Ethanol Debate Surges on Wake of Emergency Oil Summit

According to Great Britain’s PM Gordon Brown, our current energy crisis is a simple case of Economics 101. There is more demand than supply, and that is why oil prices are skyrocketing. At this past weekend’s emergency oil summit in Jeddah, Brown sought a way to rebalance that disparity, according to the Guardian UK, by offering a long-term deal of energy supply diversification as well as an investment by oil-supplying countries into western renewable technologies. Yet, despite his best efforts, he was unable to take the “heat” out of the rising oil prices, which at 12:00 EDT today, was trading at $137.18.
Amongst other things, this has refueled the debate on ethanol. Bloomberg reported on Friday that the US, Brazil, and the EU are accelerating efforts to create global standards and make the alternative fuel an internationally traded commodity. The standards would let buyers and sellers trade the fuel like copper, sugar, and oil, undoubtedly boosting ethanol’s usage. “We can start seeing a world where we’ll begin to really replace gasoline with ethanol,” said Gregory Manuel, Secretary of State Condoleeza Rice’s special adviser for alternative energy. “Trade is a function of commoditization.”

As many view the trade and commoditization of ethanol as a positive step to diversifying our energy reliance, during the election year in the US however, the ethanol issue remains complicated. Brazil, who is the world’s second largest producer of ethanol behind the US, produces a sugar-based biofuel that many proponents claim has a far more efficient production cycle compared to the United States’ corn-based, and provides 8 times more energy. The Brazilian ethanol, though, has a high import tariff, which aides to the subsidization of domestic production, and according to an article in the NY Times this morning, this is a point where candidates McCain and Obama stand divided.
“We made a series of mistakes by not adopting a sustainable energy policy, one of which is the subsidies for corn ethanol, which I warned in Iowa were going to destroy the market and contribute to inflation,” said Senator McCain to Brazilian newspaper O Estado de S√£o Paulo earlier this month.
Standing in contrast to McCain’s support of a more open trade policy for Brazilian sugar-based ethanol, Obama has remained a supporter of domestic production subsidies. As the NY Times reports, Obama is regarded as a reformer seeking to reduce the influence of special interests in politics. “But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates.”
One example of which is Tom Daschle, the former Senate Majority Leader and national co-chairman for the Obama campaign. Daschle also serves on the board of three corn-based ethanol companies, which has remained a controversial topic in the US as many critics indict it for the amount of land and energy that is required to produce it. Though in a phone interview with the Times, Daschle said his role as an adviser on energy matters was limited, Obama has remained a supporter of corn-based ethanol subsidies, citing America’s need to build “energy independence.”
The article in many instances alludes to Obama’s rhetoric of “energy independence” as a way of further establishing his presence in mid-western states, the largest corn producers in the country. According to statistics on from Industrial Info Resources, the US currently has 156 operational ethanol plants, and based on USDA numbers, nearly a quarter of all domestic corn crops will be used for ethanol production. At these levels, corn-based ethanol is estimated to expand to 8.8 billion gallons next year, which could definitely help combat our continued reliance on petroleum. Yet, citing the sharp rise of corn prices in tandem with oil, the Times also claimed that the subsidies would end up in the hands of the same oil companies that Obama says should be subjected to the windfall profits tax.
As the election year continues, as politicians and candidates seek to find solutions for rising oil prices, a slacking domestic economy, international trade policies, and global warming, amongst other things, it will be interesting to see how the ethanol debate evolves and shapes political discourse. Though it is positive to see that both main presidential candidates are in favor of fostering alternative energies, what remains unclear in all of this is what is best for the country and what is best for us in the long run.

Ashwin is an Associate Editor of Triple Pundit. He recently returned to the Bay Area after living in Argentina, where he wholeheartedly missed the Pacific Ocean. He is a freelance editor and media and marketing consultant.After a brief stint working in the wine world, when not staring blankly at a computer screen, you'll find him working on Anand Confections or at 826 Valencia, where he has been a long-time volunteer.

4 responses

  1. You’re very right about the issues inherent in ethanol’s energy input and output. For the sake of this topic, however, I was hoping to keep the conversation grounded in political terms. Whether I like or not, it’s hard to divorce issues like this from that realm, especially when we’re talking about subsidies or international trade agreements or commitments to infrastructural development, beit for ethanol, solar, hydrogen, or whatever the case may be. Thanks for your comment!

  2. Food or fuel?? What is more important? Throw out the mandates and government subsidies!!! Just let the free market work! It will determine the proper price for corn and how much of it should be used for fuel and for food.

    University of Hawai’i Professor Pengchen “Patrick” Fu developed an innovative technology, to produce high amounts of ethanol with modified cyanobacterias, as a new feedstock for ethanol, without entering in conflict with the food and feed-production .
    Fu has developed strains of cyanobacteria – one of the components of pond scum – that feed on atmospheric carbon dioxide, and produce ethanol as a waste product.
    He has done it both in his laboratory under fluorescent light and with sunlight on the roof of his building. Sunlight works better, he said.
    It has a lot of appeal and potential. Turning waste into something useful is a good thing. And the blue-green-algae needs only sun and wast- recycled from the sugar-cane-industry, to grow and to produce directly more and more ethanol. With this solution, the sugarcane-based ethanol-industry in Brazil and other tropical regions will get a second way, to produce more biocombustible for the worldmarket.
    The technique may need adjusting to increase how much ethanol it yields, but it may be a new technology-challenge in the near future.
    The process was patented by Fu and UH in January, but there’s still plenty of work to do to bring it to a commercial level. The team of Fu foundet just the start-up LA WAHIE BIOTECH INC. with headquarter in Hawaii and branch-office in Brazil.
    Fu figures his team is two to three years from being able to build a full-scale
    ethanol plant, and they are looking for investors or industry-partners (jointventure).
    He is fine-tuning his research to find different strains of blue-green algae that will produce even more ethanol, and that are more tolerant of high levels of ethanol. The system permits, to “harvest” continuously ethanol – using a membrane-system- and to pump than the blue-green-algae-solution in the Photo-Bio-Reactor again.
    Fu started out in chemical engineering, and then began the study of biology. He has studied in China, Australia, Japan and the United States, and came to UH in 2002 after a stint as scientist for a private company in California.
    He is working also with NASA on the potential of cyanobacteria in future lunar and Mars colonization, and is also proceeding to take his ethanol technology into the marketplace. A business plan using his system, under the name La Wahie Biotech, won third place – and a $5,000 award – in the Business Plan Competition at UH’s Shidler College of Business.
    Daniel Dean and Donavan Kealoha, both UH law and business students, are Fu’s partners. So they are in the process of turning the business plan into an operating business.
    The production of ethanol for fuel is one of the nation’s and the world’s major initiatives, partly because its production takes as much carbon out of the atmosphere as it dumps into the atmosphere. That’s different from fossil fuels such as oil and coal, which take stored carbon out of the ground and release it into the atmosphere, for a net increase in greenhouse gas.
    Most current and planned ethanol production methods depend on farming, and in the case of corn and sugar, take food crops and divert them into energy.
    Fu said crop-based ethanol production is slow and resource-costly. He decided to work with cyanobacteria, some of which convert sunlight and carbon dioxide into their own food and release oxygen as a waste product.
    Other scientists also are researching using cyanobacteria to make ethanol, using different strains, but Fu’s technique is unique, he said. He inserted genetic material into one type of freshwater cyanobacterium, causing it to produce ethanol as its waste product. It works, and is an amazingly efficient system.
    The technology is fairly simple. It involves a photobioreactor, which is a
    fancy term for a clear glass or plastic container full of something alive, in which light promotes a biological reaction. Carbon dioxide gas is bubbled through the green mixture of water and cyanobacteria. The liquid is then passed through a specialized membrane that removes the
    ethanol, allowing the water, nutrients and cyanobacteria to return to the
    Solar energy drives the conversion of the carbon dioxide into ethanol. The partner of Prof. Fu in Brazil in the branch-office of La Wahie Biotech Inc. in Aracaju РProf. Hans-Jürgen Franke Рis developing a low-cost photo-bio-reactor-system. Prof. Franke want´s soon creat a pilot-project with Prof. Fu in Brazil.
    The benefit over other techniques of producing ethanol is that this is simple and quick – taking days rather than the months required to grow crops that can be converted to ethanol.
    La Wahie Biotech Inc. believes it can be done for significantly less than the cost of gasoline and also less than the cost of ethanol produced through conventional methods.
    Also, this system is not a net producer of carbon dioxide: Carbon dioxide released into the environment when ethanol is burned has been withdrawn from the environment during ethanol production. To get the carbon dioxide it needs, the system could even pull the gas out of the emissions of power plants or other carbon dioxide producers. That would prevent carbon dioxide release into the atmosphere, where it has been implicated as a
    major cause of global warming.
    Honolulo – Hawaii/USA and Aracaju – Sergipe/Brasil – 15/09/2008
    Prof. Pengcheng Fu – E-Mail:
    Prof. Hans-Jürgen Franke РE-Mail:
    Tel.: 00-55-79-3243-2209

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