Not so fast

May 1, 2007
We seem to be entering the initial phase of a huge investment in the production of ethanol as a substitute for fossil fuel a reaction to the public outcry for more environmentally friendly fuels.

We seem to be entering the initial phase of a huge investment in the production of ethanol as a substitute for fossil fuel — a reaction to the public outcry for more environmentally friendly fuels. But this well-intended solution could miss the mark by a long shot, primarily because the economics are questionable, at best.

The economic issues we need to address include production, processing/distribution and cost to the end user. I'll talk about the first two in this month's column.

The production challenge involves getting enough stock (most likely corn) to the processing plants. One estimate is that we would need 90-million acres to grow enough corn to meet the demand created by the percentage of ethanol content currently being suggested for all fuels. That's roughly the size of California and New England combined. Seems a bit much.

That level of production will require a year-round supply of stock, which could mean planting crops more frequently on the existing soil base. This could compromise optimal crop rotation, making it difficult for the soil to regenerate fully. In addition, I think the quality of the land would be inferior to our current farmland. If it weren't, it would be in use already.

In order to replenish soil that's being planted more frequently, we may have to use more pesticides and fertilizers. (Ironically, many of these are made from fossil fuel, the very thing we're trying to avoid.) This, in turn, could increase the level of contamination in the stock.

A more serious drawback than contamination is the potential for a negative impact on our food supply. Since the use of ethanol will be mandated and food production will not, we could see a shift in production from food to fuel if bad weather compromises our crops. This would make us more reliant on food imports, leaving quality control in the hands of others. And can you imagine the impact on Mexico if we were to usurp its supply of corn?

Now to the processing/distribution aspect of this new fuel source, which already shows signs of leaving much to be desired. The quality of the ethanol varies by producer, as well as by the type of raw material used to make it, e.g., corn vs. sugar beets or switch grass. The quality issue will fly directly in the face of government mandates for ultra-low-diesel fuel (ULSD) because fuel pipelines could become contaminated if the quality of the ethanol varies substantially.

We already have gelling problems with ULSD during the harsh winter months because of quality differences among various crude oils. This problem would likely be magnified if ethanol were mandated since corn comes from so many more sources than crude. One solution to the gelling problem could be the installation of a heater in the truck's fuel line. It's a slippery slope, indeed.

Distribution is another major issue. If we want to run the millions of trucks currently in use for a few more years, we'll need to have fuel that doesn't have high levels of ethanol. Of course, we could overcome that obstacle by retrofitting every vehicle in use and put the ethanol in at the point of final distribution -- the pump. (Remember octane ?) What a concept.

In addition, getting the grain to the ethanol plants and the ethanol to the fuel refineries will require significant quantities of low-cost transportation. Pipelines are the least expensive, followed by barges and rails. However, since the pipeline community is currently refusing to move ULSD with lubricity additives, I suspect that ethanol will be a problem, too. Barges are limited in the area they can service, and farmers claim railways don't even have the capacity to haul the current output to market

I'll cover final cost to the end user next month. I may frequently be wrong, but I'm never in doubt.

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