Discussion on:

The Morning Briefing: Biofuels

...the Senate Finance Committees recent extension of the cellulosic ethanol income tax credit is welcome news.

For whom? Certainly not consumers. To the crony capitalists and the political/subsidy feedback loop, certainly.

Picture an America in some parallel universe: The oil industry announces that it is mixing 10% or more of Ethanol into the gasoline supply. Immediately, America's already most hated industry is attacked from all quarters for attempting to literally water down American's fuel to rip off consumers. Ralph Nader would be filing class action lawsuits on behalf of all consumers for the losses related to reduced fuel economy and damage to internal combustion engines, and Al Gore would go on a rampage about the increased net carbon footprint and other environmental damage because of the resource intensive nature of producing Ethanol. There'd be food riots in the 3rd world, because of the diversion of food crops to produce Ethanol, and vast amounts of rain forest would be cut down for crop land needed to make up the difference.

Oh wait. The last part actually has happened in our universe too.

At least the America in that universe retains some degree of sanity. Ours clearly does not. Ethanol is a complete scam. The idea that ethanol is low carbon is a flat-out lie, especially considering that it takes a gallon of oil-based products (gasoline, diesel, and fertilizer) to produce a gallon of Ethanol, which actually has lower heat content than the fuel it's replacing. Getting lower mileage these days? That's probably why. Never mind the damage that may be happening to your engines. (But now that the US government is also an automaker, they're okay with the idea that your older car is going to die a premature death - Just consider it another personal sacrifice for keeping the UAW in business)

Ethanol subsidies are a perfect example of the destructive feedback loops that are created when the government starts subsidizing. Producers receiving the subsidy get comfortable, then dependent on the subsidy. A percentage of the subsidy is then fed back to the politicians to keep the subsidy in place, or to even expand. The last thing any of these people want is for the subsidy to ever end. Meanwhile, more viable alternatives are squeezed out of the market and never happen.

Even Al Gore now admits that supporting Ethanol was a mistake, and that he did so only because he had to buy much needed votes from the farm states.

I have every expectation that in 100 years when all transport is fueled by something other than carbon-based energy, that we'll still be subsidizing Ethanol, just like the city of Detroit still subsidizes a horseshoe changer.

While biofuels from wastes offer limited economic potential and a wise environmental strategy - biofuel from waste production also represents practically - less than 1% of energy needs. Waste biofuel production is severely economically limited by logistical costs and climate - such that only a few site locations are economically feasible. There have been at least four or more major mass balance analysis studies of biofuels and all of them have agreed on at least one thing - significant energy production from biofuels will require NPK fertilizer - same as our food production for which biofuels will compete directly. Some experts have estimated a global biofuel industry could quadruple NPK demand over food production demand.

According to the 2011 USDA Fertilizer Import Summary - "U.S. nitrogen and potash supplies largely depend on imports. More than 54 percent of nitrogen (N) and 85 percent of potash (K2O) supply was from imports in calendar year 2011. Because domestic production capacity is limited, any increase in nitrogen and potash demands will have to be met largely by imports."

A decade ago the US was a net exporter of NPK and it's most critical component rock phosphates (also the only known at scale economic source of ag. and ind. phosphorous) that supply the phosphorus (most critical element) in NPK fertilizers which are btw totally dependent on petroleum for their production today. We now import a growing amount of rock phosphate - 15% of our consumption in 2011. From where you should ask? Well, that would be largely from Morocco. This begs the logical question - "If we have to import the fertilizers that we use for civilian/military biofuel and food production - how is that less risky, or a lower priority than importing foreign oil?" and "How does it reduce our critical dependency on foreign resources - especially in times of war where foreign dependency can be used against us as an effective weapon?"