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.