Comments David Morris has made
david morris comment on subsidies
Gristers,
Thanks again for responding thoughtfully. I love a good conversation. I can't say I'm going to respond every few hours but a number of people in the original comments raised the issue of subsidies, as they did in their comments on my response, so let me say a few words on this important topic.
People tack a different tack on subsidies. Some propose we end all subsidies to all fuels and let the chips fall where they may. Others support the use of subsidies temporarily but want to end them when they are no longer needed.
My take on ethanol subsidies was fleshed out in a June 21, 2006 Op Ed in the New York Times. In it I expressed opposition to the federal incentive as currently structured, an opposition I've expressed for many years. The current incentive has no cap, has no connection to need, and goes to the oil companies primarily, not the producers. I suggested that part of the incentive be indexed so that when the price of oil was high and the price of corn or cellulose or oilseeds was low, the incentive would disappear. And the rest of the incentive should be converted into a direct incentive rather than a blenders' credit and be allocated up to a certain number of gallons produced per plant per year and a higher incentive go to locally owned plants. We did that in Minnesota and it led to 80 percent of all plants being farmer owned and modest in scale.
By the way, I argue that the same be true of the wind energy incentive. It is a direct incentive to the producer, but because of various restrictions, it actually has little relevance to local owners(e.g. the tax credit can be used only against tax liability from passive income, not ordinary income, which means income from dividends and capital gains only).
If all subsidies to all fuels disappeared, the renewable fuels market would disappear completely, except for those states that have renewable fuels mandates and for a small green premium market. If the full costs of fossil fuels were incorporated into their price this might not occur but that is a complicated political step and perhaps more theoretical than practical.
As I said, I would index incentives. The wind electric incentive today is about 50 percent of the wholesale price of electricity while the ethanol incentive is about 35 percent of the wholesale price of gasoline. There are other subsidies, like those for hybrid and electric cars and PVs, that are somewhat more difficult to calculate in a comparative way.
I believe incentives should be offered on a comparative basis, but that becomes tricky when biomass is involved, for the reason that unlike sunlight and wind, which can be used only to generate some form of energy(thermal, electrical, mechanical), biomass has many possible end uses. So if we were to offer an incentive per kwh, say, or per million Btus, we would actually be favoring a certain end use for biomass and that could be problematic.
This has already occurred. The federal renewable electricity incentive is paid per kWh generated. Poultry manure is considered biomass under amendments to the 1992 law. Minnesota currently offers a very handsome incentive for incinerating turkey manure to generate electricity. When the first plant opens this month, it will be using 50-65% of existing turkey manure in the state. That manure already has an existing market as a fertilizer, so in effect, the state(and federal government) is subsidizing an inferior end use when an unsubsidized superior end use was already taking all the turkey manure generated.
So we need to be nuanced in how we offer the across the board incentive. In the case of the turkey manure, assuming we want to subsidize waste disposal(ILSR does not), then it should be on a per pound basis. But that is hard to translate into a comparative wind or solar incentive.
A couple of briefer responses to others.
- Steenblik is right. Half the plants awarded grants by DOE say they will use at least some corn stover. We'll see. The Iogen plant in Idaho, for example, will use little if any corn stover simply because it is contracting for wheat straw and there is little stover available.
- Jon Rynn talks about localized agriculture. I agree. ILSR has worked on localizing vegetable production, as well as dairy, etc. production since the beginning. Tom Philpott asked why are boosting ethanol as a catchall policy response and not offering region appropriate initiatives. We do. Indeed, our name explains our decentralist perspective, "local self-reliance". We would not suggest a biomass policy for Nevada or Arizona. Nor would we suggest a solar policy in a significant way for Coos Bay, Oregon.
- Several people addressed the issue of scale and ownership. Philpott, for example, says that farmer owned ethanol cooperatives were gaining traction for awhile but now Wall Street is taking the drivers seat. I agree. My question is whether Tom's support of ethanol in 2002, when farmer ownership was the primary ownership model and the ethanol plants were 30-40 million gallons in capacity, was strong. ILSR fought ADM's dominance in the 1980s, helping to change Minnesota's incentive so that it would nurture homegrown value-added alternatives. And we have fought the new absentee owned, 100 million gallon a year structures and argued for public policies that favor local ownership and modest scale. We would be ecstatic if the environmental community took ownership and scale into account in its policies
- And yes, my comment about molecules had to do with all the things now made from organic chemicals. Although I would also want to raise the issue of things made from minerals in general, since mining is a major problem.
- Steenblik is right. Half the plants awarded grants by DOE say they will use at least some corn stover. We'll see. The Iogen plant in Idaho, for example, will use little if any corn stover simply because it is contracting for wheat straw and there is little stover available.
david morris comments
Gristers,
Several people asked if I am reading these thoughtful comments and would respond to them. I am and I am. I didn't read them until this morning. Sundays are days away from the computer if I can possibly manage it.
Having jumped in after several dozen comments are already posted, I'm tempted to respond in chronological order, but perhaps a few overall comments might be useful.
Several people gave a tip of the hat to my organization and me for our other efforts(e.g. anti-big box retail) or our earlier books(e.g. neighborhood power) while taking me to task for one person called my "obsession" with ethanol. I appreciate the praise but would argue that the same philosophical framework that guides our work on neighborhoods and large retail guides our work on energy. We believe that most, if not all, the world's problems can be solved most effectively from the bottom up, and that communities need to develop new rules that can stimulate human ingenuity into getting the most useful work, on a sustainable basis, from local resources. In this case local resources means human, capital and natural. The major natural resources are sun, wind, geothermal and soil. Since our earliest days(1974) we have supported every one of these resources, although to the person who told me he had heard in speak during the first OPEC embargo on biofuels, he is mistaken. My very first love was(and is) solar cells and solar thermal. I came to biomass in the late 1970s.
My obsession is not with ethanol, it's with decentralized economies and political systems and local self-reliance. But I am one of the few that insists that plant matter needs to be part of the industrial and yes, energy equation. Whiskerfish mischaracterizes my position. He says I believe corn ethanol is the key transitional biological energy feedstock. I believe it is the key transitional biological industrial feedstock.
My first proposition in my column states that we need to rely on biological sources for industrial materials because only biology gives us molecules that can substitute for mineral-derived molecules. I don't believe anyone has talked about that proposition. Do we think that plants should be used for other than food and feed purposes(some I know believe they should be used only for food purposes, not for feed)? Do we believe vegetable oils should be used to replace mineral oils? Should starches be used to replace petroleum derived plastics? If so, how much acreage or tonnage should be allow for that? Currently, aside from the use of trees for paper and energy and construction, we use about 10 million tons of plants as industrial materials. In theory, if we increased this to 200 million tons, we could displace virtually all organic(that is, carbon based) chemicals with biochemicals. Greyfalcon says "All biofuels are a bad idea". Does he believe that all bioproducts are a bad idea as well? Starch can be made into industrial starch, into ethanol, into industrial ethanol, into plastics, etc.
My second proposition argues that since we have a finite amount of arable land or even photosynthetic capacity, we should develop public policies that encourage the highest and best use of plants. Nutrition comes first. We would argue that biomaterials would come before biofuels.
The first biorefinery out of the gate was the corn wet mill, which was focused on the production of high fructose corn syrup. The next iteration produced ethanol as a primary product, and the next iteration was the efficient dry mills that produced ethanol and higher value products as well.
Another proposition is that electricity should be our primary transportation fuel and that biofuels should fuel the backup engines which might drive the vehicle for 25 percent of the total miles or so. Several commenters ignored this point. One said, "I don't look at electricity as something that can replace liquid fuels". I do and said so. Whether electricity can replace 100 percent of the need for liquid fuels is for the future to decide. An all electric car requires a large battery capacity and rapid recharging facilities. Is this less expensive than a backup engine using biofuel? We must remember that biofuels are not only an energy source; they are storage system. They replace batteries. Which is why the cost of ethanol or the efficiency of conversion of crops should not be compared to the cost of electricity or the efficiency of conversion of solar cells. The storage systems must be made from something. I would argue that they should ultimately be made from biological materials. And by the way, a flexible fueled engine costs about $100 more for the car mfg than a conventional engine.
The reason for a performance standard rather than a prescriptive standard, another of my propositions, is so renewable generated electricity can compete with renewable biofuels. In the long run that might lead to 100 percent displacement of electricity for liquid fuels, but that is a very long run indeed and I'm all for the market and entrepreneurialism making that decision.
None of the commenters addressed my proposition that ownership and scale be taken into account. That is disappointing. Our perspective on this also leads us to take a controversial position on solar and wind energy. We prefer decentralized solar to centralized solar and we prefer decentralized, locally owned wind turbines to centralized wind farmers requiring high voltage transmission lines. But that's another conversation for another time.
With these are my overall views, let me make more specific responses to some of the commenters.
- The perfect should not be the enemy of the good. The use of ethanol has cleaned up the air. That is the empirical case. It has reduced carbon monoxide, reduced toxic emissions, reduced particulate emissions. In high blends it reduces volatile organic compound emissions. For goodness sake, ethanol is liquor. We can drink it. It is a single chemical. Gasoline is a blend of hundreds of chemicals and the blends change by season and from gas pump to gas pump, and every last one of those chemicals is toxic and more than a few of the primary ones cause cancer.
- One commenter said the current system of burning corn ethanol in low mileage flex fuel vehicles is almost criminal. I agree. Even more criminal is giving flex fuel vehicles a break on CAFÉ standards so that having an FFV SUV is equivalent to having about a 30 mile per gallon car for CAFÉ standards. Adding insult to injury, the car companies get that credit even if the car never uses a drop of ethanol.
- Biodiversivist says "it all comes down to biodiversity". Fine. That does not answer my question about the extent to which we should use plant matter for substituting for petrochemicals, etc.
- GreyFlen makes several points. One is that agriculture is dependent on weather. Yes it is. And it is dependent, say several others, on water. Yes it is. Droughts can cause a reduction in supplies, which occurred in 1996 in the US corn crop which was about equivalent to the reduction in oil supplies in 1979 I believe. This is a reason for stockpiling crops, which the federal government had as a part of its farm policy until 1996, which has led to most wilder fluctuations in crop prices. GreyFlen also says that efficiency is better than increasing supply. Yes it is. My proposition is to go for plug in hybrids, which as I said in the article, I've been promoting and writing about since 2003, after the second iteration Prius made this a real possibility). Traveling on electricity gets 100 miles per gallon equivalent. This is triple the fuel efficiency standard proposed by the Congress today in one bill.
- Steenblik says that the first cellulosic ethanol plants will use corn stover. I'd actually prefer that, but the first 6 funded by DOE are using other materials.
- John Fish Kurman wants us to move stuff around much less, rely on our own biological energy and electrify transportation. Fine with me.
- amazingdrx says E15 lowers mileage by 10 percent or so. E15 is not sold, so it was an odd choice. In any event, E10 reduces mileage by about 3% by energy equivalent, although the tests indicate that some is made up by the higher octane and higher efficiency of the ethanol so it comes to about a 2% loss. If the engine were optimized for ethanol rather than gasoline, as the Saab turbo in Sweden is, the loss would be about 1%. The amazing dr. also says that it takes more fossil fuel to make ethanol than ethanol displaces. The empirical evidence is overwhelming that this is not true. Even the most ardent opponents(Pimentel) now argues that the net energy loss is trivial. But if ethanol plants use cellulose(e.g. wood waste) to displace natural gas in the plant itself the net energy rises significantly(several now do). If the corn farmers use no till cultivation, as many do(but not nearly as many as should) the net energy goes up even further.
- To potatofarmer. Thank you.
- The perfect should not be the enemy of the good. The use of ethanol has cleaned up the air. That is the empirical case. It has reduced carbon monoxide, reduced toxic emissions, reduced particulate emissions. In high blends it reduces volatile organic compound emissions. For goodness sake, ethanol is liquor. We can drink it. It is a single chemical. Gasoline is a blend of hundreds of chemicals and the blends change by season and from gas pump to gas pump, and every last one of those chemicals is toxic and more than a few of the primary ones cause cancer.