Corn Ethanol: Good on Paper, Bad in Reality?
We here at the Micro Cap Press have been following ‘clean energy’ trends for nearly a year. Broadly speaking, we’re in support of it (though who isn’t?) At the same time, we’re under no illusion that solving one energy problem won’t create another one. Take the debate over corn ethanol for instance. The technology works, but at what cost?
We fully intend to maintain our neutrality on all political or social matters. On the other hand, the truth is the truth…which just so happens to be the basis of our neutrality. Given the nature of the topic, we feel a fruitful discussion can be developed on the matter of corn ethanol, provided all of the participants (that’s you) are genuine about sharing and receiving information and opinions.
Though we intend to examine corn ethanol issues in perpetuity, for today we just want to get the ball rolling by publishing these factoids. We believe all are accurate.
- The United States’ use of ethanol meets only 3.5% of the total need for combustible auto fuel, but it requires the use of 20% of our corn.
- Recent Federal legislation calls for ethanol usage to increase dramatically between now and 2022. The law, however, unduly favors the use of corn ethanol (which would be subsidized), and disfavors sugar-based ethanol…by heavily taxing it. So what? The United States produces mostly corn ethanol. Sugar-based ethanol is largely Brazilian. Again, so what? Sugar ethanol happens to be much more efficient when comparing the energy it produces against the amount of energy needed to convert sugar into the biofuel in the first place. What’s the real priority?
- Ethanol/gasoline ‘blends’ of 10% (meaning 10% of the gasoline is actually ethanol biofuel) cut greenhouse gas emissions anywhere from 18% to 29%.
As investors, the comparison we need to make is the upside and downside of each side….perhaps acknowledging that this is a bigger deal than mere money. On the other hand, if there’s a fiscal opportunity built in, there’s no point in overlooking it.
We’ll continue to post pros and cons surrounding ethanol. We may even eventually come to a firm conclusion about what ultimately makes the most sense. In the meantime, we’ll continue to search for important micro cap news, and ferret out any stocks worth trading - inside or outside the ethanol arena.
Do you have something to add regarding the corn ethanol discussion? Chime in below.
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oh yeah baby
Editor’s response: Not quite sure what you mean, but it sounds interesting enough to approve. So…..oh yeah baby.
Comment by jafcob — November 20, 2008 @ 9:58 am
There are many reasons why corn ethanol is not a viable solution to the US energy sourcing dilemma. A good example is the lower BTU value of ethanol (about 76,000 BTU/gal at 60 degrees C) versus gasoline (109,000 - 119,000 BTU/gal at 60 degrees C). Crunhing the numbers, this means 10% ethanol gasahol will yield about a 5% fuel economy loss, which means you will require 5% more fuel to cover the same distance. The greenhouse emissions gases of concern are CO2, and Methane, and these are directly linked to fuel economy (i.e. the more fuel you burn per mile, the higher the CO2 emissions!). So, by common sense extrapolation, the 18 - 29% reduction in greenhouse gases with 10% ethanol is, to say the least, an exaggeration.
With regard to production costs, many estimates are out there, but back of the envelop calculation shows the cost of production to outweigh the utility benefit in vehicles (i.e. there are more BTUs that go into ethanol production than what the ethanol delivers). The key parameters into this calculation are the BTU costs to 1) corn seed production, 2) land preparation (tractors burn diesel fuel), 3) pertinent fertilizers, herbicides, and insecticides, 4) energy to apply fertilizers, herbicides, and insecticides, 5) time cost factor from planting to harvesting, 5) harvesting, 6) preparation of the corn for fermentation, 7) fermentation process,
separation and purification of the ethanol, 10) disposal of the waste, 12) transportation of ethanol to market (by road or rail since it is incompatible with pipelines).
And with emissions, it only benefits CO (10 - 20% reduction) and hydrocarbons (about 5% reduction). But NOx increase slightly (0 - 2%) and aldehydes increase (2 - 5%). Once in the vehicle, drawbacks with use are 1) fuel systems corrosion, 2) fuel systems deposit, and 3) negative impact on lubricant on fuel/oil dilution during vehicle operation.
So, I would conclude that corn ethanol should be seen as a short term stop gap band-aid to the US energy problem while we come up with more viable alternatives. However, reality predicts we might have to linger on the corn ethanol band wagon for a while because it is more an agricultural policy rather than an energy policy, and citizens of the agricultural mod-west are a strong voting block.
Comment by Allen Aradi — November 18, 2008 @ 12:57 pm
The use of corn to produce ethanol for fuel is just another example of our government’s knee-jerk reaction to our energy problems. Instead of exploring all of the potential, and now-realized, negative effects of using corn, they stubbornly forge ahead with a public-be-damned attitude. This administration is not the only party guilty of sitting on their hands when oil and gas were relatively inexpensive. Each administration before it, rather than spend the time to develop an energy policy focused on SEVERAL alternative fuels and sources of energy, pandered to the oil companies and so-called friendly countries for years. What about the natural gas that’s emitted from garbage and garbage dumps all over the country? What about increasing tax credits instead of decreasing them for homeowners and businesses installing various solar powered systems? What about using the grease that’s disposed of by millions of restaurants as a bio-fuel? We know there are a handful of people actually filtering and using this oil as a fuel right now to heat their homes and for their cars with diesel engines. Instead the enitre economy is at the mercy of mega-profit oil companies and oil-producing nations who are our enemies. Where is the great American know-how that lead the world for decades? Families and businesses are suffering and our entire economy is tetering on disaster for lack of action and foresight into our energy problems. We have learned nothing from the oil embargos and lines at the gasoline stations. Oil is a fossil fuel and as far as I know there are no more dinasaurs left. Like the dinasaurs we need to abandon oil, not just foreign oil, and get to work forthwith on real solutions to our energy problems. We can dedicate great minds to create iPods and iPhones and numerous toys for our insatiable appetite for entertainment but we can’t come up with a viable, cost-effective alternative to the internal combustion engine? Unless this country comes to grips with the realities facing people everyday trying to heat their homes and put gas in the cars and food on their tables, we are doomed. And it won’t take a missle to do it. When people con’t have money to spend of anything but fuel, look out for riots and increasing crime that is already being witnessed in certain parts of the world. Shame on this country for fiddling while its citizens burn.
Comment by Dan — May 9, 2008 @ 8:25 am
Corn ethanol is the only currently viable feedstock for ethanol. The government sent a mandate to farmers to
build and invest in corn ethanol production. Now they are wanting to pull the plug on them for doing what they were asked to do. Don’t they and the American people have the guts to stay the course?
The energy conversion will improve as new processes for corn ethanol are developed, if the government allows this process to go forward. The Brazilians have developed their cane ethanol over a 20 year period.
How can you expect corn ethanol producers to do the same in 3 years. Their is also the issue of DDG, which is distilled dry grains. This is the unused portion of the grain and is being used to feed livestock as we speak here. There is very little feed use loss in this process. More mouths in the world to feed is what is making food prices go up. More people with more money to buy foodstuffs will continue this trend.
I believe that there are multinational companies and Brazil itself lobbing to change the policy of taxing cane ethanol so they can benefit. This has got us into the energy mess we are now in. Americans need to be patient so that the market here in the United States can work and develop. Other than corn and soybeans there are no other feedstocks available in quanity and portability that can be used and transported . Cane ethanol will develop here but it will take time. Just like it did in Brazil.
Don’t destroy the American Farmer, instead keep this money in the United States . We are already sending our energy dollars out of the country . Stop the bleeding. Invest in America.
Comment by carl — May 9, 2008 @ 4:40 am
Living in Hawaii, we are seeing sugar ethanol plans halted because of permitting delays and difficulties in financing plants…
In the mean time, it takes about 400 pounds of corn to produce 25 gallons of ethanol. That same 400 ounds of corn would about feed a person…not the best diet, but survivable. If you buy 15 gallons of gas a week, with 10% ethanol, you are burning about 75 gallons of ethanol a year…which could feed 3 people.
We DO need to work on coverting cellulose into alcohol…and maybe some sugar conversion plants (especially where sugar would otherwise be abandoned as a crop, as in Hawaii)…but we should cut back on corn to ethanol…by removing the subsidy.
Editor’s response: Thanks for the addition…the reality is pretty clear. Anybody else have any background on cellulose/alcohol energy?
Comment by William — May 6, 2008 @ 7:18 pm