House Passes Energy Bill
Friday, December 7th, 2007 By Marc KilmerYesterday the U.S. House of Representatives passed an energy bill that raises taxes on oil companies, imposes unrealistic renewable fuel standards on utility companies, mandates more ethanol usage, and raises the Corporate Average Fuel Economy (CAFE) standards. All of these things will raise prices for U.S. consumers. At a time of rising energy prices, you’d think Congress wouldn’t be looking to add to the problem. I co-authored a Viewpoint with Margo Thorning about the energy legislation that can be found here.
On a related note, Ron Bailey of Reason magazine has a great article explaining why ethanol mandates, such as those in the energy bill, have more to do with politics than helping the environment:
A new study from AEI/Brookings Joint Center points out that in 2005, the ethanol program consumed about 15% of U.S. corn production but displaced less than 2% of gasoline use. The International Food Policy Research Institute (IFPRI) just issued a report projecting that if countries simply pursue their current biofuel expansion plans the global price of corn will increase by 26 percent and the price for oilseeds will rise by 18 percent. If biofuel production doubles over current projections, the price of corn rises by 72 percent and oilseeds by 44 percent. The IFPRI report notes that “The increase in crop prices resulting from expanded biofuel production is also accompanied by a net decrease in the availability of and access to food.” Even in North America, access to food calories drops by between 2 to almost 5 percent depending on which biofuel production scenario plays out. In food stressed sub-Saharan Africa, available food calories drop by between 4 and 8 percent.…
The most vexing question: Does corn bioethanol actually reduce greenhouse gas emissions? A study last year by Cornell University biologist David Pimentel and University of California at Berkeley engineer Ted Patzek says no. According to the study, “Ethanol production using corn grain required 29 percent more fossil energy than the ethanol fuel produced.” And the news was even worse for cellulosic ethanol using switchgrass, which requires 50 percent more fossil energy than it displaces; woodchips needed 57 percent more; and biodiesel burnd 27 percent more fossil fuel than it displaces. On the other hand, the researchers at University of Minnesota offer a much sunnier analysis of the net energy benefits of bioethanol. They find, “Ethanol yields 25 percent more energy than the energy invested in its production, whereas biodiesel yields 93 percent more.”
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Biofuels are commercially questionable, do not materially advance energy independence, and may not even help reduce greenhouse gas emissions. Naturally, Congress wants to mandate them. Why? Well, Iowa caucus voters win; Archer Daniels Midland wins; and special interest contributors to political campaigns win. Bioethanol is just a subsidy boondoggle masquerading as a solution to America’s energy problems. But it does help get some politicians elected.
