Biofuels industry responds

Your article, "The Biofuels Scam", was breathless in its unfair dismissal of homegrown, renewable ethanol.

First, the World Bank report mentioned by Mr. Andrews was by no means secret.  The 2008 report that was widely reported on in various publications around the world blamed biofuels for increasing food prices. However, this year, in an about face from its original position, the World Bank issued a new study which shows that biofuels in fact played a much smaller role than previously thought and that energy prices and speculation played significant roles in the non-energy commodity price spikes seen in the recent past. Indeed, not one kernel of food fit for humans goes to ethanol production. The corn used to make ethanol in this country is field corn. In fact, a co-product of ethanol production are the Dried Distiller's Grains which go right back into the food chain in the form of one of the highest-quality livestock feeds on the market. So, ethanol production does not take food away from people.

Second, every day, ethanol producers are developing technological improvements to increase efficiency, reduce water use, and boost the amount of energy derived from corn kernels or from cellulosic biomass. Today, it takes 3 gallons of water to produce a gallon of ethanol, the same amount of water it takes to produce a gallon of oil. Research out of the University of Illinois at Champagne-Urbana says that ethanol production can reduce water use to as little as 1 gallon.

Third, while some in the boating industry oppose higher blends of ethanol, that is far from a universal opinion. In fact, a recently-published story in Orlando Sentinel says that blaming ethanol for boating woes "may not be fair" since the vast majority of engines can handle E-10. There is no better evidence of that than Minnesota, the Land of 10,000 Lakes - and probably five-times as many small-engine operating snowblowers - where E-10 is the state-mandated standard (gasoline with 10 percent ethanol - the same as Florida). Read that article here.

Finally, when my company filed the Green Jobs Waiver with the EPA to increase the use of ethanol in our fuel from 10 to 15 percent, it was not a federal mandate on E15. Rather, in our waiver, we asked EPA to remove the arbitrary cap that prevents ethanol from competing against foreign oil.  Approval of this waiver doesn't force anyone to buy or sell E15 - rather approval of the waiver will provide consumers with more choices on the fuels market. There are many Americans who would rather choose a renewable, cleaner and domestically-made fuel, like American ethanol, than the status quo of funneling billions of dollars overseas for oil that gets dirtier, costlier and riskier to extract with every passing day.

If we truly want to reduce our dependence on foreign oil, create jobs and improve our environment, we must increase the use of clean, renewable fuels like ethanol in all of our engines.  

Sincerely,

Stephanie Dreyer

Growth Energy, Public Affairs Associate

James Andrews replies:
It's interesting that the Biofuels industry wants to raise the "arbitrary ceiling" from 10% to 15% because then biofuels can "compete against foreign oil." Biofuels would not be competitive even if everyone were forced to buy a GM E85 vehicle - for one simple reason - biofuels production is heavily subsidized by taxpayers.

The Energy Tax Act of 1978 introduced the first major federal subsidy to ethanol, at 40 cents per gallon. Today the Volumetric Ethanol Excise Tax Credit (VEETC) is 45 cents per gallon for ethanol and the Volumetric Biodiesel Tax Credit is $1.00 per gallon for biodiesel. The current annual taxpayer funded subsidy for biofuels production is about $5 billion per year, and this doesn't count other tax advantages like accelerated depreciation. Chevron and Shell should be so lucky.

For sake of argument, let's accept the industry premise that it takes three gallons of water to refine one gallon of ethanol, and that it equals that of the oil refining industry. This is an apples to oranges comparison, because oil doesn't require water to grow. According to the Environmental Defense Fund, an additional three to six gallons of water for irrigation are required for each gallon of ethanol produced. The Ogallala Aquifer is one of the world's largest aquifers and an important water source for eight states: Colorado, Kansas, Nebraska, New Mexico, Oklahoma, South Dakota, Texas and Wyoming. According to the USGS, the Ogallala supplies about 30 percent of all water used for irrigation - and the aquifer is being depleted.

Each 56-pound bushel of corn yields about 2.8 gallons of ethanol and 16 to 18 pounds of feed. For each gallon of ethanol, assume three gallons of water to refine and a very conservative three gallons to grow. In 2006, the US had a production capacity of 5,047 million gallons per year (mgy). 5 billion gallons of ethanol thus required 1.8 billion bushels of corn, 30 billion gallons of water, and 2.3 billion dollars in direct tax credits (at 45 cents per gallon). Today the numbers are higher. Ethanol production in 2009 was approximately 10 billion gallons, and is projected to be 12 billion for 2010. Ten billion gallons of ethanol required at least 60 billion gallons of water; 12 billion gallons of ethanol will exceed 72 billion gallons of water. The most recent U.S. Energy Bill set a target of 36 billion gallons of "renewable" fuels to be produced in the United States by 2022. Who needs the Ogallala Aquifer, anyways?

Missing from the industry rebuttal was the pollution caused by excess nitrogen ending up in the Mississippi. Each year, spring runoff washes nitrogen fertilizer into the Gulf. Phytoplankton eats this fertilizer causing large "blooms." When the plankton die, they fall to the bottom and their decomposition depletes the water of oxygen. Technically known as hypoxia, this prevents marine life that depend on oxygen - fish, crabs and shrimp, from living in the polluted water. In recent years, the "dead zone" has grown - projected to be about 8,500 square miles this year. What impact does removing an area the size of New Jersey have on seafood production and costs?

If we truly want to reduce our dependence on foreign oil, create jobs and improve our environment, we must increase the use of American sourced oil, and stop draining our aquifers and polluting the Gulf. Ending biofuels tax subsidies will help reduce the Federal deficit.

Let the marketplace determine what fuels are used - not politicians and Big Ag.

Your article, "The Biofuels Scam", was breathless in its unfair dismissal of homegrown, renewable ethanol.

First, the World Bank report mentioned by Mr. Andrews was by no means secret.  The 2008 report that was widely reported on in various publications around the world blamed biofuels for increasing food prices. However, this year, in an about face from its original position, the World Bank issued a new study which shows that biofuels in fact played a much smaller role than previously thought and that energy prices and speculation played significant roles in the non-energy commodity price spikes seen in the recent past. Indeed, not one kernel of food fit for humans goes to ethanol production. The corn used to make ethanol in this country is field corn. In fact, a co-product of ethanol production are the Dried Distiller's Grains which go right back into the food chain in the form of one of the highest-quality livestock feeds on the market. So, ethanol production does not take food away from people.

Second, every day, ethanol producers are developing technological improvements to increase efficiency, reduce water use, and boost the amount of energy derived from corn kernels or from cellulosic biomass. Today, it takes 3 gallons of water to produce a gallon of ethanol, the same amount of water it takes to produce a gallon of oil. Research out of the University of Illinois at Champagne-Urbana says that ethanol production can reduce water use to as little as 1 gallon.

Third, while some in the boating industry oppose higher blends of ethanol, that is far from a universal opinion. In fact, a recently-published story in Orlando Sentinel says that blaming ethanol for boating woes "may not be fair" since the vast majority of engines can handle E-10. There is no better evidence of that than Minnesota, the Land of 10,000 Lakes - and probably five-times as many small-engine operating snowblowers - where E-10 is the state-mandated standard (gasoline with 10 percent ethanol - the same as Florida). Read that article here.

Finally, when my company filed the Green Jobs Waiver with the EPA to increase the use of ethanol in our fuel from 10 to 15 percent, it was not a federal mandate on E15. Rather, in our waiver, we asked EPA to remove the arbitrary cap that prevents ethanol from competing against foreign oil.  Approval of this waiver doesn't force anyone to buy or sell E15 - rather approval of the waiver will provide consumers with more choices on the fuels market. There are many Americans who would rather choose a renewable, cleaner and domestically-made fuel, like American ethanol, than the status quo of funneling billions of dollars overseas for oil that gets dirtier, costlier and riskier to extract with every passing day.

If we truly want to reduce our dependence on foreign oil, create jobs and improve our environment, we must increase the use of clean, renewable fuels like ethanol in all of our engines.  

Sincerely,

Stephanie Dreyer

Growth Energy, Public Affairs Associate

James Andrews replies:
It's interesting that the Biofuels industry wants to raise the "arbitrary ceiling" from 10% to 15% because then biofuels can "compete against foreign oil." Biofuels would not be competitive even if everyone were forced to buy a GM E85 vehicle - for one simple reason - biofuels production is heavily subsidized by taxpayers.

The Energy Tax Act of 1978 introduced the first major federal subsidy to ethanol, at 40 cents per gallon. Today the Volumetric Ethanol Excise Tax Credit (VEETC) is 45 cents per gallon for ethanol and the Volumetric Biodiesel Tax Credit is $1.00 per gallon for biodiesel. The current annual taxpayer funded subsidy for biofuels production is about $5 billion per year, and this doesn't count other tax advantages like accelerated depreciation. Chevron and Shell should be so lucky.

For sake of argument, let's accept the industry premise that it takes three gallons of water to refine one gallon of ethanol, and that it equals that of the oil refining industry. This is an apples to oranges comparison, because oil doesn't require water to grow. According to the Environmental Defense Fund, an additional three to six gallons of water for irrigation are required for each gallon of ethanol produced. The Ogallala Aquifer is one of the world's largest aquifers and an important water source for eight states: Colorado, Kansas, Nebraska, New Mexico, Oklahoma, South Dakota, Texas and Wyoming. According to the USGS, the Ogallala supplies about 30 percent of all water used for irrigation - and the aquifer is being depleted.

Each 56-pound bushel of corn yields about 2.8 gallons of ethanol and 16 to 18 pounds of feed. For each gallon of ethanol, assume three gallons of water to refine and a very conservative three gallons to grow. In 2006, the US had a production capacity of 5,047 million gallons per year (mgy). 5 billion gallons of ethanol thus required 1.8 billion bushels of corn, 30 billion gallons of water, and 2.3 billion dollars in direct tax credits (at 45 cents per gallon). Today the numbers are higher. Ethanol production in 2009 was approximately 10 billion gallons, and is projected to be 12 billion for 2010. Ten billion gallons of ethanol required at least 60 billion gallons of water; 12 billion gallons of ethanol will exceed 72 billion gallons of water. The most recent U.S. Energy Bill set a target of 36 billion gallons of "renewable" fuels to be produced in the United States by 2022. Who needs the Ogallala Aquifer, anyways?

Missing from the industry rebuttal was the pollution caused by excess nitrogen ending up in the Mississippi. Each year, spring runoff washes nitrogen fertilizer into the Gulf. Phytoplankton eats this fertilizer causing large "blooms." When the plankton die, they fall to the bottom and their decomposition depletes the water of oxygen. Technically known as hypoxia, this prevents marine life that depend on oxygen - fish, crabs and shrimp, from living in the polluted water. In recent years, the "dead zone" has grown - projected to be about 8,500 square miles this year. What impact does removing an area the size of New Jersey have on seafood production and costs?

If we truly want to reduce our dependence on foreign oil, create jobs and improve our environment, we must increase the use of American sourced oil, and stop draining our aquifers and polluting the Gulf. Ending biofuels tax subsidies will help reduce the Federal deficit.

Let the marketplace determine what fuels are used - not politicians and Big Ag.

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