, Brazilian sugarcane is not grown near the Amazon, but it displaces commercial soy and corn farming, which in turn displaces lower-value farming and ranching activities and pushes them further into the Amazon. Throughout the world, increasing food production in response to higher prices often means extension onto marginal land (which in turn is often forest). Yes, this effect is hard to measure precisely, but that does not mean it doesn’t exist.

Finally, like many others, they take a rich-world-centric view of food price increases (“farm commodity prices have almost no effect on the retail consumers”). Yes in America, but in poorer countries where food purchases account for >50% of income and raw commodities make up >65% of end food prices, that is not the case – food price rises have a huge negative impact on nourishment, nutrition and overall welfare, which is not something to be casually ignored.