Interesting timing, especially when some biomass companies are switching from wood chips to corn, because they couldn’t turn a profit on wood chips. Looks like all the wheels are coming off the bus now.
To Survive, Some Biofuels Companies Give Up on Biofuels – Technology Review
Gevo, a prominent advanced-biofuels company that has received millions in U.S. government funding to develop fuels made from cellulosic sources such as grass and wood chips, is finding that it can’t use these materials if it hopes to survive. Instead, it’s going to use corn, a common source for conventional biofuels. What’s more, most of the product from its first facility will be used for chemicals rather than fuel.
As the difficulty of producing cellulosic biofuels cheaply becomes apparent, a growing number of advanced-biofuels companies are finding it necessary to take creative approaches to their business, even though that means abandoning some of their green credentials, at least temporarily, and focusing on markets that won’t have a major impact on oil imports. This is hardly the outcome the government hoped for when it announced cellulosic-biofuels mandates, R&D funding, and other incentives in recent years.
Here’s the story on the subsidy ending from the Detroit News:
Congress adjourned for the year on Friday, failing to extend the tax break that’s drawn a wide variety of critics on Capitol Hill, including Sens. Tom Coburn, R-Okla., and Dianne Feinstein, D-Calif. Critics also have included environmentalists, frozen food producers, ranchers and others.
The policies have helped shift millions of tons of corn from feedlots, dinner tables and other products into gas tanks.
Environmental group Friends of the Earth praised the move.
“The end of this giant subsidy for dirty corn ethanol is a win for taxpayers, the environment and people struggling to put food on their tables,” biofuels policy campaigner Michal Rosenoer said Friday.
Dirty Corn Ethanol? I’m all for ending taxpayer siphoning, but dirty corn ethanol?
Full story h/t to Lawrence Depenbush
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Our usual ethanol disciples will doubtlessly dispute this, but if one were to take a gander at the total usage and imports of oil by the US it becomes abundantly obvious that ethanol hasn’t made a significant dent in the amount of oil we import or use. The disciples will claim it’s like Obama’s “jobs saved” or the stimulus spending (i.e. without ethanol it would have been much worse!). So what’s the point of converting feed stock into ethanol? It does NOT reduce pollution. It does NOT reduce the price of motor fuel at the pump. No one would ever put it in aviation gas. You certainly want to avoid it in fuel for marine engines. Ethanol is hygroscopic and absorbs water. It’s very hard on small engines. It DOES reduce gas mileage so we spend more per mile traveled.
Corn farmers get paid the same Ag subsidy rather they grow sweet corn, feed corn or corn for ethanol. For the individual farmer it’s a surprisingly modest sum and it’s nothing new. For Big Ag giants like ADM it’s a huge sum of money. Currently the ethanol producers are paid a subsidy and the blenders (i.e. the oil companies) are paid a subsidy. If the taxpayer subsidies go away the only thing that will change is the cost of fuel at the pump. What must end are the mandates – specifically the federal mandates. I don’t care if California wants to mandate that THEIR gasoline be adulterated with ethanol (sorry, crosspatch). It should be the decision of the individual states. It doesn’t even bother me that ethanol is used to adulterate gasoline or that some folks feel better about themselves for using E85. I just don’t want to be forced to subsidize their artificially less expensive fuel. I also want to be able to burn pure gasoline in my vehicles that were designed to burn pure gasoline. Let the free market pick the winners and losers, not politicians and crony capitalists using taxpayer money. Without these damn subsidies it would cost the refineries less to produce pure gasoline than an E10 blend. So if ethanol is such a wonderful technology as asserted by A. Scott and Hotrod Larry, end the mandates and subsidies and see if the ethanol industry survives.
Ethanol provides no measurable benefit to the USA. It benefits relatively few at the expense of the many. It is also laughable to even suggest that diverting 40% of our corn crop to make motor fuel doesn’t affect food costs. The mandates inflate the cost of corn (which the farmers and Big Ag love) and this affects all other food stuffs. Ask anyone who raises cattle, hogs or chickens. This isn’t the evil work of “speculators”, it is simple supply and demand. Converting food to fuel while millions are starving is immoral.
“I don’t think other manufacturers get that sweet a deal. Other manufacturers may get accelerated depreciation, but they do not get to claim more than their capital investment. This is a subsidy to the oil business in the US.”
The same deals are available for mining, and, I believe, timber production.
“Correct, — but it is the same bogus energy accounting used by the anti-ethanol group to discredit fuel ethanol with intentionally misleading energy accounting.”
Not really. Most everyone agrees that there is a positive energy balance for Ethanol production, somewhere on the order of 1.3-1.4 to one. Where the disagreement comes in, is if this catches all the energy expenditures required to produce it. Where the discussion really gets hairy, is when the claim comes in that we are “replacing” 10 billion gallons of oil with 10 billion gallons of Ethanol. Well, not really, because it took the equivalent of about 7 billion gallons to make it, so, the net positive is pretty darned small in the scheme of things.
http://www.ffhboo.com/hemp.html
And if you’re wondering after reading that page why hemp was outlawed, think about the industries at the time which were in those markets..
That’s why there was a huge campaign in the US to demonise it, they had to give it a name change, to marijuana, because hemp was so well known not to be demonic.. Having gotten it outlawed in the States, the BigCompaniesCartel had it outlawed world wide.
No one has a right to make any law forbidding its use.
jabre says:
December 28, 2011 at 11:27 am
Ever hear of a group called Al Queda?
Ever hear of a country called Israel?
A. Scotts, Hotrod, et al,
Until you stop stating the information concerning energy out vs energy in in such an obtuse and misleading way, I will not stop ridiculing you,re inference of perpetual motion. If it is factual that corn ETOH contains more energy than the sum of its energy inputs. it is an energy amplifier.
Since it doesent matter what the source of the input BTUs in is then corn ETOH could be used as the energy input. Then one BTU of corn ETOH in will give you 1.6 BTU of corn ETOH out. In this case only one BTU of non corn ETOH is needed to prime the corn ETOH pump making all other sources of energy moot and all ETOH energy essentially free.
Your statement is misleading at best and something that you honestly believe at worst. If ETOH was such a magical fuel. it would need no subsidy and would bring nearly free energy to every citizen of the world.
And none too soon!
“Dirty Corn Ethanol? I’m all for ending taxpayer siphoning, but dirty corn ethanol?”
Funny. Yes, like the Dirty Oil from the Canadian oil sands. Or Dirty Coal. The greenies seem to love to use this term for anything but dirt, which is, of course, organic and pure. Unless it has dirty fertilizer or dirty pesticides in it. Or is tilled by machines using dirty oil.
They love to talk dirty. It sounds so ‘bad.’
Propaganda is based on the selective and repetitive use of ‘fuzzy’ words. Following the Orwell model I suppose some things will soon be called doubledirty.
Well, _Jim, Google can help you: Follow the link:
http://www.embrapa.br/imprensa/noticias/2011/novembro/4a-semana/rs-tera-sistema-de-producao-de-cana/
philincalifornia,
I lived and worked in Brazil. I’m of a belief that the “Alcool” success story of Brazil is mostly hype. I cannot see where the benefit is realized for the average Joe. Automobile fuel prices are higher in Brazil than, for example, the USA even after the USA’s fuel price increases over the last few years. Brazilians have less money for fuel to begin with. Per capita Car ownership is much lower in Brazil so fuel demand is less. “Gasolina Comum” is still sold in Brazil so the alcohol fortified fuel has not displaced gasoline. Petrobras is pulling out all of the stops to cultivate Brazil’s off shore oil reserves. My guess is it’s mostly just domestic politics like the USA’s interest in these types of alcohol related fuels. It pumps money into certain peoples’ pockets and provides domestic make work.
Jabre, Can we count the cost of the defense of the entire continentsl USA towards the cost of ethanol?
philincalifornia says:
December 28, 2011 at 8:07 am
“DirkH says:
December 28, 2011 at 7:07 am
[mentioning decades of sugar cane subsidies in brazil]
———————————————
Maybe Dirk but, as the saying goes “Good things come to those who wait” and the wait is clearly over, as evidenced by the football (soccer) star proxy.”
I wish you luck with that attitude in California. Maybe in 30 years the jobs you are now losing to Texas just might come back.
cwj says:
“Oil producers get a depletion allowance of 15 percent of the gross income from all the oil they pump, regardless of the depreciation. If the depreciation of the capital investment to develop the field is greater than the depletion allowance they can claim depreciation instead. I don’t think other manufacturers get that sweet a deal. Other manufacturers may get accelerated depreciation, but they do not get to claim more than their capital investment. This is a subsidy to the oil business in the US.”
•
Companies that extract water from the Ogallala aquifer get the same depletion allowance as oil production, because like oil, an aquifer is a diminishing resource. And many industries are allowed accelerated depreciation in the tax code [accelerated depreciation is recaptured upon sale of the asset]. What you are actually commenting on are simply incentives provided in the tax code for oil exploration and production.
The only number that really matters is the net amount paid into federal and state treasuries after all tax incentives are accounted for. Oil companies pay substantially more than the average company in net income taxes. There is no comparable subsidy to the immense sums provided to politically favored industries such as windmill companies, which on balance not only pay zero income taxes, but which collect enormous taxpayer resources to allow them to keep afloat.
Already done that:
http://www.fuelandfiber.com/Archive/Fuel/Research/AGE85/age85.html
Yes it does multiply fuel availability.
The majority of the energy used to make fuel ethanol is derived from natural gas and coal fired electric — it is essentially transforming those fuel sources into a usable liquid transportation fuel. It also directly replaces gasoline which everyone agrees that if you add 10% ethanol to a batch of gasoline you end up with more fuel than you started with. Since fuel ethanol has a direct energy content of 72% of gasoline on a gallon for gallon basis, you have increased the fuel energy available by 7.2%. You also have increased the octane of the gasoline blended in, so you allow the refiner to you a larger distillation cut from the crude oil. Distilate that he previously could not sell legally as gasoline when blended with ethanol now meets minimum octane requirements for sale.
The most common way to denature ethanol so it can be sold as fuel ethanol rather than taxed as liquor is to add 5% straight run sub-octane gasoline. Because of those combined effects each gallon of ethanol blended with gasoline effectively increases our gasoline supply producible from available crude by about 1.2 gallons.
Once you add in the economic benefit of spending that transportation fuel money in the U.S. rather than sending the money overseas to crude oil importers the net benefit is substantial.
Will fuel ethanol ever fully replace gasoline. NO!!
And you would be an idiot to try, it is a high quality blending agent that enhances gasoline and increases the available supply while also improving fuel octane, and burn characteristics. Its best use would be to blend it with gasoline in high ethanol blends from 20% – 60% ethanol for low octane requirement engines and 85% (E-85) for high octane requirement engines.
Larry
You were the person who advocated redirecting the $252 billion we spend for imported oil into the U.S. economy and implied this would henceforth be for production of liquid fuels using ethanol. I’m simply saying that you’ll never get there with ethanol because the side issues are too grave. Moreover, there is no need to become energy independent, which is what this issue is really about. The argument is: “We can pay a non-economic price for “renewable” fuels because there are all these other savings to be had and subsidies we can eliminate. etc and so on…”
You are snipping (not that I care), I am not kidding, and I have been living here, on Earth, for 60 years now. Your figure of the “true” cost of oil being $480 per barrel is not credible. If you mean that oil induces $480 of economic activity per barrel consumed I could believe that, but you said “subsidies” and that is not credible.
Big _Jim says your reference is bogus anyway.
The extra information you provided is interesting, thank you. But since we are speaking mainly of ethanol/gasoline blends in the range of 15% (V/V) with gasohol (E85 can’t be much market share), then what I said is not out of context, and is germane to the topic at hand. Refiners do reduce the amount of pentanes in the gasoline before blending to offset for this volatiles issue. Thus, one may add 15% ethanol, but one does not extend the liquid fuel available by as much as 15%. As since we are speaking of a very small gain in this replacement scheme anyway, this becomes important to the life-cycle analysis of using ethanol in gasoline.
Finally,
Well, true, but if you look at it another way, It doesn’t seems so great. First I’ll use a figure of 1.34 rather than 1.6 (see the reference I provided way back up at 8:32am). To get 1.0 BTU of gasoline energy into the economy we must consume about 0.15 BTU of energy for production, refining, and transportation. To replace that 1 BTU of gasoline with 1 BTU of ethanol requires we consume 3.0 BTU of energy to get back 4.0 BTU of ethanol (1 BTU net to replace the gasoline). Therefore we increase the flow of energy through the economy greatly with all the attendant environmental and investment issues.
For all of its portrayal as a green renewable source I can’t get over the fact that you must burn off 1 BTU of energy and afford all of the associated consequences before you can get at that 1.6 BTUs of green renewable energy and all of the slightly smaller consequences.
Even funnier is what “clean” organic fertilizer is made of v.s. the “dirty” stuff made from natural gas and air.
Lovely; still in the ‘research phase’ … an easy spot when the first few paragraphs start like this:
“Pesquisadores estão desenvolvendo … ”
and
“A idéia é reproduzir no estado produtividades … ”
and
“O objetivo da pesquisa é criar todo um … ”
(Meaning “Researchers are developing ” and “The idea is to reproduce ” and “The objective of this research is to “.)
Hopium at this phase.
.
I suppose if you are worried about the amount of CO2 in the atmosphere it is ultimately because you are worried about the well-being of the people living on the planet.
Even if CO2 is a problem and biofuels are a solution to that problem, biofuels still reduce the well being of people living on the planet by forcing some of them into starvation.
Example…
http://climatesanity.wordpress.com/2011/12/28/biofuels-leading-to-disaster/
Cost of the corn component in food at $7.00 per bushel of corn
Corn flakes, 18 oz box $0.10
Soda, 2 liter bottle $0.12
Beef, per lb of beef $0.33
Pork, per lb of Pork $0.45
http://ncga.com/facts for more details. (National Corn Growers Association compiling data from other sources)
Compare the above estimates to the cost of any of the above at your local grocery store. The cost of corn is not a large component of the cost of any food, even corn flakes.
The cost of the raw agricultural product of any food in the US is a small part of the ultimate cost to the consumer. Most of the cost of food is in the processing and distribution.
Smokey did well here, in response, but I wanted to add something. First, in order to “incentivize” people to produce strategic minerals some get a better deal than the 15% depletion allowance on oil–nickel for instance gets 22%. So other people do better than oil. Second, the 15% depletion is limited to one-half of taxable income, and so despite the depletion allowance the producer still pays taxes; and unlike what cwj claims, this is for depletable assets and not depreciable ones–they are not the same.
Speculators or not, Scott A cannot explain why, if the demand of corn has been going up, (almost HALF of the demand is now ethanol!) – why have our exports been going DOWN?
What some people totally fail to understand in all this is that in the third world the cost of feeding a family is sometimes 100% of that family’s income. When our exports drop the price of food in the third world goes up and those people have less to eat as a result. Adding insult to injury, some farmers in the third world are enticed to grow bio-fuel crops and some are even being told to abandon their farms altogether to mitigate CO2 via reforestation thus further reducing the food supply.
It boils down to a matter of rich people buying the food right out of the mouths of starving people in order to ‘feed’ it to their machines. If that isn’t evil then evil has no meaning. Genocide is exactly the unspoken end result that these gaia worshippers actually desire as they foist their faux notion of ‘saving the planet’ on us. END the ethanol mandate now.
It threatens (has been threatening and has ‘worked over’ a lot of old boat motors) the boating industry with its incompatibility with various seals and rubber used in fuel systems, just as it has rotted seals and rubber used in a multitude of small engines where it is mandated to be used as a motor vehicle fuel.
Why can’t politicians just leave us alone without messing with every little thing they can get their fingers on, like our previously-functioning fuel supply system or our lives? Launch the Challenger in sub-freezing temperature against engineering recommendations not to, go for ‘Throttle up’ … just be prepared for failure down the road because of decisions that countermand reality and better judgment.
.
@cwj: People who are living in or close to poverty are deeply affected by grain prices, and right now the global price of wheat is rising. Corn is not in a vacuum. “Maize prices have increased sharply and are affected by complex linkages with other markets. In January 2011, maize prices were about 73% higher than June 2010. These increases are due to a series of downward revisions of crop forecasts, low stocks…the positive relationship between maize and wheat prices, and the use of corn for biofuels…Higher global maize prices are also passed through to consumers indirectly by raising animal feed prices, meat prices, and the price of many processed food categories.”
Three ways 10% Ethanol is saving you money.
1) The wholesale price of ethanol, today, is $2.21/gal (Gasoline is $2.66/gal).
http://news.ncgapremium.com/index.cfm?show=62&subtype=25
2) The gasoline that is blended with ethanol is lower grade gasoline than the “straight” gas you might still be able to buy in some places. The straight gas is 87 Octane. The gasoline that is blended with ethanol is 84 Octane (the higher Octane ethanol brings it back up to 87 Octane.)
3) Following the lead of Brazil, and the U.S., the “World” is now producing close to 2 Million Barrels/Day of Ethanol. Taking this 2 mbpd off of the global market would surely raise the price of gasoline, Substantially.
Smokey; “What you are actually commenting on are simply incentives provided in the tax code for oil exploration and production. ”
The difference between the 15% depletion allowance and actual depreciation is a subsidy as well as an incentive. Even ACRS only accelerates the timing when the depreciation offset income, it never exceeds the amount of the depreciated Capital investment. Depletion allowance by design exceeds the amount of depreciable asset.