Posts Tagged ‘corn ethanol’


Nigel Hunt of Reuters reports that

Corn prices rose to record highs on Monday and looked set to climb further as torrential rains threatened to reduce further U.S. crop prospects in a market already facing tight supplies and surging demand.

Strong demand for corn from U.S. biofuel producers has contributed to supply tightness in the corn market. The U.S. Department of Agriculture has forecast about a third of this year’s crop will be consumed by the biofuel sector.

“I am still very bullish. I think $7, $8, $9 corn is well within reach,” said Commerzbank analyst Edward Hands.

Unfortunately, the combination of a foolish corn ethanol program with rising gas prices and rising transportation costs are all conspiring to drive up the price of food. With the additional effects of the recent heavy storms and rain in the Midwest, including flooding in some areas and frequent tornadoes, corn prices are skyrocketing. One simple action that should be taken immediately is to halt all corn ethanol subsidies and programs, so that food and fuel are no longer in competition with each other.

Original text copyrighted © 2008 James K. Bashkin

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Addendum. Devastated US corn crop sends ethanol producer shares into freefall.” The Associated Press reported the following financial news:

The values of ethanol producers hemorrhaged Thursday as the price of their key feedstock, corn, climbed to record levels because U.S. floods have devasted this year’s crop.

“In the last 10 days the world has changed in the corn market with massive flooding causing irreparable damage to this year’s crop and pushing corn prices up $1 over this time frame,” Citi Investment Research analyst David C. Driscoll wrote in a client note.

“As a result of this unprecedented weather event which has happened only twice in the last 25 years, ethanol margins have plummeted over the same ten day time span with small and mid size ethanol producers now running at substantial losses against cash costs.”

He expects such small and mid-sized producers to halt operations.

Unfortunately, these financial and farming problems will increase food prices in the near term, but they may help lower food prices in future growing seasons, as long as the corn ethanol producers stay shut down. Repeal of the tax credits for corn ethanol would help keep corn ethanol from once again driving food prices up.

Original text copyrighted © 2008 James K. Bashkin

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“Biofuels are fast becoming a new flash point in global diplomacy, putting pressure on Western politicians to reconsider their policies.”

Note that free registration at the NYT may be necessary to see this article at the “read more” link. Nevertheless, this New York Times article needs to be read! This is true even though the article sounds more like it was written by a politician than I would have expected, giving ample space what I would call the self-serving justifications offered by Congressmen and Federal officials. The tone of the NYT article contrasts with the stronger conclusions reached in the Chicago Tribune about the growing price of eggs, where the blame is laid squarely on high corn prices (you may have to register for a free account to see this article, also). I have been writing about the topic of the unfortunate conflict between food and fuel since approximately September (not that the idea was original to me, there was plenty of documentation available!).

I don’t condemn all biofuels, and I support biodiesel made from waste vegetable oil, fish oil or other waste products as a reasonable approach, if one must have a liquid, carbon-based fuel. It is certainly clear that liquid fuels will not be disappearing overnight. However, I do not support placing food crops in competition with energy needs. In my opinion, the time of electric cars should be and is approaching, as hybrids become more popular, plug-in hybrids are near to reaching mainstream showrooms, and battery technology continues to improve, making already-available, purely electric cars even more affordable. We should be making investments in these technologies and related clean energy programs (solar, wind, geothermal), not pouring tax dollars down the drain with ethanol subsidies that have no effect whatsoever on oil and gas prices (this much is obvious, regardless of your opinion how corn ethanol and other biofuels affect food prices). The Economist was also firm in its criticism of corn ethanol programs, as reported here earlier.

Please see my recent post about the discoveries of improved Lithium ion batteries from Argonne National Labs and my post about electric cars, hybrids and plug-in hybrids. Many other related articles are published here as well.

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© James K. Bashkin, 2008


“A law taking effect Tuesday makes Missouri just the third state – behind Minnesota and Hawaii – to implement a wide-ranging ethanol mandate.” This article by AP reporter David Lieb reports on new Missouri legislation that mandates the use of ethanol-gasoline mixtures. E10, or 10% ethanol, has already become common on Missouri. The article cites the low cost of ethanol relative to gasoline as the economic driving force, but I take exception to this point! As documented extensively on my blog, tax subsidies fund ethanol and, unless obtained from biomass (which it isn’t), it not only has terrible consequences for the environment but is as bad or worse for air pollution as gasoline. Read more at this site and comment on your thoughts about the socialism practiced by Republicans to help Archer Daniels Midland and other major corn manufacturers even though corn ethanol is bad for the environment.

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Treehugger.com is an excellent site for environmental issues. In this case, the Treehugger article gives a good introduction to ethanol as fuel, and discusses the differences between corn ethanol (US) and ethanol derived from sugar cane (as in Brazil). Note that the best form of ethanol production IMHO, from cellulose and other biomass, is not quite ready for prime time and needs more R&D (the money being use to subsidize corn ethanol would be a great place to get the R&D funds).

The Treehugger article is not polarizing (somewhat surprisingly) and will help most people get a good sense of what the basic ideas and issues are. It is, however, “soft” on corn ethanol and also on Brazilian ethanol from sugarcane (which is far superior to corn for producing ethanol, but that conclusion ignores the terrible exploitation of people and the environment that is going on in Brazil).

The comments to the Treehugger article offer valuable additional information- please read them also. Then you can see more detailed analysis here by searching for ethanol to find discussion and references to both scientific and popular articles on problems with corn ethanol, health problems from using any ethanol as fuel at HighlightHealth, problems with biofuels obtained from rain forests, and the effect of biofuel “mining” on local food supplies (the latter two points being extremely important according to many, including Jane Goodall).

Additional links to stories on corn ethanol as fuel (including several different viewpoints that I disagree with, but which you should read and decide for yourself):

Note, this article may not be available to everyone (the policies seem to change almost daily with commercial science journals. I realize that is an exaggeration, but if you can’t read the article, which is a PDF, any library or University will have access). Here is a key quote:

“Biofuels need new technology, new agronomy and new politics if they are not to do more harm than good… The common complaints about biofuels — and they seem to become more common by the day — are that they are expensive and ineffective at reducing fossil-fuel consumption, that they intensify farming needlessly, that they dress up discredited farm subsidies in new green clothes, and that they push up the price of food. All these things are true to some extent of corn-based ethanol, America’s biofuel of choice, and many are also true of Europe’s favoured biodiesel plans.”

 

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© James K. Bashkin, 2007

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Why President Bush’s corn ethanol subsidy plan, supported by numerous governors and state legislatures as well as Congress, is terrible for the environment and US taxpayers, doing nothing but sending tax money down the drain, or more literally up in smoke. Independent opinions from another site, that I am not connected to, but which I agree with strongly in this case.

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By now, I have written and blogged quite a bit on this topic, so you can find more information by searching this site for ethanol or clicking here, here, here, here, here, here, here and here. Feedback is welcome as always.

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These comments are my analysis and discussion of an article on various sides of the “corn ethanol story” published by Joel Achenbach in the Washington Post, with farmers telling us they can’t survive without the subsidies. I guess they’ll inherit the earth when the rest of us have no water to drink. The fact that the dust bowl is likely to be re-created doesn’t seem to bother them, so get ready, California, for a big influx of foreigners from the Midwest. Click the “read more” link below to see the article.

The comments on the story, found on the Washington Post website, are most telling, with some decrying “environmentalists who are never happy.” Well, I don’t see a lot to be happy about when tax dollars are being spent to subsidize a senseless and wasteful corn-ethanol program that pollutes and wastes our fresh water while having no impact on our foreign oil dependence. I have documented much about the problems of corn ethanol on this site. I don’t blame the farmers for taking the subsidies: heck, this is America, where socialism is a crime unless it bails out good farmin’ folk (or big business). Using public funds to save lives through health care, or to save the environment through any number of approaches (mass transit, anyone?), is clearly viewed as evil by many. It is, however, our “energy policies” that are flawed- they certainly have nothing to do with energy.

Corn is food, and will never compete successfully as an ethanol producer unless its non-food parts are added to cellulosic ethanol feedstocks in future biomass-to-ethanol plants. Wasting money on corn-ethanol just delays research on sensible biofuels and pollutes the fresh water that is so short in many parts of the US and the world.

Why is it that everyone is up in arms about chemical companies, oil companies, power companies or mining companies that pollute the environment, but polluting is no problem at all if done by those great family farmers whom we all love so much (and their large corporate cousins)?

Of course, as pointed out in one of the comments to the Washington Post story, ethanol contains about half the available energy that gasoline contains, so you have to burn twice as much ethanol as gas to go the same distance at the same speed.

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© James K. Bashkin, 2007

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As reported by Timothy Gardner of Reuters, ethanol prices are so low that producers are not making any profit.

U.S. weekly ethanol margins still in the dumps

by Timothy Gardner

NEW YORK, Nov 2 (Reuters) – U.S. ethanol margins ticked a few cents higher this week as producers fetched slightly higher prices for the renewable fuel, but the average producer was still making next to no profit, analysts said Friday.

So, production of ethanol is

  • ruining the food economy
  • polluting the rivers (and streams and Gulf of Mexico and everything else) with agricultural runoff
  • eliminating grasslands
  • using up water in water-poor regions

and the bad news is … nobody is even getting rich off this behavior! Oh, and it is having zero impact on our need for foreign oil. The robber barons of old must be turning over in their graves.

More from Mr. Gardner:

“When gasoline prices are much higher than ethanol prices, some blenders add more ethanol to gasoline than required by law, which eventually boosts prices for the renewable fuel.

But the slighter better ethanol margins were not enough to line the pockets of renewable fuel producers

“When you consider overhead costs, you’re probably below break even,” Ron Oster, an ethanol analyst at Broadpoint Capital, Inc, in Missouri, said in an interview.”

Why such trouble? Because the corn-ethanol business faces problems like

“rising prices for natural gas, used to power most bio-refineries, [that] cut profit margins down to about break even”

Read the whole article for bleak projections of profit, more explanation of high production costs and revelations about the poor efficiency of many ethanol plants.

Why are we subsidizing this industry, and why are we pretending that it is good for the environment?

© James K. Bashkin, 2007

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I initially used “digg” to call attention to the title story on Yahoo Green, but after further reading, I ending up writing a critical note about it and the related study on this blog (below).

Some, but not all, of the problems with corn-to-ethanol operations are discussed on Yahoo Green and in the original Environmental Defense report. These problems include increased usage of water in areas already suffering water shortages and (unmentioned in this story) increased water pollution. Also an issue is the loss of land from the food agriculture supply chain as food and highly-subsidized ethanol compete for farmers’ attention. Finally, also unmentioned in the story: possible health problems due to formaldehye and ozone from ethanol combustion. So, I tried to address these issues in the post called “Environmental Defense report soft on ethanol” written yesterday and found below. I was pleased to have a note of clarification from Environmental Defense pointing out that they are the organization I have supported for many years and think of as the Environmental Defense Fund (EDF, apparently a 10-year old name, but, being 49 years old, what’s a decade or two here or there?). The comment from the former EDF also addressed the “narrow focus” of the report. I appreciate the responsiveness of the group in addressing my confusion over (their) identities. I understand the logic provided for the narrow focus of the report, but I’m not completely comfortable with it.

copyright 2007 James K. Bashkin

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The Environmental Defense organization released a report, discussed on its web pages and in a related web article written by one of the report’s co-authors, about the potential negative effects of ethanol production on the environment.

The report, a downloadable PDF, Potential Impacts of Biofuels Expansion on Natural Resources [PDF], discusses the damage that ethanol production could do to the Ogallala Aquifer, the center of the famous 1930’s Dust bowl and

“one of the world’s largest aquifers and an important water source for the eight Great Plains states it lies beneath: Colorado, Kansas, Nebraska, New Mexico, Oklahoma, South Dakota, Texas and Wyoming.”

The report, as summarized on the Environmental Defense website, warned of the following:

” Making ethanol requires substantial resources. For example, between three and six gallons of water are needed to produce one gallon of ethanol. Our study shows how plans to expand the production of ethanol, primarily with corn-based feedstock, will further strain the region’s resources. Topping the list of potential issues are:

  • increased use of water in places where supplies are already dwindling,
  • retired croplands reverting to working lands, and
  • the loss of important grasslands to crop production.”

However, this warning is mild compared to more recent conclusions and studies, including one study from the National Research Council and one from the United Nations,. I have discussed these reports before.

Water shortages are ONE consequence of ethanol production, and the ED is correct to point this out. However, the conversion of corn to ethanol carries with it a much higher environmental burden and actual cost: the increased runoff of fertilizer alone threatens rivers, streams and other bodies of water, including the Gulf of Mexico. This harmful process is also heavily subsidized by Federal and State tax dollars in the US.

Until we can implement biomass to ethanol conversion commercially, the UN has called for a halt to biofuel use. The current methods compete too much with food and cause too much environmental damage. Jane Goodall has stated that biofuels, while helpful in principle, damage the rain forests if made without proper foresight and methods. I agree with the UN and with Jane Goodall.

We also need to explore and solve apparent health issues from ethanol-based fuel, as found by sampling the air quality of Brazil, where many cars have been running on 100% ethanol for decades. The health issues are directly related to high amounts of ozone and formaldehyde in Brazilian air- these are substances associated with serious respiratory problems and, in the case of formaldehyde, with causing cancer in lab mice.

It seems to me that we could eliminate the harmful emissions with proper catalytic converter design or other adjustments to the combustion engineering of cars, but (a) I’m just speculating and (b) somebody has to work on it.

So, I’m am surprised at the “lack of teeth” in Environmental Defense’s report, and its focus just on water use, with no mention of damage to water quality or food supply.

I am a financial supporter of the Environmental Defense Fund (EDF)- I’m confused about whether there is any relationship between ED and EDF. I haven’t had issues with EDF in the past, and I’m getting the impression that the groups aren’t linked. Sorry- I need to clarify this. Will do in the next post.

© James K. Bashkin, 2007

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In case you missed it, a gentleman named Burl Haigwood kindly left a long and detailed comment, and rebuttal, to my recent post on the health effects of ethanol as a fuel.

Because I do want to debate the issues, I thought it best to reprint his response and my related comments here, since otherwise they would remain buried in the comments section.

 

BurlHaigwoodCFDC said in response to An Unfortunate Truth about Bioethanol (from Corn):

I would like to address a few missing and broken links to your argument. When you have only one side in mind during your article and can not give any merit to the only fuel to break the 100 year stranglehold on the oil dominated transportation fuel market – it is just an argument not a debate or discussion. The ethanol program started as an intended consequence to do something about nation’s reliance on imported oil. Since that time we have had several wars in the oil producing region of the world, which has fueled terrorism, we now understand where the greenhouse gases are coming from, we have not discovered any more oil in the US, we are using 40 billion more gallons of gasoline each year, and the oil companies have not produced any alternative fuels out of anything. The issue is about oil not ethanol. Take out ethanol and nothing has been accomplished in 30 years by anyone or anything else. Ethanol is the only fuel that has worked to replace gasoline in 30 years – despite a lot of trying by a lot of people and industries. LPG, electricity, solar, natural gas, biodiesel, and the consumer’s willingness to buy small cars have not worked. Ethanol works and it is better than imported crude oil and gasoline. If you really want to avoid being full of formaldehyde I suggest your try and avoid the estimated 65 carcinogens in gasoline like benzene, toluene, and formaldehyde. Ethanol made in Puerto Rico from sugar cane or from corn in Iowa is the same ethanol and receives the same credits/incentives. Those incentives are available to anyone, including the oil companies, to make alternative fuels in any form from any renewable feedstock. If you believe in a free market, then adding 400,000 barrels of a product that costs less than gasoline to the motor fuel pool should help. In fact DOE says ethanol has lowered the price of crude oil by $2.50 per barrel – that’s $18 billion dollars this year. Other studies show that record oil prices have twice the impact on food prices when compared to ethanol. The oil companies have not made one drop of alternative fuels or anything else to help their customers since they invented lead additives, which took the government 70 years to take out. While you say you are not paid by the oil companies you are doing their work by spreading heated and misguided mistruths about the U.S. ethanol program. That is their intended consequence. I suggest you and others interested in all aspects of a very complex ethanol issue Google The Ethanol Fact Book. Ethanol is not perfect, it is just better than imported crude oil and gasoline. Ethanol is leading the way to a brighter future – not gasoline or imported oil. We need your passion and brains on the solution side of this oil equation problem.

 

 

 

My Response to Mr. Haigwood of the Clean Fuels Development Coalition (CFDC)* is given here:

 

Thank you for taking the time to respond in such a detailed manner. You make many good points, and I’ll try to address them.

First, I am not approaching this subject with any preconceived point of view. Believe me, I would be very happy if ethanol turned out to be the answer to our problems. If corn ethanol were the answer to our problems, I would be even happier. I just want the problems solved, and I’d like to avoid using more nuclear power.

Each post on this blog tends to report on one or more related articles in the scientific or popular press (including the web). Each article has a focus, naturally. The totality of this blog represents my interests and matters that I think should be discussed, so I am delighted by your comments and by the fact that you took the time to read what I had to say.

You were absolutely correct when you said

“The issue is about oil not ethanol.”

 

But this is not complete. The issue is also about the environment and food prices.

I am well aware of the carcinogens in smog from gasoline/petrol. They are made worse in strong sunlight by a process that generates photochemical smog. I am grateful to my colleague Hal H. for informing me of the key discoveries in this field from UC Riverside (the link goes to one scientific article).

My blog was based in part on a new study published in the scientific journal Environmental Science & Technology, as reported on the website Highlight Health. This article predicts serious increases in respiratory problems caused directly by worsening air quality, if ethanol displaces gasoline/petrol as automobile fuel (specifically referring to E85, which is 85% ethanol and 15% petroleum). It is a new article. The results surprised me. On its own, I would have taken it seriously, but not as proof. However, Walter, who writes HIGHLIGHT Health does an excellent job researching for his blog, and he described other research, this time experimental in nature, on the growing ratio of formaldehyde to acetaldehyde in Brazilian air since the introduction of ethanol fuel.

I’m not sure exactly why the formaldehyde problem exists, but I will search the literature and report back. I believe that the formaldehyde is at least partly related to sunlight and ozone, as is photochemical smog in general. I suspect that the very high oxygen content of ethanol relative to petroleum is an important factor in formaldehyde generation, but it might not be. I’ll look into this more.

I would expect that car emissions could be improved so that ethanol-run cars did not suffer from this problem, though it would (or might) require new catalytic converters that, as far as I know, nobody is working on. Developing countries might or might not be able to afford the catalytic converters. The truth is that, with the zero or low nitrogen and sulfur content of ethanol-based fuels, cheaper catalytic converters might handle the problem and work well in place of current models designed to survive sulfur and nitrogen impurities.

So, while ethanol has some problems as a fuel, as I see it, these problems do not seem to me to be insurmountable. This hopeful statement is predicated on people admitting that the problems exist and resources being put into solving the problems. We’ll see what happens.

 

No, the big problem is corn. (Well, oil is a big problem, too.)

 

It is my conclusion, based on the articles I have read, that we are going to destroy the ecosystem in the Gulf of Mexico and in rivers and lakes and seas and bays around the world if we continue to grow corn for ethanol. Just the fertilizer alone places far too great a burden on the rivers and streams.

From my recent World Headlines and blogroll, take this New York Times article, for instance, which reports on a National Research Council (NRC) study sponsored by our most prestigious scientific body in the US., the National Academy of Sciences, and funded by the National Science Foundation (NSF), Environmental Protection Agency (EPA) and other organizations:

 

“Panel Sees Problems in Ethanol Production

By CORNELIA DEAN

Published: October 11, 2007

Greater cultivation of crops to produce ethanol could harm water quality and leave some regions of the country with water shortages, a panel of experts is reporting. And corn, the most widely grown fuel crop in the United States, might cause more damage per unit of energy than other plants, especially switchgrass and native grasses, the panel said.”

I hope that you read this whole story, Mr. Haigwood. Afterwards, I’d like to see if you still feel the same about corn ethanol. I look forward to continuing the debate.

Personally, I don’t think that we will find a viable solution to the energy and fuel issues without efficient conversion of cellulose-based biomass to fuel and raw materials. There is progress being made in these areas, as I have discussed before.

 

 

© James K. Bashkin, 2007

____________________________________________

*Note, the mission statement of the organization Mr. Haigwood is connected with is:

“The Clean Fuels Development Coalition (CFDC) is an innovative not-for-profit organization that actively supports the development of new technologies and the increased production of fuels that can reduce air pollution, stimulate our economy, and lessen our dangerous dependence on imported oil. Our goal is to drive the demand for clean low-carbon fuels, like ethanol, through a combination of efforts that include collaborating with industry, educating and communicating with the media and other strategic influencers, and support new legislative initiatives that will help us achieve our mission.”

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