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January 30, 2007
SouthAmerica: On Monday, January 29, 2007 The New York Times and also The Financial Times had a column about energy use in the United States and ethanol.
On The New York Times article columnist/economist Paul Krugman wrote âThe Sum of All Earsâ and he said:
ââ¦There is a place for ethanol in the worldâs future â but that place is in the tropics. Brazil has managed to replace a lot of its gasoline consumption with ethanol. But Brazilâs ethanol comes from sugar cane.
In the United States, ethanol comes overwhelmingly from corn, a much less suitable raw material. In fact, corn is such a poor source of ethanol that researchers at the University of Minnesota estimate that converting the entire U.S. corn crop â the sum of all our ears â into ethanol would replace only 12 percent of our gasoline consumption.
â¦Subsidizing ethanol benefits two well-organized groups: corn growers and ethanol producers (especially the corporate giant Archer Daniels Midland).
â¦Can anything be done to promote good energy policy? Public education is necessary first step, which is why Al Gore deserves all the praise heâs getting. It would also help to have a president who got scientific advice from scientists, not oil company executives and novelistsâ¦â
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On January 29, 2007 The Financial Times published an article by John Gapper âCorn kernels are no cure for oil junkiesâ â and the article said:
âThere was a rare note of agreement last week between George W. Bush in his State of the Union address and the punditocracy at the World Economic Forum in Davos: the world has to find an alternative to fossil fuels. But is the biofuel movement a space race or a gold rush?
Some Americans dub the attempt to develop second-generation biofuels such as ethanol and biodiesel a new space race. It is a challenge that US scientists need to solve, probably with government backing, in order to help Americans to sleep easy at night. In the 1960s, the country's foreign rival was the Soviet Union; now it wants to lessen dependence on energy from oil states such as Saudi Arabia.
The space-racers say the US can displace a lot of the petrol used in cars with ethanol derived from biomass such as wood chips and prairie grasses. This lay behind the fuel standard set by the US president last week for the US to use 35bn gallons of renewable and alternative fuels a year by 2017. But a lot of research into how to extract ethanol from cellulose in plant stalks and wood is still needed.
Ethanol evangelists such as Vinod Khosla, the Silicon Valley venture capitalist, sense a vast potential market. Mr Khosla wants Europe to match the US initiative by requiring the use of 100bn litres of alternative fuels.
"If the US and Europe both set this goal, we could be independent of oil. It would be a $150bn market that would attract entrepreneurs with new technologies," he says.
Put this way, what is not to like? The world gets a source of fuel for cars, perhaps even trains and aircraft, and reduces carbon dioxide emissions from fossil fuels. Europeans like it because it reduces global warming and Americans gain their goal of energy independence from the Middle East. Scientists get research grants and venture capitalists make fortunes. Bring it on.
At the moment, however, it is more like a gold rush. The west wants to emulate Brazil, where cars run on ethanol refined from sugar cane. But there is no cane, so biofuel is being refined from what is available, corn kernels are distilled to make ethanol in the US and rapeseed to make biodiesel in Europe. Arable crops are being taken from people's mouths and put into their fuel tanks instead.
It worries even some of the beneficiaries. I bumped into Mr Khosla, together with luminaries such as Larry Page, the co-founder of Google, and John Doerr of the venture capital firm Kleiner Perkins at a dinner in Davos on alternative energy organised by the Massachusetts Institute of Technology.
As well as these space-racers there were some gold-rushers at the table. One was Alberto Weisser, chief executive of Bunge, which together with Cargill and Archer Daniels Midland processes most crops in the US and Europe. ADM has led the ethanol rush and Bunge is building two ethanol and two biodiesel refineries in the US. Biofuel demand means new business but the Brazilian-born Mr Weisser is not wholly comfortable.
"My biggest concern is that I do not want a gold rush to start that gives biofuels a negative reputation," he says. His worry is that demand for biofuels is raising the price of crops and having unintended consequences for food supplies. He estimates that 60 per cent of rapeseed in Europe is being converted into biodiesel. This has led food companies to import palm oil, which is less healthy for people than vegetable oil.
Biofuels are also a boondoggle for farmers. The US imposes a tariff on imports of Brazilian ethanol and subsidises domestic corn growers to grow crops for ethanol refining. This has some, although not a lot of, logic in terms of US energy independence. But it makes things worse for carbon emissions since it is far more efficient to produce ethanol from sugar cane than from corn kernels. Indeed, refining ethanol from corn seems hardly worth the effort. To grow and refine enough corn to make 1.3 units of energy from ethanol takes at least one unit of fossil fuel, estimates Gregory Stephanopoulos, a professor at MIT. As a gallon of ethanol puts out about 30 per cent less energy than a gallon of petrol, the 5bn gallons of ethanol produced in the US last year only displaced 1bn gallons of petrol.
This is where the space race comes in. Biomass is far more efficient as a source of fuel than corn: instead of getting 1.3 units of biofuel energy from one of fossil fuel, it is possible to get four or five. This changes the equation.
Instead of having to devote a large swath of North America to corn-growing in order to make a dent in consumption of petrol, the US could grow smaller areas of prairie grasses and leave corn alone.
Unfortunately, mass production of biomass fuel is some way off yet. Technological advances are needed to get enough out of plant cellulose to allow ethanol to be distilled on an industrial scale. MIT's scientists and Silicon Valley entrepreneurs are going to have to crack some obstacles before the tussle between food companies and ethanol refiners for supplies of corn and seeds can end.
Optimists such as Mr Khosla believe there will be a seamless transition: biofuel companies have started with sucrose-based ethanol and biodiesel but will evolve to cellulose-based fuel as the technology matures. I hope he is right but governments could end up blocking progress by subsidising farmers and refiners to keep making biofuels from the crops they favour now. If the US could put a man on the moon, it ought to be able to put the squeeze on corn farmers.â
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January 30, 2007
SouthAmerica: No wonder the American capitalist system is slowly becoming discredited around the world â and when the United States try to tell people what to do they look at the US system with some suspicion.
Let me give you the latest example of what I am saying: today the United States is so energy dependent from foreign sources that the US has to go to war to secure new sources of energy as it has been the case regarding the Iraq War.
The American people it has not learned a lesson from the oil shock of the 1970âs, and today the United States it is more dependent than ever on foreign oil.
In the other hand the Brazilian government it did bite the bullet and they decided that they would not subject the Brazilian economy to another oil shock like in the 1970âs and they decided to do something about.
Today Brazil has an state-of-the-art energy system which is 100 percent independent from foreign oil, and at the same time in the age of "Global Warming" the Brazilian system it is also environment friendly.
What it is âPatheticâ to me is how even when the United States is trying to do the right thing and develop new sources of energy such as ethanol â the United States manages to still go in the wrong direction making its effort almost completely irrelevant.
If we did not have the Brazilian system to compare against it â then we would say the United States is going thru a process of trial and error to find a new source of energy.
But with the Brazilian system being such a success â ethanol produced from sugar cane â the US ethanol program it looks obsolete from the let go.
If we were talking about the Brazilian system producing only 30 or 50 percent more ethanol from the same effort than the American system then some people would find a way to justify why the American system should continue.
But that it is not the case. The Brazilian system produces 8 times (800 percent) more ethanol from the same type of effort. The ration is 8 to 1 and very soon the ratio is going to be 10 to 1 in favor of the Brazilian system.
If Americans really believed on what they preach to the rest of the world regarding the efficiency of the capitalist system, then they would let the Brazilians produce the ethanol for the U.S. market since the American market it is so incompetent regarding that issue.
By the way, regarding Paul Krugmanâs column I have the feeling that Paul Krugman is also recognizing that Al Gore would be the best prospect for US president in 2008 â and I would not be surprised if Paul Krugman might end up supporting Al Gore in his column from all the democratic presidential candidates - if Al Gore enters the 2008 presidential race.
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