Is ethanol the cure for America's addiction to oil?

In July 2005, the United States' Congress passed the Energy Policy Act of 2005, a massive piece of legislation intended to "ensure jobs for our future with secure, affordable, and reliable energy." The Act touches on just about every possible type of energy, from coal to nuclear to wind, and includes efficiency goals for housing and appliances, as well as funding for energy research and development.

Of all sections of the Act, the one that is possibly the most influential at this time is the requirement for U.S. refineries to increase their use of biofuels from 4 billion U.S. gallons in 2006 to 7.5 billion by the end of 2012. Broadly speaking, there are two types of biofuels: biodiesel and ethanol. Of the two, ethanol is considered more important because it can replace varying percentages of gasoline; in fact, for every gallon of biodiesel produced in 2005 in the U.S., 43 gallons of ethanol were produced.

The Energy Policy Act is intended, in part, to ensure that the U.S. has access to indigenous energy sources; this is considered to be of national importance in a country that has about three percent of the world's oil reserves, consumes about one-quarter of the world's oil production, and imports about 60 percent of the oil products it uses.

Ethanol's proponents list other arguments in favour of ethanol, including the growth in ethanol-related employment, the fact that over 95 percent of ethanol is made in the U.S., and its environmental benefits as a green fuel. Despite these perceived advantages, many people are asking whether the push for ethanol is justifiable.

Refineries are required to include ethanol in their production of gasoline for which they receive 51 cents for every gallon of ethanol blended with gasoline. Since the volume of ethanol must increase every year, there is a growing demand for supplies of ethanol produced in the U.S.; most of the ethanol is made from corn.

The demand for ethanol is forcing the price of corn higher, causing U.S. farmers to both divert corn from existing markets and, not surprisingly, grow more. Existing markets, domestic and international, are experiencing rising corn prices: higher prices have resulted in U.S. livestock farmers and feedlots owners reducing the amount of feed given to cattle and poultry, lowering the market weight of the animals. With corn being the major source of fructose and starch.a basic ingredient in many North American food products—there is a very real possibility of price increases because of corn shortages. Since the U.S. is the world's number one corn exporter, concerns are being expressed about whether corn importing countries such as Egypt will be able to meet the nutritional needs of their citizens.

Perhaps the most significant evidence of the increasing demand for corn is the amount of acreage being devoted to its production. In 2006, some 78 million acres were seeded with corn; in 2007, this increased by 15 percent to 90 million acres, the most acreage devoted to corn since 1944.

Once harvested, corn intended for ethanol production is shipped to a plant which "cooks" it to extract the sugars that can be turned into ethanol. According to the American Coalition for Ethanol, there are about 118 ethanol plants in the U.S., with another 76 under construction, and many more in the planning stage. The heat required for each plant can come from a number of sources, such as natural gas; however, with rising natural gas prices, some plants are using coal because of its low cost. Ethanol's reputation as a greenhouse gas-friendly fuel is justifiably called into question when coal—the most carbon intensive fossil fuel—is burned in its production.

Although most automobiles built in North America since the mid-1970s can run on mixtures of gasoline with up to 10 percent ethanol (referred to as E10 or gasohol), the U.S. Congress has introduced the Biofuels Security Act of 2007, legislation intended to further the penetration of biofuels—primarily ethanol—from 2012 to 2030. The two most significant items in the Act are the requirement for cellulosic ethanol and E85.

One of major arguments against corn-ethanol is that it uses a food product for fuel, something that many people find hard to accept with the world's population expected to exceed nine billion by 2050. An alternative to corn-ethanol is cellulosic ethanol, or ethanol obtained from plant fiber such as corn stalks or various grasses, which allows corn to continue as a food source. At present, the technology to produce cellulosic ethanol is still in its infancy and when fully developed is expected to be several times more expensive than existing corn-ethanol plants. Given today's massive investments in corn-ethanol plants and the cost differential with cellulosic ethanol plants, corn may still be the feedstock of choice for ethanol production well into the future.

E85—gasoline mixed with 85 percent ethanol—is another requirement of the Biofuels Security Act. Most U.S. vehicle manufacturers produce E85 or flex-fuel vehicles, both in anticipation of E85 becoming more widely available—at present it is only found in a few corn-belt states—and to ensure that manufacturer's fleet of vehicles being built meet the EPA's CAFÉ (Corporate Average Fuel Efficiency) standards. E85 is touted as a green fuel, but it has a lower energy content and suffers from poor mileage when compared with vehicles running on straight gasoline, a fact that is causing many drivers to shy away from using E85 in favour of gasoline.

Of course, the ultimate test for the various pieces of ethanol legislation will be whether or not the U.S. has reduced its reliance on imported oil products. According to the U.S. Energy Information Administration, in 2005, ethanol was responsible for about one percent of the U.S. liquid fuels market and the U.S. imported slightly more than 60 percent of the oil products it consumed. The EIA projects that by 2030, ethanol will make up about 3.4 percent of the U.S. liquid fuels market and the U.S. will be importing 61 percent of the oil products it consumes!

2 May 2007