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Case for biofuels weakens further

By Dennis T.  Avery
web posted May 18, 2009

Biofuels are a terrible answer to the fuel problem.

  • They force consumers to bid against themselves on food and fuel, artificially driving up the prices of both.
  • Biofuels take huge amounts of land to produce each gallon—and land is the planet's scarcest resource. Farmers know they must double food and feed production over the next 40 years to adequately feed the expected 8 billion people and we already use most of America's good farm land.
  • If you believe atmospheric carbon is a problem, be aware that when grassland is converted to cropland  to grow biofuels, we incur a "carbon debt" as the stored carbon in the soil gasses into the air. This aggravates greenhouse gas levels in the atmosphere—for decades into the future.

The most urgent problem, however, is the staggering cost of biofuels. Government subsidies for oil and natural gas totaled just 10 cents per megawatt hour in 2007, according to the Energy Information Agency. Converted to electricity, corn ethanol and other biofuels got 19 times as much subsidy per unit of delivered energy—$19.52 per megawatt-hour.

Coal got 44 cents per megawatt-hour in subsidies during 2007, while wind turbines got $23.37 and solar panels got $24.34 per MW-h!

Nuclear power produces carbon-free electricity, and is subsidized at only $1.59 per MW-h. However, Energy Secretary Stephen Chu just announced that he won't open the Yucca Mountain storage facility, so bye-bye to more nuclear power.

For all those subsidy dollars, the EIA says wind and solar provided only 1.1 percent of our electricity in 2008—after doubling during the Bush years. They're now only 0.2 percent of our total energy package. Ethanol displaced just 1.9 percent of our oil use. (My thanks go to Patrick Bedard of Car & Driver for teasing those numbers out of the voluminous EIA data.)

Cheerleaders for corn ethanol say the diverted corn doesn't much impact food costs. But, even with ethanol plants going bankrupt, corn is still far more expensive than four years ago. As the ethanol mandates expand sharply in the years ahead, expect food prices to rise accordingly. Corn growers may applaud higher prices, but shouldn't they admit the food-price reality?

Actually, the U.S. is gaining energy independence in one area—the huge amounts of modestly priced natural gas, from shale, that are now hitting the market. Oil prices are up 12 percent since the beginning of 2009, but natural gas prices are down 41 percent. We're producing the shale gas with computer-guided horizontal drilling, then "frakking" the shale layers with high-pressure liquids and sand to release more gas. Hugely productive new fields are being developed: Texas (the Barnett shale); Louisiana (the Haynesfield shale); and across Appalachia, from western New York clear down through West Virginia (the Marcellus shale). An industry-backed study sees 2.2 billion cubic feet of gas, enough to last nearly 100 years at current use rates.

Natural gas, of course, emits about 60 percent as much CO2 per unit as burning coal.  "The availability of natural–gas generation enables us to be much more courageous in charting a transition to a low-carbon economy," says Jason Grumet, an Obama advisor with the National Commission on Energy Policy.

Expect the sharp increase in natural gas production to flow into more gas-fired power plants, along with a more gradual increase in propane-powered car and truck fleets.

We can use the same drilling technology for the 400 billion barrels of light, sweet crude oil in the Bakken shale formation that underlies the Dakotas, Montana, and Saskatchewan.

Can someone remind me why we're subsidizing corn ethanol? ESR

Dennis T. Avery is an environmental economist, and a senior fellow for the Hudson Institute in Washington, DC.  He was formerly a senior analyst for the Department of State. He is co-author, with S. Fred Singer, of Unstoppable Global Warming Every 1500 Hundred Years, Readers may write him at PO Box 202, Churchville, VA 24421 or email to cgfi@hughes.net.


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