The ethanol industry has attracted many critics over the years. Much of the criticism is well meant and should be well taken. The yardsticks that are usually applied to the industry – carbon footprint, biodiversity, competition between food and fuel, government subsidies, air and water quality – are certainly appropriate, even if they are rarely applied equally to all energy industries.

But the critics tend to miss the most important point about the historical reason for the development of the ethanol industry.  The primary reason for blending ethanol in gasoline is NOT to replace Middle Eastern oil. (That was always a secondary issue.)

The reason that today’s corn ethanol industry has become so large is that the oil industry does not have a safe additive to bring gasoline up to 87 octane.

Back in the 1970s, when the Richmond-based Ethyl Corp.’s leaded gasoline additive was replaced as a grave public health hazard, the oil industry resorted to severe reforming of crude oil to obtain gasoline with minimal octane levels. This gasoline had high levels of benzene and related carcinogens. That’s why your local service station now has signs warning about unleaded gasoline and carcinogenic compounds in gasoline.

In 1990, Congress worked with President George H.W. Bush’s Environmental Protection Agency to amend the Clean Air Act and eliminate benzene and other carcinogens in gasoline. The law mandated two new types of oxygenated octane boosters: These were 1. MTBE, made from petroleum, which they thought would be used mostly on the east and west coasts, and 2. blends of 10 percent ethanol made from corn, which they thought would be used mostly in the heartland and eventually replaced by cellulosic biofuels.

As it turned out, MTBE was a serious water pollutant. Like lead and benzene, it was banned in the late 1990s.

That left corn ethanol, and the industry was not at all ready for prime time. It jumped from a few billion gallons of annual production to more than 14 billion in the space of a few short years. And as it grew, its critics became increasingly vocal. Much of the criticism was fueled by the oil industry, which was dismayed at losing such a large portion of its market.

There’s no space to address all the issues here, but it should be said that ethanol is in fact energy positive (although only marginally so), and does not take food out of the mouths of starving children (since leftover corn is fed to livestock with 90 percent of the original protein value).

In addition, ethanol is well proven to be far cleaner than gasoline in terms of air and water pollution.

However, the long-term pressure on agriculture is a serious issue in terms of world food resources, and supplying the growing demand for energy could very well come at the price of starvation in the developing world, as critics have warned. This is a point in favor of second- and third-generation biofuels, which have long been known as better but more technically difficult.

Unfortunately, the ethanol debate has largely been one-sided. Unwilling to engage its critics and admit its mistakes, the ethanol industry has sheltered behind a high-level public relations campaign focused on Congress. This has left the field of public opinion open to those who have no interest in getting to the bottom of seriously complex scientific and public health issues.

For all its problems, there are major issues with the idea of eliminating ethanol blends in gasoline. Most importantly, what octane booster will replace it? Leaded gasoline, benzene, MTBE or other metallic compounds? Are we ready for yet another public health debacle?

It’s also worth considering the way that alternative energy sources are treated in the U.S. Following a period of enthusiasm, tax credits are enacted, then as problems are encountered, a wave of negative publicity builds. Eventually the tax credits are withdrawn and the alternative energy industry collapses. This has happened with solar, wind, biodiesel and other alternative energy sources except ethanol since, until recently, ethanol was primarily supported by Midwestern Republicans.

Today, some people say that government shouldn’t be in the business of choosing technologies. They say they want an unregulated marketplace. But if that were true, we wouldn’t have military protection for the Persian Gulf, we wouldn’t have an insurance ceiling for the nuclear power industry, and we would still be talking about taking the lead out of gasoline.

We need to remember our history and use a little common sense in our energy policy before taking thoughtless actions we may later come to regret.

Q: How many conservative economists does it take to change a light bulb?
A: None. The darkness will cause the light bulb to change by itself.

H.R.Spalding Co., Boston, 1852, was one of thousands of stores selling various liquid fuels, including an ethanol blend, before kerosene was introduced with a tax advantage in the 1860s.

History is loaded with myths, and they are often used to lead is in one direction when, in fact, a more accurate historical account might provide a rather different lesson.

Take, for instance, the Whale Oil Myth — the idea that the free market, without any government intervention, is fully capable of making energy technology transitions. People who believed in the myth have argued against environmental regulation and energy research.

I first heard about the Whale Oil Myth as a journalist covering a speech by Sen. Henry (Scoop) Jackson (D-WA) in 1979 at the American Stock Exchange in New York. Jackson was telling a group of assembled oil executives that their professed belief in full deregulation and a government-free market was not credible. He noted that, historically, government subsidies favoring the oil industry were always supported by the oil industry, and “if that’s not regulation, Im stupid.” He said it was time to get beyond the “whale oil myth.”

In the 1970s and 80s, Ronald Reagan’s economic adviser, Walter Wriston, often used the Whale Oil Myth to argue that we didn’t need a federal energy policy. All we needed was deregulation, and the market would move in the right direction. Acting on this advice, Reagan crippled federal environmental regulation and energy research during the 1980s.

In 1992, economist James S. Robbins provided a more concise account of the Whale Oil Myth in Capitalism Saved the Whales. “The whales were saved because of the march of technology,” rather than environmentalism, Robbins said. The technology of petroleum gave the whales their reprieve. Robbins goes on:

“Stopping technology in its tracks in the 1850s would have doomed the whales. But suppose whaling had been outlawed then, as it is now? The immediate effect would have been a dramatic decline in quality of life. Would kerosene and electric lamps have come on the scene any faster, in reaction to the sudden surge in demand for substitutes?”

In April of 2008, distinguished Carnegie Mellon economist Lester Lave told the PBS News Hour:

“In the 19th century, we were using whale oil for lighting. It was the best way to get light at night. The problem was that there are only so many whales, and we had more people around. And so basically there just wasnt enough whale oil. So what happened was that in Western Pennsylvania, they discovered oil.”

Despite their differences in political orientation, Robbins (the conservative) and Lave (the liberal) simply haven’t done their homework. The fact is that kerosene did not arrive just in time to replace the dwindling supply of whales.

A variety of lamp oils

Consumers had a farily wide choice of lamp fuels in the years before the Civil War. Every sizable town had a store devoted to a variety of lamps and lamp fuels and a “manufactory” for the various fuels. The illustration to the left is H.H. Spalding’s store in Boston, MA around 1850. At Spalding’s store, a consumer would have a choice of five or six types of fuel as well as candles:

• Whale oil — $1.30 to $2.50 / gallon
• Camphene — 50 cents / turpentine and camphor oil without alcohol / not as bright as burning fluid
• Burning fluid — 50 cents / gallon (blends of alcohol, turpentine and camphor oil – bright, sweet smelling)
• Lard oil — 90 cents (low quality, smelly)
• Coal oil — 50 cents (sooty, smelly, low quality) (the original “kerosene”)
• Candles — by 1850 used in rural and low-income urban areas

At the time, street lights from manufactured coal gas were also being installed in cities across Europe and America, but most homes used lamps. According to an IRS report, alcohol production for the burning fluid market alone stood around 90 million gallons per year at its height in 1860 (Free Alcohol Hearings, 1906).

Whale oil peaked at 18 million gallons in 1845, according to Starbuck’s whaling history of 1878. Production of kerosene from petroleum rose to about 200 million gallons in 1870, spurred by a 1862 tax of $2.00 per gallon on alcohol to pay for the Civil War.

The tax quickly forced burning fluid and camphene off the market. Attempts to exempt industrial alcohol from what was meant to be a beverage alcohol tax were not successful at the time. A far smaller tax (10 cents per gallon) was imposed on kerosene.

It is clear, then, that kerosene came into an already well established liquid fuel system with full scale production, distribution and end-use technology already well in place. Whale oil had already been replaced by a variety of other fuels, and the markets for those fuels far exceeded the original markets for whale oil.

Petroleum did not suddenly emerge to light up a world quickly going dark as the supply of whales ran out. In fact, it emerged because its competitors were taxed out of business.

The argument that the petroleum industry did not need the government to replace whale oil, then, is incomplete and misleading. The fact is that the government intervened heavily in the market, and then did not act when manufacturers who were disadvantaged asked for relief from an unfair tax.

The petroleum industry did not arise in response to market conditions but rather in response to government intervention. Petroleum did not save the whales in the 1860s. Other technologies had already done that. In effect, the petroleum industry was born with the silver spoon of subsidy wedged firmly in its teeth. —-

Comment (By Dr. Lave): There was a piece in the NY Times Sunday on whale oil (Peter Appelbome, “Once they thought whale oil was indispensable too).” He (Appelborne) says that whaling was the 5th largest US industry in the 1850s – 735 ships out of 900 in the world.

He says that whale oil was considered far superior to campher, lard, and other substitutes. He claims that whaling was in severe decline by 1861 – even though the first oil well (in Titusville) was 1859 – there could not have been much kerosene coming to market yet. He traces the decline to depletion of the easily accessible whale population – 8,000 whales killed in 1853 alone. A economic view is that the cost of whale oil rose as the whale population was depleted. Ships had to go further and stay out longer to get their quota. The price rose, only the rich were willing to pay for this luxury good, and so the number of ships declined. The implication is that the whaling industry killed itself by depleting the whales. Kerosene filled the market until Edison came long in 1894 with the Pearl Street Station. This seems to be a tempest in a tea pot. 8,000 whales caught with perhaps 20 barrels of oil each is 160,000 barrels of oil or 6 million gallons. With more than 1 billion people in the world, that is 1/170 of a gallon per person.

Even if you consider just the USA and Europe, that would be 1/20 of a gallon each. That is not much light. Clearly, only the rich lighted their homes with whale oil. I don’t understand how a government tax on alcohol had anything to do with this. Burning alcohol for light is not wonderful – they have to turn out the lights for you to see the flambe. I don’t understand the subsidy argument.

The Civil war certainly distracted the US whaling industry, but that just left more whales for the Europeans. The US could have gone back to whaling after the war, if kerosene had not taken over the market and the cost of a gallon of whale oil not become too high. So, free market? Subsidization? I interpret the story to indicate that depletion of the whale population was the primary culprit. I don’t see any evidence of subsidization. Applebome cites Eric Jay Dolan, “Leviathan: The history of whaling in America.” To elaborate: We switched from wood to coal because Europe ran out of trees – and it took some time to learn how to make iron from coal (you have to make it into coke first, eliminating the sulfur and other impurities and just leasing carbon). We have learned to use less tin (tin cans) because of high prices. In general, scarcity or just high prices prompt technological change. We are farming salmon, shrimp, catfish, beef, chickens, etc. because there aren’t enough wild animals to satisfy demand.

So high prices are one source of changes in materials and energy use. A second source is technology. We didn’t run out of kerosene or city gas – electric lights were superior. We didn’t run out of horses – motor vehicles were superior. We didn’t run out of hydropower to run factories, electricity and internal combustion engineers were superior. Thus, developing superior products and processes are another motive for innovation. —

Response by Dr. Kovarik: As arcane as it may seem, the whale oil myth is a good illustration of the ongoing debate over energy policy. It matters because the implication that conservative economists draw from the “whale oil myth” is that the invisible hand of the marketplace is appropriately the main (if not only) driving force behind change in energy use.

Liberals see a stronger role for government. In fact, the last time energy was this high on the public agenda, liberals like Sen Henry Scoop Jackson railed against the deregulation of petroleum industry as bowing to Walter Wriston’s “whale oil myth.” I think Jackson would be happier with where things are now and the general recognition (even by conservatives) that national security (at least) indicates a stronger role for government.

Its hard to imagine why Dr. Lave would say: “I don’t understand the subsidy argument.” The argument is simple. In 1862, the dominant fuel (camphene) is taxed at over $2.00 a gallon, while the emerging new fuel (kerosene from Pennsylvania) is taxed at 10 cents a gallon. Not a subsidy? Perhaps tax advantage is a more precise term than subsidy. Even so, the point is that the policy, more than the market, is what changed the way Americans used energy in the 1860s.

I agree, this is not an earth-shaking question, but it is at least a notch up from “tempest in a teapot.” Drawing the wrong lesson from inaccurate history can have impacts. Also, it’s not entirely correct to say: “Burning alcohol for light is not wonderful – they have to turn out the lights for you to see the flame.” That’s true for pure alcohol, but camphene was a blend of turpentine, alcohol and camphor oil. It tested brighter than kerosene, according to Congressional testimony from the Edison Testing laboratory in 1906.

—
Additional notes Free alcohol hearings, U.S. Senate 1907, p. 320. Also, Free Alcohol Hearings, House Ways & Means Committee, 59th Congress, Feb.-Mar. 1906. (National Agricultural Library, Beltsville, MD).

Henry Ford, Charles Kettering and the Fuel of the Future, by Bill Kovarik has a lot more about camphene and whale oil, from sources such as the History of Light, pamphlet by the Welsbach Gas Co., Philadelphia Penn, 1909; on file in the Smithsonian collection of Advertising, Museum of American History, Washington, D.C.; and The Free Alcohol Law, Senate Finance Committee Hearings on HR 24816, Feb. 1907, Doc. No. 362.

Walter Wriston, The Whale Oil, Chicken, and Energy Syndrome at The Economic Club of Detroit 25 February 1974.

Lester Lave, Harry B. and James H. Higgins Professor of Economics and Finance, Carnegie Mellon University

Public Broadcasting Service News Hour story: “Greening Pittsburgh Paul Solman explores how an old steel city is implementing green energy.”

Alexander Starbuck, History of the American whale fishery from its earliest inception to the year 1876 Washington, Government Printing Office, 1878.

(Note: This site was featured in an August 2008 discussion with Paul Solmon (PBS News Hour business desk) and economist Lester Lave of Carnegie Mellon University. Thanks to both for taking history seriously and for their kindness in answering my questions.

“Stop the Ethanol Scam,” Roanoke Times March 20, 2011 is one.  “Ethanol a Massive Waste” is  another one. Both fail to take basic historical facts into account.

They say that the Nazis commandeered “the entire European potato crop in 1944 and turn(ed) it into ethanol to fuel V2 rockets.”  So people starved in order to feed the German rocket program. The historical lesson, they say, is that we are “driving down much the same road with the current ethanol program in America.”

In the first place, when we think about the lessons of history, we ought to actually think.

Could the entire European potato crop have been turned into V2 rocket fuel? In fact, V2 rockets used several fuels, including about 900 gallons of ethanol each. The 3,000 rockets in the V2 program would have consumed about 2.7 million gallons overall, made from about 140,000 tons of potatoes. This was only a tiny fraction of the 40 million tons of potatoes harvested in Germany in 1944, which was a pretty bad year for potatoes, among many other things.

So the basic claim doesn’t make any sense at all.

More importantly, there are other lessons from the World War II era that illustrate a need to keep alternative sources of energy and strategic materials under domestic control.

For instance, in 1942, then-Senator Harry Truman’s investigating committee found that the US oil industry had been working with Germany’s I.G. Farben to deliberately block the development of synthetic rubber from petroleum.

The government reacted by demanding that the oil industry replace its leadership. While the oil industry floundered, heroic American farmers patched together an ethanol industry that provided the basic feedstock for non-petroleum rubber.  By D-Day,  three quarters of the tires on Allied jeeps and aircraft originally came from Midwestern corn fields. If we had waited for the oil industry, the liberation of Europe could have taken another year or more.

It’s true that the current corn ethanol fuel industry has problems.  Many of the criticisms are appropriate and well meant. Others are not, and there isn’t space here to go into all of the debate here.

The most important point is that an emerging US biofuels industry is currently in the process of shifting away from corn to non-food sources like cellulose.

Before we close down this US-based biofuels industry, we need to consider the facts and think about the national interest.  What’s the historical record?  Just what has the modern oil industry done to liberate America from dependence on the world’s least stable sources of energy?   Anything?

The emerging US biofuels industry will be sorely needed when another series of oil shocks hit home.  At that moment, we will be reminded once again that those who don’t learn the lessons of history are doomed to repeat them.

If we are wise enough, we can remember those lessons now, while there is still time.

Bill Kovarik

Ethanol may seem modern, but people throughout Appalachia have been making it for hundreds of years.

“We are known for our moonshine industry,” says science writer Bill Kovarik with a laugh, “very well known for our moonshine industry. It is still flourishing.”

Kovarik, who’s also a professor at Radford University, says that ethanol is, first and foremost, a way to make corn more valuable. More than a century ago, Henry Ford built cars to run on it, with just that in mind.   “So, you could replace the transportation income that farmers used to have by [their] growing the fuel for the cars, instead of growing horses and feed.”

Link to the rest of the story  /  Link to the longer Harvest Media version

Postscript: Bob Dineen of the Renewable Fuels Association had an interesting take on this series:

“Where in this series is the comparison to Big Oil?  You can’t talk, weigh, or dismiss an alternative without talking about the problem it is trying to solve.  So where, perhaps in the final piece, will we hear NPR discuss the billions in subsidies and tax breaks that go to Big Oil conglomerates and dangerous dictators in oil rich countries?”

Remember all the cute news items two years ago about how the price of movie popcorn just went up $2 thanks to ethanol, or how your grocery cart (or your wallet) just got lighter, thanks to ethanol? Turns out, it was mostly fiction.

We knew that the Grocery Manufacturer’s Association was spending millions on a campaign to discredit ethanol.

Now comes a report from the British government saying that ethanol had only a minor role in the food price increases of 2008. Drought and higher OIL prices were mostly to blame.

The American Council for Ethanol said:

“The role of corn and ethanol in grocery prices has been grossly exaggerated by critics who have much to gain in keeping ethanol’s potential limited…  Energy prices have a much more dramatic impact on food prices because all foods are dependent upon this expensive energy for processing, packaging, and transportation…”

Every now and then, you can glimpse  major industries like those marketing petroleum and groceries, behaving defensively, and sometimes ruthlessly,  to protect markets they are trying to dominate.  This dog-eat-dog approach, consumers and national security be damned, is one reason why we have government regulation. It’s because these industries can’t be trusted to regulate themselves.

Ethanol has its problems, but the GMA’s attempt to destroy the ethanol industry on behalf of its friends in the oil industry was unreasoned and reckless.

And now we know it was not based on evidence.

By Bill Kovarik and Scott Sklar

At a time when the need for public understanding of environmental science and energy technology issues has never been greater, the debate over biofuels illustrates a serious problem.

Because the issues are extraordinarily complex, participants in the debate often resort to misleading oversimplifications even when their concerns are quite legitimate.

C. Ford Runge’s Yale360 article, “The Case Against Biofuels”  illustrates the point.

For instance, Prof. Runge argues that biofuels require massive federal subsidies. A less polemical and more helpful approach would include a comparison of all subsidies received by energy industries. The Environmental Law Institute reported in Sept. 2009 that ethanol received some $16.8 billion in subsidies over the 2002-2008 period, while the oil industry received $72 billion over the same period. Not surprisingly, the gap between federal subsidies for traditional energy industries (coal, oil and nuclear) and federal subsidies for renewable energy industries (biofuel, wind and solar) increases with historic perspective.  (1)

The point is also made that biofuels drive up food costs, contributing to famine in the developing world. Cartoonists like to depict this “food or fuel” debate with a fat American fueling up his SUV with the same food that a starving child could have used.

Again, the concern is legitimate but the issues are extraordinarily complex. Ethanol’s actual contribution to food costs, according to an April 2009 Congressional Budget Office report, was between 0.5 to 0.8 percent, compared to an overall food price increase of 5.1 percent in 2006-2007. Other factors, including the rising cost of petroleum, were far more significant.  And the 2009 decline in corn prices, given the continued increase in biofuels production, argues against Runge’s simplistic conclusion. (2)

The cartoon version of the food or fuel debate is based on the faulty premise that corn is being diverted from human food to ethanol. In fact, nearly all US corn production goes to livestock feed. Most of this corn is sent through grain mills that separate starch, oils, proteins and other components. If the starch is not used for high fructose corn syrup, it is often used for ethanol or other products. In any case, the protein goes on to feed the livestock and has little if any impact on world food supplies.

Yet there are very serious concerns in the food or fuel debate, as policy analysts like Lester Brown have pointed out for decades. One is that competition from energy industries can displace crop land and farm infrastructure in developing nations. This is a component of a larger international concern having to do with an imbalance between export crops, staple foods production, and surplus US grain shipments that tend to undermine local agriculture and make countries more dependent on the US.

In 2007, it was widely reported that Dr. Jean Ziegler, the United Nations special rapporteur on the right to food, said that using agricultural lands to produce biofuels as a “crime against humanity.” Yet it was not widely reported that the UN Food and Agriculture Organization responded to Ziegler by saying that other issues are more significant in driving food insecurity, including lack of rural development, infrastructure, energy cost, and fair trade standards for agricultural products.

“Biofuels present both opportunities and risks,” said FAO Director-General Jacques Diouf. “Current policies tend to favor producers in some developed countries over producers in most developing countries. The challenge is to reduce or manage the risks while sharing the opportunities more widely.”

Yet another very serious concern involving the management of risks involves potential loss of biodiversity with the expansion of biofuels production into tropical rainforests. Again, the issues are complex. Most of the loss of tropical rain forests is associated with timber and livestock production for export. For example, in Brazil, sugar cane is the ethanol feedstock, and thin Amazonian soils do not support sugar cane production. Yet soybean production for food use, and some biodiesel use, is in fact cutting deeply into the Amazon rain forest, and sugar cane is expanding into coastal bio-reserves of Brazil.

The policy question is how to apply international standards (or certification) to the biofuels trade in order to penalize production that leads to higher carbon footprint or loss of biodiversity.  The conflict between the Global Agreement on Trade and Tariff and the European Renewable Energy Directive is an example of the difficulty in this debate.  While the GATT would have all nations treat all products equally, regardless of production methods, Europe’s RED does discriminate against biofuels production methods that increase carbon footprint. Are environmental standards a form of  protectionism? Or are they necessary to ensure that the destructive potential for renewable fuels can be curbed?  This only scratches the surface of the biofuels certification debate.

Still another concern has to do with the carbon footprint or energy balance of biofuels, especially corn ethanol.

Prof. David Pimentel and others have argued that it takes more energy to produce ethanol than the energy contains. There are several problems with that argument. For one, Pimentel omits the energy value of the protein-rich distillers grains in calculating energy balance.  Agricultural economists, such as Prof. Bruce Dale, note that only one-sixth of the energy cost of growing corn involves imported liquid fuel; the rest is in fertilizer or pesticides made with domestic natural gas.  And Hosein Shapouri of USDA, argues that when all inputs are added, the energy benefit of ethanol is 34% over and above energy inputs. Its is not negative, according to USDA and most other studies, despite Pimentel and other critics views.

True, USDA’s 34% is not necessarily a great result, but it is important to remember that the main reason we use corn ethanol is not to reduce dependence on foreign oil or reduce carbon emissions. Rather, the historical reason for the rise of the corn ethanol industry in the 1980s and 1990s involved replacement of other, far more dangerous octane boosters in gasoline. Among these were the neurotoxin tetra-ethyl lead (phased out in the 1980s) and carcinogens like benzene, toluene and xylene.  The oil industry used a non-agricultural octane booster called MTBE until it was banned as a serious water pollution threat. Billions in MTBE cleanup costs are now pending, and ethanol production from corn soared because it was one of the few octane-boosting options remaining.

It would seem, then, that taking 10 percent ethanol out of the US fuel mix would mean a far higher exposure to “air toxics,” a point which is often lost in discussions about modeling studies of ethanol’s evaporative emissions, such as one performed by Prof. Mark Jacobson in 2007. Jacobson’s conclusion that ethanol use increases air pollution has been widely repeated, but without a broader cost-benefit discussion, including all forms of air pollution, the conclusion has limited policy implications at best.

Critics also point out that the corn ethanol industry is currently dependent on a highly carbon-intensive agricultural system.   Farmers are well aware of the problems, and changes are taking place in agriculture in ways that have very little to do with ethanol, which is, after all, only a very small component of that very large system. Overall, fertilizer and pesticide use is dramatically declining, as a November 2009 USGS corn belt stream survey confirms. Farmers are switching to cheaper, more biologically based, less fossil intensive methods. (3)

Critics rightly note that the ethanol industry has had its own air and water pollution problems which are only beginning to be addressed.  And the industry has been astonishingly deaf to criticism, content to fight a “treetops” campaign in Washington for its subsidy but not really explaining the complexities of its issues to the public.

As a result, many people have concluded that the case against biofuels has been proven. We couldn’t disagree more.

There is great danger in simply killing off the emerging biofuels industry and leaving the future fuel problem entirely in the hands of the oil industry, which has never been particularly interested in putting environment or national security ahead of its own profits.

The Obama administration’s move to stimulate non-food ethanol through cellulosic biofuels and research on third generation biofuels has risks, true, but the policy is meant to cap the amount of corn ethanol and move into far more environmentally benign forms of biofuels production. Whether that can happen remains to be seen, but at least the policy direction is a generally positive one.

At the very least, the biofuels debate should be seen as one of many complex science and technology issues that we oversimplify at our peril.

1. ( http://www.eli.org/pressdetail.cfm?ID=205)
2. ( http://futures.tradingcharts.com/chart/CN/M )
3. ( http://www.usgs.gov/newsroom/article.asp?ID=2345 )

1926 cartoon from Ethyl Corp. papers.

The grain ethanol industry has always been controversial.

These days, critics point out that the corn ethanol industry is not going to help avert climate disaster since, at best, it has a slightly positive net energy balance (or carbon footprint).

Fair enough. But the corn ethanol industry was  not originally created as a way to shift to low-carbon fuels

The original ethanol industry was the main fuel in the lamp fuel industry before  kerosene.  It was taxed out of existence in the US during the 1860s, but returned with the backing of Henry Ford and Teddy Roosevelt in 1906.

When geologists said oil was  running out just after World War I, ethanol was seen as one important answer.  When engines needed better fuels in the 1920s, ethanol was seen as superior to tetra-ethyl-lead (“leaded gasoline”) octante boosters.  When farmers needed new markets in the 1930s, ethanol was billed as a way to avoid farm relief. And when the Arabs cut off oil supplies to the US in the 1970s, an ethanol industry was built to provide emergency fuel supplies.

But the most important factor in the development of the large modern ethanol industry was the need for an octane boosting additive for gasoline. It is   far cleaner and safer than what we had before — leaded gasoline and benzene.

This need for a non-toxic octane booster was clear from the early days of the automobile, and people once hoped that high octane alcohol fuel would mean engines that were so much more efficient they would hardly need fillups (as this 1926 cartoon demonstrates).

Ethanol blends vs leaded gasoline

Although ethanol has been seen as a petroleum alternative for 150 years, there was a time (between 1926 and 1976) when nearly all gasoline was sold with three to four grams of lead per gallon.  “Leaded gasoline” is still being phased out in different parts of the world.

When TEL was introduced, the oil, chemical and automotive industries were repeatedly warned by scientists at the world’s leading universities (Yale, Harvard, and others) that this historically well known poison was extremely hazardous to public health, but they undermined independent research and adamantly refused to admit the damage they were causing. They even claimed there were no alternatives.

Secret US government tests conducted in 1933 showed that 3 grams of tetra ethyl lead were almost as good at boosting octane, given the same engines and same base gasoline, as 15 percent ethanol.  But these tests were never made public, and leaded gasoline dominated the market — with catastrophic effect on public health.

The technical excuse for phasing out leaded gasoline came in the 1970s, when cars with catalytic converters came on the market and leaded gasoline had to be phased out. The public health reasons for phasing out leaded gasoline had long been forgotten, but had re-emerged. The oil industry chose benzene (and benzene-related compounds) to replace lead, but benzene is highly carcinogenic.

Then in 1990, Congress and the Bush administration got together on the Clean Air Act. Two new fuel additives would be encouraged — MTBE, which the oil industry said was perfectly safe, and ethanol, which the oil industry didnt like but admitted was perfect safe.

As it turned out, MTBE was a very serious contaminant in water systems, and today many billions of dollars are being spent cleaning up after the MTBE mistake.

Which left ethanol, the last non-toxic, non-carcinogenic octane booster. Yes, it is somewhat more volatile, which means that the other toxic components of gasoline can be released at higher levels. But on balance, this is a minor problem in comparison to the toxic nature of other octane boosters.

Food or fuel?

One other issue that comes up constantly is that we should not be taking food from the starving children of the world and feeding it to the Cadillacs.

Who could disagree ?  Starvation in the world is a great evil, and it should be fought. Doesnt ethanol from grain make the problem worse? The answer is complicated, and the ethanol industry has never wanted to admit that its critics have a point.

Ethanol is made from the starch in grain, not the protein. The leftover distillers dried grains (DDGs) are used for human and livestock feed, just as the corn would have been if the starch had not been extracted. There is more protein in DDGs per pound than in corn. And most US grain is fed to livestock in a system that has plenty of environmental problems that have nothing to do with ethanol. So on one level, ethanol gets a pass.

In a larger sense, the critics are right — It is not a good idea for energy to compete with food in the marketplace, and there is a case to be made for some legal restraints to be built into the system.

But right now, ethanol is being made from the same grain that is eventually fed to livestock, its just that when the cows and chickens and pigs get the DDGs, there is a little less starch in the mix.

No children are actually starving today because of ethanol. Its something that might happen if the corn ethanol industry continues to grow or goes badly off track.

Replacing petroleum ?

Ethanol from grain was never intended to be a complete substitute for petroleum, a goal that everyone knew from the beginning (the 1920s and earlier) would have required more sustainable systems. It was only intended to be a blending component for gasoline.

It also had some national security benefits, in that it could be produced quickly from local resources in an emergency.

American farmers developed ethanol for their communities and their country at a time of crisis, and they deserve to be understood rather than undermined.

Most critics of the ethanol industry are very well intentioned; they have the right yardsticks. They are concerned about the poor, and about energy independence, and about the climate.

But they are measuring the wrong thing. They want to know why the grain ethanol industry doesnt measure up to high standards of sustainability. But that’s not why the grain ethanol industry was created.

Low-carbon energy sources that preserve biodiversity and enhance long term food security for the poor — these are the goals to keep in mind.   They were not the original goals for the ethanol industry, and they need to be seen as relatively new requirements that will take time. We have only recently elevated our vision — It takes time to elevate an industry.

So the question is this: If we do away with the modern grain ethanol industry, will we have to go back to lead and benzene in our gasoline? Will we allow the oil industry to use MTBE or MMT other toxic additives? What is the alternative to ethanol as an octane booster?

Critics can say the ethanol industry has rested on its laurels too long, has been too profitable at taxpayer expense and has not delivered on second generation biofuels as it should have.  That’s reasonable. But if we want to talk about environmental catastrophe, think about returning to benzene or leaded gasoline octane boosters.

We tend to think of modern problems as stemming from older technologies, but often forget that the older technologies were sometimes developed to address problems that were even older.

Yes,  need to keep looking down the road into the future; but once in a while, we need to glance in the rear view mirror.

Its easy to be smug about opposing ethanol. Critics say:

• If ethanol was so great, it wouldn’t need a subsidy.

• It robs food from the poor to give fuel to the rich

• It takes more energy to make ethanol than it produces

• Ethanol causes more air pollution than gasoline.

• Even if all America’s corn were turned into ethanol, it would only come to 12 percent of the country’s fuel.

There are grains of truth in each of these statements, but this is a complex argument, and each of these statements contains omissions, distortions and  inaccuracies.  So lets take them in turn …

• It robs food from the poor to give fuel to the rich. Possible, but not yet true, and if we use  intelligent regulations, this need not be true.

• It takes more energy to make ethanol than it produces. To arrive at this conclusion, Prof. David Pimentel and others  omit the value of distillers grains.  According to the USDA, when all inputs are added, the energy benefit of ethanol is 34% or more.  This is not necessarily a great result, but its important to remember that the main reason we use ethanol is to blend with gasoline as a non-toxic octane booster.  Its also important to note, as does Prof. Bruce Dale, that most of these ethanol energy inputs come from domestic natural gas and not from foreign oil.

• Ethanol causes more air pollution than gasoline. This conclusion is based on one study and, if true,  only applies to one category of air pollution – evaporative emissions – in warm weather.  It is definitely not true of all emissions. Many air pollution tests have shown that ethanol is  less toxic and polluting than gasoline, especially considering the benzene or MTBE additives that would otherwise be in gasoline.  Here’s a simple test: ask, which would you prefer to drink? Ethanol, obviously, is far less toxic to the human body than petroleum products.

• Even if all America’s corn were turned into ethanol, it would only come to 12 percent of the country’s fuel. Currently 80 percent of America’s corn is turned into livestock feed. If all the starch were taken out of the livestock feed and turned into ethanol, no livestock would go hungry because the remaining protein – enhanced feed is more than adequate to take care of them. Also its important to recognize that corn ethanol is not intended to substitute all oil, it is blended with gasoline as a safe  octane booster.

• Cant be moved in pipelines – Yes, it can, however, most ethanol moves long distances by rail.

According to the critics, politics is the reason for ethanol,  particularly the Iowa Primary:  “If you are not willing to sacrifice children to the corn god, you will not come out of the Iowa primary with more than one percent of the vote,” says The Cato Institute’s energy “expert,”  Jerry Taylor, in a 2007 interview with John Stossel.    “Right now the closest thing we have to a state religion today isnt Christianity, it’s corn.”

This is a grotesque misreading of what should be a fact-based discussion about energy and national security.  It might just as easily be said that the closest thing we have to a state religion today is the conspicuous worship of moneyed interests by the high priests of the think tanks. But this sort of argument leads nowhere.

The Stossel interview presents an interesting exchange with Sen. Evan Bayh (D-IN):

Stossel:  You’re robbing Peter to pay Paul, and we are all Peter and you and the farmers in Indiana are Paul. It’s not fair.

Bayh:  You’re currently being robbed to pay sheiks in the Middle East.   Doesnt it make more sense to have Middle Western farmers producing America’s fuel?

Other interesting critics of ethanol include:

• Robert Bryce, Yet More Outrages of the Corn Ethanol Scam, Jan. 2010.
• Ed Wallace, The Great Ethanol Scam, Business Week, Sept. 2009
• MZ Jacobson, Effects of ethanol (E85) versus gasoline vehicles

Seattle Times staff reporter

BOARDMAN, Ore. — The poplar trees here grow 10 feet a year, transforming an irrigated stretch of desert near the Columbia River into a neatly pruned forest. For now, the trees provide lumber for cabinets and pulp for paper.

But in the years ahead, energy entrepreneurs hope the pulp from poplar can be turned into ethanol, helping resuscitate the Northwest’s floundering biofuels industry.

MORE>>>

By Bill Kovarik

This illustration – from the Congress des Applications de L’Alcool Denature, Dec. 16 – 23, 1902 (published by the Automobile Club de France) — popped off the cover of a book I happened to pick up at the National Agricultural Library archives in Beltsville, MD while I was a grad student in the 1980s. At the time I was reading Leo Marx’s “Machine in the Garden,” and I was instantly struck by the beauty of the visual correspondence to that metaphor.

This “muse of biofuels” is probably an adaptation of the image of Polyhymnia, the muse of agriculture and lyric poetry, one of the nine muses of Greek mythology. Of course, the hair style and the cog-wheel brooch are modern for the year 1902, but the flowing robe and the diadem in her hair  would be typical of depictions of a Greek muse through the ages.

She is holding an overflowing bouquet of roses, looking down over a steering wheel with a rather serious expression, which is typical of Polyhymnia. She is a portrait of wisdom and beauty, firmly in control of a gentle machine located in some lush flower garden.

The printed program of the Congress where the muse appears on the back cover has no explanation, but I interpret the image as a depiction of the potential for harmony between agriculture and industry. It is a suggestion of the prospect for humanizing industrial machinery by bringing together the two major theaters of civilization (agriculture and industry) in a new synthesis.

The idea of balance between these theaters of civilization has held a fascination for generations, and the potential for ethanol and biofuels has been seen as only one small part of that larger theme.

For example, Benjamin Franklin wrote of his concern for uniting city and country through better transportation and communication systems. He was especially concerned with cleaning up Dock Creek and making it a small river port to help farmers carry goods into the city of Philadelphia.

Many engineers in the 1880s – 1920s, such as Henry Ford and Harry Riccardo, expressed the idea that agriculture and biological resources could be primary sources of energy, and that humankind could live on solar “income” rather than fossil fuel “capital.”

Ford hoped that a rural renaissance would replace farm depression if science could find ways to use farm products for industrial purposes. Russell Anderson wrote “Biological Paths to Self Reliance” in 1982 called that expressed some of this idea in scientific form.

It’s not easy to say how much currency this idea gained in Europe in the years before and after World War I — many of the historical records have been lost in the intervening years. One indicator of the scope of the vision is the work of various research organizations.

For example, the Pasteur Institute searched for ways to make biofuels from ocean kelp in 1918, according to the US publication Scientific American. Yet today, the Pasteur Institute itself has no record of the experiment. Similarly, almost nothing is known about the French Institute for Natural Fuels located in the African nation of Mali in the 1920s and 30s.

The Congress of 1902 was opened by the French minister of agriculture and was one of a series that had been held in France since 1899 often accompanied by auto races and exhibits. In 1901 the congress also had an exhibit of alcohol motors, stoves, coffee roasters, irons, water heaters and other household appliances.

The exhibit was first assembled in Germany in the 1895 – 1900 period. The exhibit was in Paris in 1901, in Germany in Feb. 1902, back in Paris in Dec. 1902, stayed there for a few more months and then traveled to Italy, Spain and other European nations. In 1907 it was shipped to the US and was part of the 300th anniversary of Jamestown, and then went to several Grange meetings, including one in Baltimore in 1908. We dont know what happened to it afterward. We don’t even have photos of the exhibit at this point.

Many cars ran on alcohol at the time but these were primarily racing and demonstration cars. Racing cars used alcohol because it had less knock in higher compression engines, a quality that was later called “octane.”

Alcohol was more expensive than gasoline and far less abundant, since of course there was an existing kerosene distribution system for lamp fuel all over the US and Europe, and gasoline was just a refinery byproduct of the kerosene industry. However, official German and French policy was to provide an alternative to petroleum so that the countries would not be subject to the whims of the oil industry, and this was done through research support, support for these exhibits, and (in Germany at the time) through tariffs on imported oil.

The US and Canadian biofuels industry is struggling to pull through an historic shift to second generation production feedstocks and production technologies.

There is pressure coming, in part, from  low carbon fuel standards passed by the California Air Resources Board  in April 2009, and also from the need for some return on federal development funding injected into the industry since 2007.

At least  eight major cellulosic biofuels plants  are in production or under construction in the US and Canada.

So, it’s now or never for cellulosic biofuels — the “fuel of the future” for almost a century, and long seen as the only source of renewable fuel that could replace petroleum.

“We think, ultimately, cellulosic materials are the only materials where you can produce enough under environmentally sustainable conditions,” said Chris Somerville, director of the Energy Biosciences Institute at the University of California at Berkeley at the 2008 Society of Environmental Journalists conference.

Somerville is restating  an opinion expressed by Henry Ford, Isaac Asimov, and even, 90 years ago, by the scientist who founded the Cellulose Chemistry division of the American Chemical Society – Harold Hibbert, who said:

“It looks as if in the rather near future, this country will be under the necessity of paying out vast sums yearly in order to obtain supplies of crude oil from Mexico, Russia and Persia,” Hibbert said in a 1921 journal article.   “It is believed, however, that the chemist is capable of solving this difficult problem…. (and) it would seem that cellulose in one form or another is capable of filling that role.”

A few years later, Henry Ford told the New York Times:  “The fuel of the future is going to come from fruit like that sumac out by the road, or from apples, weeds, sawdust — almost anything.”

Reporters tour a switchgrass project in 2008 near Roanoke, VA.

Science writers kept track of the issue, and in 1940,  science writer William L. Laurence wrote about a Jewish scientist who fled the Nazis.   Prof. Ernst Berl, by then working at Carnegie Institute, developed a pressurizing process for reducing cellulose from all kinds of plant materials to either liquid or solid fuels.  His work, Laurence said, “assures mankind of an illimitable supply of the prime movers of the wheels of civilization for all time, after natural deposits have been exhausted.”

Another WWII era development was the discovery of cellulose – eating microbes in the remote jungles of the Pacific.  Soldiers called it “jungle rot,” but  Elwyn T. Reese  and others in the US Army labs realized that the enzyme from the fungus was turning cotton into sugar by splitting the strong chemical bond holding cellulose molecule together.

This process, a key to making paper and celluloid film, had traditionally involved highly polluting acid and pressure treatments. Still, the enzyme approach seemed to have promise, especially after the first oil shock of the 1970s.

Natick scientist Leo Spano, who carried on Reese’s work,  told a Congressional committee in 1973 that they could produce fuel from cellulose at low cost, and without affecting food supplies, but the oil industry fought the idea, saying that ethanol would cause all kinds of technical problems. It wasn’t until the late 1970s that the idea of using blends of ethanol (then called “gasohol”) was accepted by the auto companies.

Research on cellulose based fuels continued in hundreds of university and government labs, and thousands of unrecognized scientists took small steps, isolating, characterizing and testing the complex chemical structures of plants, which includes not only cellulose (linear sets of six-carbon glucose molecules in strong bond) but also five carbon sugars (hemicellulose) and glue-like substances (lignin).

Political support continued, to some extent.  In a September 16, 1980,  New York Times op-ed, Sen. Birch Bayh and Rep. Robert A. Roe wrote about the  promise of converting cellulose-based materials in garbage into ethanol. They said the nation must build waste-to-ethanol facilities in metropolitan areas to demonstrate their commercial viability, environmental safety and energy potential. And they urged the elimination of institutional barriers from federal, state and local governments.

Pilot scale development work started gearing around this time. Particularly noteworthy was the work of Patrick Foody, who founded Iogen Corp. in Canada in 1974.   Foody  was inspired by the vision of  Natick researchers and hoped to commercialize cellulosic biofuels relatively quickly. But the process proved complex and, at the same time, oil prices fell so low that most other research work ground to a halt.   “We had to realign and refocus,” Foody told the Financial Post in 2006.  “We had to come up with commercially viable products that would create cash flow.”  So Iogen expanded its markets into enzymes for textiles and paper milling. By the early 21st century,  Shell Oil, Volkswagen and other major international companies invested in Iogen and the race was on, again, for the best enzymatic process for cellulosic biofuels.

Science fiction writer Isaac Asimov found it all fascinating, and wrote about cellulose chemistry in some of his novels and articles.  “Cellulose can be broken down into glucose molecules,” Asimov noted in a 1986 article, “and the glucose solution can be fermented into alcohol…  (and) used as a liquid fuel.”   The advantage?  “Cellulose is self-renewing if we are carful to conserve our forests, so the fuel we get from it could last indefinitely, whereas oil from the ground must be completely used up eventually.”  Asimov also found it hard to resist the science fiction notion that that  mutant microbes might get outside their tanks and dissolve the forests.

The question of just how far cellulosic biofuels could go to replace oil was answered in a pathbreaking 2005 Oak Ridge – USDA study.   Waste wood and switchgrass and other energy crops have0 the potential to create 1.3 billion tons of terrestrial biomass, which could replace at least 30 percent of US petroleum, the study said.

Although the “billion ton” study changed the federal government’s approach to energy,  there are concerns about the use of Conservation Reserve Program land, about increased forestry, and other impacts from intensified biomass harvesting.

More recent studies have  shown potentially greater yields with miscanthus and other low-input crops — as much as 1,000 gallons of fuel per acre, as opposed to hundreds per acre with corn. Among researchers working on energy crops are Ken Vogel at the University of Nebraska,  David Bransby of Auburn (AL), Stephen Long at the University of Illinois,  John Sheehan of the National Renewable Energy Laboratory (NREL), and Chris Somerville of UC Berkeley.

In the end, a broader resource base for fuel production would include, Somerville said, energy plants that would have the benefit of producing oils and fuel-like substances that would be very close to gasoline and diesel, and consequently need little energy to refine.

Two other very promising efforts to broaden the resource base using marine cellulose (kelp) involve work in University of Costa Rica and the Scottish Association for Marine Sciences.

CARB Standards and the Land Change Penalty

The California Air Resources Board estimated that cellulosic process came out with the lowest carbon intensity, measured by C02 equivalent per megaJoule  – expressed as  gCO2e/MJ.  (MegaJoules are about 948 Btus, or about one tenth of a gallon of ethanol).

CARB – ARGONNE CARBON INTENSITY CALCULATIONS
•    20.40 gCO2e/MJ  cellulose ethanol from farmed trees
•    22.20 gCO2e/MJ cellulose ethanol from  waste wood
•    73.40 gCO2e/MJ sugarcane ethanol.  ( * includes 46 gCO2e/MJ for land change )
•    96  gCOe/MJ  gasoline from California
•    99.4 gCO2e/MJ   corn ethanol   ( * includes 30 gCO2e/MJ for land change )

( * The land change penalty accounts for situations where new cropland is brought into production somewhere else to offset corn or sugarcane grown for ethanol.)

Although grain producers reacted with dismay to the new standards, which will effectively keep corn ethanol out of California, CARB believes that the new standard will eventually lead to the development of 1.5 billion gallons of cellulosic biofuel, 25 new plants and 3,000 new job.

In 2011, an MSU study questioned  land use change assumptions by CARB and others.

 Commercial Plants under development

ENZYME process

Combinations of mild acid and pressure pre-treat the plant material, then enzymes break cellulose down into glucose, and then ferment the glucose into ethanol or other chemicals.

•     POET – 20,000 gal/yr – Scotland, SD. Enzyme process.  Operating,  will lead to 25 million gallons per year commercial facility in Emmetsburg, Iowa, making ethanol from corn cobs and stalks in tandem with a standard grain ethanol plant,
•    ABENGOA Bioenergy – Hugoton, KS. Enzyme process. Wheat straw  Starting construction in 2010, in production by 2011.
•    IOGEN –  Ottowa, Canada – Enzyme process. One of the earliest firms to work on the cellulosic enzyme process, Iogen declined a partial US-funded deal and is working with a start-up plant in Canada.
•     DUPONT DANISCO — Vonore, TN  – Under construction, plant will use  switchgrass and enzyme processing.
•     VERENIUM -  Jennings, LA. –  1.4 million gallon demonstration-scale plant / waste biomass sugarcane
•    http://www.technologyreview.com/Energy/20828/?nlid=1099

 ADVANCED ENZYME process – Along with enzyme breakdown of cellulose into glucose, a chain of enzymes can produce a variety of products, not just ethanol.

•     MASCOMA -  Rome, NY – Began in February 2009 with capacity of 200,000 gallons of cellulose ethanol, gasoline or other chemicals from wood chips, grasses, corn and sugar cane residues. An affiliate is developing a commercial-scale facility in Kinross, Michigan.

ACID processes

Strong sulfuric acid is added to dried biomass, heated and then separated under pressure. This is very similar to the way cellulose is separated for paper.

•    BLUEFIRE Ethanol  – Irvine, CA.  Acid process.  Garbage,   wood waste, ag residues – Still hung up on siting.  http://www.bluefireethanol.com/

Synthesis gas – Heat and pressure are  applied and biomass is turned into biogas — hydrogen and carbon dioxide streams –  that are then re-combined in the presence of catalysts to create different kinds of fuels or chemicals.

•    RANGE BIOFUELS -   Soperton, GA. Synthesis gas (syngas) using heat, pressure and steam, and catalytic treatments.  Under construction.   First 20 million gallon phase by March 2010  http://www.rangefuels.com/our-plants.html

 OTHER  projects

Here are some other projects still at the lab and scale-up stage include:

Colusa Biomass Energy Corporation, Sacramento, CA     Waste rice straw

Fulcrum BioEnergy     Reno, NV     Municipal solid waste

Gulf Coast Energy , Livingston AL    Wood waste

KL Energy Corp.     Upton, WY     Wood waste.

SunOpta     Little Falls, MN     Wood chips

US Envirofuels     Highlands County, FL     Sweet sorghum

Global Energy Holdings Co., Atlanta GA      Citrus peels

References

 Costa Rica  marine cellulose research

Scottish marine cellulose research

The “Billion Ton Study” (2005)
Cellulose biofuels industry information (RFA)

Department of Energy Cellulose Biomass resources

http://www1.eere.energy.gov/biomass/news.html

http://www1.eere.energy.gov/biomass/past_solicitations.html

The Forbidden Fuel is the definitive history of alcohol fuel, describing in colorful detail the emergence of alcohol fuel in the nineteenth and twentieth centuries and the political and economic forces behind its popularity, opposition, and eventual growth.

In 1982, when The Forbidden Fuel was first published, approximately 350 million gallons of ethanol were produced in the United States for transport fuel. In 2008 that number had grown to 9 billion gallons—an approximate average annual growth rate of 98.9 percent. Similar dramatic growth has occurred all over the world, especially in Brazil.

This new edition examines the forces behind this explosive growth; it also presents fresh evidence that the controversial issues that were presciently foreseen and described in the 1982 edition—limits of the land, food versus fuel, environmental risks, and global warming—still persist as unabated challenges to industry leaders and policy makers.