Amid all the thunder and lightening about subsidies in the new farm bill -- which officially became law Thursday -- Congress made a major policy shift with regard to the goodies lavished on ethanol makers.
Under previous policy, biofuel makers -- whether conventional or cellulosic -- benefit from a 51 cent a gallon tax credit conferred on gasoline blenders. No any more.
According to a recent Environmental Law & Policy Center memorandum [PDF] summing up the farm bill's energy title, legislation creates "new cellulosic biofuels production tax credit for up to $1.01 per gallon, available through 2012." Meanwhile, it also shaves down the old blenders' credit, known as the volumetric ethanol excise tax credit ("VEETC" or "blender's credit"), from 51 cents to 45 cents per gallon.
Can cellulosic producers benefit from the production tax credit, and then sell their ethanol to blenders who get the VEETC? Unclear. I'm in the process of checking that out.
The new law also contains some goodies for investors who want to build cellulosic ethanol plants. It provides mandatory funding for a program that went unfunded in the 2002 farm bill for "grants to demonstration-scale plants up to 30 percent of costs, and loan guarantees for commercial-scale plants (up to $250 million per plant)." No estimate is given on how much this will cost taxpayers.
"The program is for advanced biofuel production such as cellulosic ethanol or butanol," the ELPC memo states. "Corn-starch [conventional] ethanol is not eligible for assistance under this program."
It should be noted that while straight corn-based ethanol is excluded here, cellulosic ethanol derived from corn waste (e.g., stalks and cobs) isn't. In fact, if cellulosic ever does ramp up to commercial scale, it's almost certain that corn waste will be the main feedstock.
Such a scenario would not only consolidate this ecologically destructive crop's grip over the Midwest; it would also likely lead to soil erosion, since corn "waste" now provides important organic matter to the Midwest's soils.
But wait; there's more. Next we get the "Bioenergy Program for Advanced Biofuels," designed for "low-carbon biodiesel and cellulosic ethanol. This one lays out $300 million over four years; and "an additional $100 million in discretionary funding over four years is allowed."
Apparently, it just writes checks to certain biofuel producers. "It pays biofuels producers for production of biofuels based on several factors to be determined by the USDA." There is provision to prevent giant factories from grabbing all the goodies: "Not more than 5 percent of total payments can be paid to large facilities with a refining capacity of more than 150 million gallons per year."
This one is evidently designed to boost soy-based biodiesel: "We expect that most of this funding will be used for soy biodiesel in the first several years of the new Farm Bill," ELPC states. Oh, dear.
If you dig through the ELPC report, you'll also find various inducements for farmers to grow "energy crops" like switchgrass.
Then we get this, my favorite bit: the Biofuels Infrastructure Study. This one directs the USDA to:
conduct a study to assess the infrastructure requirements for biofuels production and transport through 2025. The study is intended to be comprehensive and include water requirements, alternative transportation, adequacy of rural roads, impacts on safety of transportation systems, and resource conservation.
That's awesome -- so there's all sorts of goodies for people who want to use land to produce fuel for cars, including a big study of biofuel's infrastructure requirements.
Hopefully, the next farm bill will contain goodies to build infrastructure for local and regional food systems.
In future posts, I'll be looking at what effect all of this federal largesse might have on biofuel markets and farmland.
Arlen Specter (D-Pa.) [UPDATED]
Michael Pollan on agriculture and health care
Dianne Feinstein (D-Calif.)
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amazingdrx Posted 12:29 am
25 May 2008
The subsidy for ethanol is over twice the cost of kwh powered transportation. Yet there is no subsidy for plugin hybrids or plugin assisted bikes.
Natural gas costs 1 dollar per equivalent to a gallon of gas in a natural gas fueled car, tractor, or truck. Biogas from the corn, and other crop waste and manure ought to get that dollar and a half per gallon subdidy.
Now that's a biofuel that builds soil with the organic soil amendment from biodigestion.
Long haul trucking powered with farm biogas from pumps on the interstate, how much diesel would that save. Flex fuel diesels that run on diesel fuel or natural gas, that might help the economy.
These cellulosic ethanol subsidies are all wrong for the economy and the climate. and the soil.
http://amazngdrx.blogharbor.com/blog
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maverick Posted 9:08 am
25 May 2008
Switchgrass is a larger co2 sinkhole than an established forest . It is a crop you plant once and then mow like your lawn. It also provides habitat and can be planted on marginal lands ( think sides of the road, CRP ground) because the water requirement is not traditional as in soy , corn etc.
This creates closed fuel loops . Farmers in a co-operative structure can use the fuel they grow and sell it locally. This is ONE mechanism to a complex problem . We are used to thinking in a singular fuel mind set. Soon we will see technologies open up an enormous market to everyone. Not Exxon etc. We need to stay vigilant to keep the profits in communities that have the environmental and economic indicators to produce cellulose ethanol. Think Mom and Pop , Farmer co-op's and communities. Then move into other area's.
Slow and steady wins the race Turtle.
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Ron Steenblik Posted 2:57 pm
25 May 2008
I think we need a good discussion on the likelihood of that happening. For the moment, at least, the economies of scale for cellulosic-ethanol plants are even greater than for corn-ethanol plants. You need all the fermentation, distillation and dehydration equipment of the conventional plant, plus a lot of fancy, up-front equipment to prepare the cellulose and hemi-cellulose (and separate out the lignin) to boot.
Then you need a place to store tons and tons of the feedstock in a way that won't let it get wet or catch on fire.
Harvesting is also governed by economies of scale, and consolodation. The more dispersed the harvested area, the more costly it is to harvest the required amount to feed the plant.
Look at maps of CRP land (that which is not quickly reverting back to the production of food or feed crops) and you will notice that a lot of it is in relatively narrow strips, and some of it is on relatively steep slopes.
And does anybody know what the policies of the Highway Departments of the various states are with respect to growing and harvesting switchgrass on the road margins? There is a reason why they prefer short grasses: drivers can see across them, and can pull their vehicles off onto them in an emergency.
Yes, we can overcome all of these problems through big enough subsidies. But shouldn't the country stop and take a collective breath and ask what alternatives one could procure for $1.50 or $2.00 per gallon of gasoline equivalent?
These are only my personal opinions.
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amazingdrx Posted 3:12 pm
25 May 2008
But ethanol? It is a bit more complex.
To make biogas put manure and farm waste in a tank. That's it.
Ethanol needs two steps with different equipment in each step. Fermentation and distillation. Not something mom and pop could get into unless they were moonshiners.
http://amazngdrx.blogharbor.com/blog
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Ron Steenblik Posted 4:57 pm
25 May 2008
These are only my personal opinions.
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Jonas Posted 3:25 am
26 May 2008
"Farm to tank": converting biomass via thermo- or biochemical conversion into a liquid fuel is rather inefficient. It is much more efficient to use that biomass in a combined-heat-and-power plant (which can have an overal plant efficiency of 90%). So that way you are more efficient from the start.
"Tank to wheel": now you use your rather efficient electricity in an electric car. With its motors and with good batteries, electric cars are considerably more efficient than internal combustion engines. So here again, you save big time.
The farm bill should have referred to this much more rational use of biomass.
Now they are keeping the split between the ICE-model and the EV-model. The future points towards an electric mobility concept, in which you can use many decentralised types of renewable energy.
3. Some will say that electric transport would be problematic because renewables like wind or solar don't deliver baseloads or peakloads and are thus dependent on coal or gas. But here comes biomass's role: it offers reliable and renewable baseloads and peakloads.
They did a large-scale test in Germany to see whether you can generate electricity day and night from renewables only, and indeed, they demonstrated this (we all knew it was possible, but someone needed to demonstrate it, to get the message true). They used biomass as a baseload, and connected it to wind and solar plants to generate reliable power for the grid round the clock.
4. In the future we will even be able to capture CO2 from biomass and sequester it so as to generate carbon-negative electricity. (No other energy source, reliable or not, is capable of doing so).
This opens a quite radical and bizarre future: each time you were to drive your EV with electricity from a carbon-negative biomass plant, you would be taking CO2 out of the atmosphere !
You wouldn't merely be 'reducing your emissions to zero'. No, you would actively be taking historic CO2 out of the atmosphere.
And the more you drive, the more you would be solving climate change...
Obviously, this revolutionary idea hasn't yet reached mainstream thinking, but a select group of people (especially in Europe) is beginning to explore it (recently, there was a conference on decarbonised, biohydrogen based electricity and 'bio-energy with carbon storage).
In short, instead of becoming a problem, driving your car can become the thing to do....
We must build a renewables based electricity infrastructure, with a carbon-negative biomass baseload, and hook it up to EVs.
Then we can mitigate climate change by driving our cars.
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Ron Steenblik Posted 5:30 am
26 May 2008
Apart from your claim that "the more you drive, the more you would be solving climate change..." (though I guess what you're saying is that it takes a market demand for the electricity to encourage the building of biomass electricity plants), I wouldn't disagree with what you've written here.
If you are one person, why do you so often jump to the defense of people promoting liquid biofuels and the internal combustion engine?
These are only my personal opinions.
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Jonas Posted 9:40 am
26 May 2008
Some people 'split up' the world into two socio-geographical zones: the highly developed world, and the developing world.
(This is probably the reason why you subconsciously use the word 'split' - because subconsciously you are aware of the world's social geography).
So I ask you, what is so bizarre about argueing in favor of (1) liquid biofuels in the underdeveloped world, where people can afford cars that cost $2000, and (2) arguing in favor of more optimal uses of biomass in the highly developed world, where economies can afford these infrastructures because the existing ones needed for such a concept are already in place, and because you people's purchasing power is a tad higher.
One - two. One - two.
One: Tata Nano Flex Fuels for the Congo
Two: EV's plugged into carbon-negative bio-electricity in Brussels.
One - two.
I've been over this with you in the past. I seem to recall that you could agree then that it doesn't make sense to build a bio-hydrogen infrastructure in Central Africa, but that you can begin to think of one in the Low Countries.
In some senses, yes, one's personality should be split in order to understand the world a bit better. I suggest you try it!
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Jonas Posted 9:42 am
26 May 2008
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Jonas Posted 9:53 am
26 May 2008
It explicitly acknowledge its current 'sustainability' and dispells the cruel myths which link it to rainforest destruction and to rising food prices.
After acknowledging that the generalised war against biofuels has been neofascist, it then lists its wishes which come down to protecting certain important ecosystems close to the state of Saõ Paulo, where the bulk of sugarcane is grown.
As a big defender of liquid biofuels for developing countries like Brazil, I would say that it is not insensible to ask for the protection of systems like the Cerrado.
But this conservationism can only bear fruit when it is socially sustainable. And that remains to be seen. If it is socially unsustainable (e.g. limiting ethanol expansion needed to power Brazil's modernisation process), then it might result in more rainforest destruction (without modernity, based on abundant liquid fuels, no longterm protection of the Amazon is possible).
So we should make a serious analysis of the social sustainability of WWF's plea for conservation.
For the rest I agree with the organisation's view on Brazilian ethanol's sustainability and superiority.
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Jonas Posted 9:57 am
26 May 2008
It's pretty sad, because American consumers could have enjoyed the opportunity of driving on sugarcane ethanol which costs a third of corn ethanol, which is highly sustainable, and which is 5 to 8 times more efficient on a seed-to-tank basis (even after export).
Why don't American citizens protest?
(Sorry about my multiple posts, I should have put them in one answer; but he farm bill is pretty large on biofuels, bioenergy and biomass.)
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Ron Steenblik Posted 3:28 pm
26 May 2008
My own thinking on developing countries is not fixated on one idea (bio-energy) -- hence the arguments you and I have had over whether a sudden rise in the price of foodstuffs is better or worse for the developed world or not, and whether small-scale distributed energy may make more sense in some places than larger-scale, grid-based power.
To answer your question, what do I think of concept of carbon-negative bio-electricity? The concept sounds good, but the devil is in the implementation. Let's see how it works in practice.
In your own "split" thinking, however, you might further split your understanding of the developed world (which is what much of the debates here in gristmill concern) into a few additional compartments.
Environmentalists in North America (and Australia) have, or should have, a natural scepticism to large-scale, government-backed claims on the vast, semi-arid grasslands of our countries.
We've been there before.
By the end of the 19th century, Native Americans and buffaloes had been reduced to a fraction of their original population on the high plains of North America. Land there was cheap. Hundreds of thousands of people -- poor people -- were encouraged to settle on the land, and outrageous claims were made about the yields that the land could produce in order to lure them there.
Then WWI came along, and the settlers were encouraged to dig up the fragile sod and plant crops, "from fence row to fence row". That worked for awhile, but when drought returned to the Great Plains, vast parts of it were turned into one enormous dust bowl. Tens of thousands of poor farmers lost everything they owned and had to emigrate, many to California.
The expensive system of farm subsidies that we have today dates back to that era. Initially established to help those poor farmers of the Plains, it then morphed into an entitlement program mainly benefitting crop farmers in the Midwest.
So don't be surprised when North Americans show scepticism towards those who envisage vast swathes of the world's "arable land" (which in many countries actually means grasslands) being appropriated for something like energy crops. That scepticism is grounded in the history of countless scams and failed, well-intentioned experiments.
These are only my personal opinions.
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Delay And Deny Posted 11:54 pm
26 May 2008
Clearly we're trying to re-agrify America. The best solution for the current situation is to continue spawling. We've exhausted the suburbs and must move into the rural areas. Shows such as "Farmer Needs A Wife" are encouraging young females to bring their goods to the sticks and hook up with Eb and Fred Drucker. We need more roads in Hooterville (and more Hooters).
Oil Is So Hot!
http://oilismastery.blogspot.com
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amazingdrx Posted 1:04 am
27 May 2008
It is based on the mistaken notion that burning biomass has no GHG balance consequences and that CO2 can be sequestered by pumping it underground.
No CO2 has yet been sequestered despite decades and 10s of billions spent. The Futuregen plant in Illinois is the latest to be abandoned. Was there ever even a pipeline for the cO2 at this location? It has to be piped to a suitable location then be pumped underground, making sure it stays put.
When the biomass grown on a given acre of land is burned, as ethanol or directly, that CO2 is released into the atmosphere. When food crops are grown, the food value is turned into CO2. But the rest of the biomass should go back into the soil. With conservation land, the whole amount of CO2 goes back to the soil.
That's a natural carbon cycle. There is no way that burning sugar cane is a natural cycle. It prevents the storage of CO2 in the soil, releasing milennia of stored carbon. And making the CO2 balance worse every year, by the amount (of carbon) that land would normally, naturally sequester.
http://amazngdrx.blogharbor.com/blog
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Jonas Posted 1:36 am
27 May 2008
You can make carbon-negative energy by sequestering carbon in two ways: one is by geosequestering it as a gas, two is by storing it as inert C in soils (just plough it under).
Both technologies are well proven.
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Jonas Posted 1:47 am
27 May 2008
I am not against subsidies for certain new technologies (like cellulosic ethanol or solar concentrated power), provided there's clear provisions for their phase-out after certain objectives have been achieved.
The case about the subsidies for American grassland farming is similar to the case of European Union farm subsidies, in that they are both very old and obsolete, showing the stubbornness of subsidies. The EU's farm subsidies date back from the post-WWII era, when food insecurity was a real problem in Europe. Ten years later (1960s) they should have been abandoned because Europe became a food exporter. Today, they still exist, make up the bulk of the EU budget, cost us €40 billion a year. They benefit wealthy farmers only, and keep poor third world farmers out of the market.
Luckily, with record grain prices (partly due to biofuels), they are being phased out.
In its latest health check, the Commission suggests a 15% cut in direct payments by 2013 (or thereabouts).
So if reason doesn't do the trick, irrational market movements can often cause a revolution.
The rising grain prices are creating a large shift in contemporary agriculture: rich farmers in the West spend heaps on improving their technologies (just read that precision farming is now seeing a boom because farmers have plenty to spend); subsidies are being phased out; and massive investments are flowing into third world agriculture, where farmers are already benefiting slightly from the increased prices.
On substance I agree that subsidies in agriculture no longer make sense for producers that already make huge profits; the instrument should only be used to protect weak farmers, to combat food insecurity, and to protect access to certain strategic resources (such as mineral fertilizers).
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Ron Steenblik Posted 3:16 am
27 May 2008
Thank you for a constructive comment. But I am would challenge your statement that farm subsidies are being phased out in the North. As Tom Philpott has been pointing out in his blogs, the latest Farm Bill passed by the U.S. Congress essentially maintains the status quo. Meanwhile, the cost to the U.S. Treasury of the volumetric ethanol excise tax credit (and a similar one for biodiesel), because it increases in proportion to volumes blended, will continue rising. If one considers the total cost of farm payments AND the VEETC (not to mention state-level subsidies), subsidies to agriculture in the USA are on a trajectory to INCREASE, not decline.
Yet just 18 months ago, some people in the U.S. Administration (e.g., the U.S. Ambassador to the EU) were saying confidently that rising commodity prices (for which at the time he and the industry were giving full credit to biofuel demand) would enable deep cuts to be made in agricultural subsidies. It didn't happen that way. (Surprise, surprise!)
The European Commission is talking about (gradually) reducing its subsidies, but is already running into opposition from the usual quarters. I would be reluctant to forecast the outcome before the dust settles.
Solar photovoltaics is one of the few technologies for which clear provisions for their phase-out after certain objectives have been achieved were included in several countries' policies (e.g., Japan's for roof-top PV).
But the nature of agriculure is that once subsidies are introduced, especially production-related subsidies, rents get generated that raise the price of land, which then makes it difficult to phase out the subsidies.
That is not to deny that temporary subsidies for crucial inputs, like the example you mention of Malawi's fertilizer and seed vouchers for small farmers, may nevertheless have a place.
These are only my personal opinions.
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amazingdrx Posted 4:07 pm
27 May 2008
Coral reefs sequester carbon too. So do wood buildings.
Soil only sequesters carbon if biomass is returned to the soil. Your gavorite energy scheme, fuel farming, robs that biomass and burns it, sending all the carbon skyward.
If 5% of our energy came from biogas from waste (like manure, garbage, waste biomass, and sewage), that would otherwise release methane into the atmosphere, it would offset the rest of our carbon footprint.
This is the practical solution for GHG climate disaster.
http://amazngdrx.blogharbor.com/blog
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