Tariff Set to Expire on Foreign Ethanol, Spelling End of Failed Domestic Product

Cane sugar is converted to ethanol much more cheaply

In a time of economic and environmental turmoil, the United States is pursuing a doomed alternative biofuels policy. The entrenched oil lobby has been leading the way down this path in Washington. Perhaps this has all begun to change in 2011.
A sea-change is occurring in how American scientists and economists view liquid biofuels, namely ethanol. The decades-old attempted shift from petroleum to corn ethanol has failed. Other liquid biofuels were flops, economically speaking. Now businesses are looking further south, much further.
Sugar is king in Brazil. Prices for cane ethanol are skyrocketing, but supplies are plummeting. The Brazilian Sugarcane Industry Association (UNICA) sent an urgent notice to its members this April to increase production.
“The future is bright for us,” says UNICA spokesperson Ana Carolina Lessa. “All the industry needs to do is keep up with the growing demand.”
This task may soon become much more difficult.
The U.S. passed Brazil as the leader in ethanol production in 2005. There are now over 200 ethanol plants in the country. This trend could soon be reversed in Brazil’s favor.
Amidst decades of criticism, U.S. subsidization of corn ethanol could soon take a major blow. The Volumetric Ethanol Excise Tax Credit (VEETC) received a yearlong extension in the Congress in December, but doubts about another extension in 2011 are growing.
VEETC, which originated in 2004, includes a 54-cent per gallon tariff on imported ethanol, thus protecting the domestic markets. A $1.01 per gallon credit goes to cellulosic ethanol producers. This ethanol comes from non-food sources such as grasses, wood, and agricultural waste.
The subsidy of a 45-cent per gallon (of ethanol) tax credit goes to gasoline blenders, those blenders usually being oil companies.
BP could receive $600 million this year out of the total $5 billion in VEETC subsidies for blending gasoline with corn-based ethanol, making the British oil and gas giant one of the largest beneficiaries of the subsidy.
On BP’s website, the company claims: “As one of the largest blenders and marketers of biofuels in the nation, we blended over 1 billion gallons of ethanol with gasoline in 2008 alone.”
Environmentalists cringe at the thought of oil companies leading the way toward responsible alternative energy solutions.
“If corn ethanol is so great, it wouldn’t be subsidized,” said David Pimentel of Cornell, who has been called an “über-biofuel-skeptic.” Many experts agree, but that doesn’t change the fact that corn ethanol is still considered a viable alternative energy source by Washington and the American public.


About Joe Doolen

I am a graduate student at the University of Wisconsin-Madison's School of Journalism and Mass Communication. My aim is to write on science and international issues with a focus on environmental policy and justice. Topics range from local and domestic politics to international communications and culture, and anything cool about science really!!
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One Response to Tariff Set to Expire on Foreign Ethanol, Spelling End of Failed Domestic Product

  1. Gary Schwendiman, Ph.D. says:

    There are 240 million internal combustion engine vehicles in the U.S. They use 140 billion gallons of fuel per year. They can run on only two things; petroleum derivatives and ethanol. The OPEC countries control 67% of the oil reserves in the world; other countries control 31%. The U.S. controls only 2%. The long term suppliers of oil to the world are the OPEC countries.
    The U. S. is now spending hundreds of billions of dollars per year to import oil. Those who oppose ethanol to partially replace oil in the U.S. are by default in favor of sending billions of dollars a year to foreign oil producing countries. The only practical way to escape the coming negative impact of the depletion of U.S. oil reserves is to produce and use more ethanol. Internal combustion engines, which constitute 96% of the car and truck engines in the U. S. cannot run on anything other than petroleum derivatives or ethanol. Of the 140 billion gallons of fuel currently used in the U. S., about 100 billion gallons is E10, a fuel blend of 10% ethanol and 90% gasoline. If this percentage were increased, U. S. dependence on foreign oil would be decreased, and the U. S. economy would be strengthened.
    There is only one alternative way to fuel the 240 million vehicles when the prices of petroleum and gasoline soar. That way is to produce and use more ethanol. Unless many more billions of gallons of ethanol are produced, the U. S. will continue to be hostage to whatever price the OPEC oil producing countries demand for oil. It will be the ultimate economic terrorism.
    Globally, there are 900 million internal combustion engine vehicles. It is reliably estimated that by 2030, there will be 1.7 billion internal combustion engine vehicles in the world. The world is now producing 300 billion gallons of gasoline per year. It is highly unlikely that more than 300 billion gallons of gasoline per year will ever be produced. To fuel the additional 800 million internal combustion engine vehicles will take an estimated 250 billion gallons of fuel. That 250 billion gallons of fuel can realistically only come from only one source; that source is ethanol. Unless action is taken now to begin to dramatically increase the production and use of ethanol, oil prices and gasoline prices will soar as demand outstrips production.
    It would be nice to live in an ideal world where there would be hydrogen fuel cell cars, electric cars, hybrid cars, and plug-in-hybrid cars that are comparable in cost to equivalent internal combustion engine cars; it would be nice to have natural gas cars that have a nationwide infrastructure for dispensing natural gas; and it would be nice to have a myriad of other ways of replacing the internal combustion engine; but those ideas will not now and may never turn the corner into reality. Reality demands reliance on current solutions that actually work.
    Ethanol is not perfect; but taking all of the pluses and minuses into consideration, it is clearly better for the U. S. than having increasing U. S. gasoline prices and an increasing reliance on oil imports. Those who clearly see the future know that producing and using more ethanol in the is a big win for those who want lower gas prices, cleaner air, less reliance on oil imports and a stronger U. S. economy.

    Gary Schwendiman, Ph.D.

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