Energy: Are US biofuels policies flawed?

"We need to set realistic targets for ethanol in the United States instead of just throwing taxpayer money out the window." -- Amy Myers Jaffe, associate director of the Rice Energy Program and a contributor to the report.

A few years ago, when biofuel and blogging were both just heating up, I registered biodieselbloggerdude.com (yeah, whatever) with the idea of vanning around the countryside on a tankful of curly fries waste chatting up the entrepreneurs and alchemists who were turning animal and vegetable fat into black gold. About three hours later, having poked about in publicly available sources, I realized the idea of finding the country's energy needs in the compost pile was at best a fantasy and at worst a scam.

Now Rice University’s Baker Institute for Public Policy has released a study citing the economic, environmental and logistical shortcomings of the U.S. government's efforts to promote of biofuels as alternatives to coal, gas and oil.

Fundamentals of a Sustainable U.S. Biofuels Policy (pdf) asks whether the $ billions in federal subsidies and protectionist tariffs that go to domestic ethanol producers every year is money well spent. According to the report, in 2008 "the U.S. government spent $4 billion in biofuels subsidies to replace roughly 2 percent of the U.S. gasoline supply. The average cost to the taxpayer of those 'substituted' barrels of gasoline was roughly $82 a barrel, or $1.95 per gallon on top of the retail gasoline price (i.e., what consumers pay at the pump)." The researchers find little evidence that mandated volumes for biofuels can be met or that biofuels are improving the environment or energy security.

In fact, they say, "[i]ncreases in corn-based ethanol production in the Midwest could cause an increase in detrimental regional environmental impacts, including exacerbating damage to ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico and creating water shortages in some areas experiencing significant increases in fuel crop irrigation." Moreover, they challenge the claim that ethanol use lowers greenhouse gas emissions: "There is no scientific consensus on the climate-friendly nature of U.S.-produced corn-based ethanol, and it should not be credited with reducing GHGs when compared to the burning of traditional gasoline."

In 2007, Congress passed the Energy Independence and Security Act (EISA) mandating production targets for "renewable fuels," mainly biodiesel and ethanol. The bill set out ambitious production targets beginning in 2008 at 9 billion gallons per year of biofuels and rising to 36 billion gallons per year by 2022. The law caps corn ethanol at 15 billion gallons per year, but according to the study even that level will be difficult to reach given logistical and commercial barriers.

EISA also called for 21 billion gallons of advanced biofuels, produced from sources like switchgrass, corn stover and algae, to be included in the nation’s fuel supply by 2022. However, the report finds "existing mandated targets for advanced biofuels are not currently achievable -- scientifically or commercially -- and should be revisited."

Finally, the report questions the efficacy of the tariff imposed on ethanol imported from Latin America and the Caribbean. Because sustainable production of U.S. domestic corn-based ethanol can't or won't happen, the report finds "tariff policies that block cheaper imports are probably misguided....we believe on balance that the economic and geopolitical benefits to this trade with select regional suppliers would outweigh any 'energy security' costs to having some larger percentage of U.S. ethanol supplies arriving from foreign sources."

It should be noted that the study was supported by a research grant in environmental engineering from Chevron Technology Ventures.

Of course, the Rice study doesn't answer questions about what combination of energy sources -- solar, thermal, wind, nuclear, biological or otherwise -- will be needed to liberate us successfully from dependence on oil and coal. But a functioning society is a fact-based enterprise and the report provides additional data to use as we try to devise a workable national energy policy.

The rest of the story: Fundamentals of a Sustainable U.S. Biofuels Policy (Publications from the Rice Energy Program initiative on U.S. Biofuels Policy)

See, also: Is Algae Worse than Corn for Biofuels? (Scientific American 2010-01-22)