Paul Krugman on ethanol

This is from the New YOrk times via http://economistsview.typepad.com/economistsview/2007/01/paul_krugman_th_1.html.
Krugman mentions the lack of net energy production and also the contrast with Brazil that produces ethanol from sugar cane. No one mentions corn as food production as Castro does. Of course Krugman is not voted into office and so does not run in Iowa either.




The Sum of All Ears, by Paul Krugman, Corn Cop-Out, Commentary, NY Times: For those hoping for real action on global warming and energy policy, the State of the Union address was a downer. There had been hints and hopes that the speech would be a Nixon-goes-to-China moment, with President Bush turning conservationist. But it ended up being more of a Nixon-bombs-Cambodia moment.

Too bad... The only real substance was Mr. Bush’s call for ... ethanol to replace gasoline. Unfortunately, that’s a really bad idea. There is a place for ethanol in the world’s energy future — but that place is in the tropics. Brazil has managed to replace a lot of its gasoline consumption with ethanol. But Brazil’s ethanol comes from sugar cane.

In the United States, ethanol comes overwhelmingly from corn, a much less suitable raw material. In fact, ... researchers ... estimate that converting the entire U.S. corn crop — the sum of all our ears — into ethanol would replace only 12 percent of our gasoline consumption.

Still, doesn’t every little bit help? Well, this little bit would come at a very high price compared with ... conservation. The Congressional Budget Office estimates that reducing gasoline consumption 10 percent through ... fuel economy standards would cost ... about $3.6 billion a year. Achieving the same result by expanding ethanol production would cost taxpayers at least $10 billion a year...

What’s more, ethanol production has hidden costs. ...[T]he Department of Energy ... says that the net energy savings from replacing a gallon of gasoline with ethanol are only ... about a quarter of a gallon, because of the energy used to grow corn, transport it, run ethanol plants, and so on. And these energy inputs come almost entirely from fossil fuels, so it’s not clear ... ethanol does anything to reduce carbon dioxide emissions.

So why is ethanol, not conservation, the centerpiece of the administration’s energy policy? Actually, it’s not entirely Mr. Bush’s fault.

To be sure, ... Mr. Bush’s people seem less concerned with devising good policy than with finding something, anything, for the president to talk about that doesn’t end with the letter “q.” And the malign influence of Dick “Sign of Personal Virtue” Cheney, who no doubt still sneers at conservation, continues to hang over everything.

But even after the Bushies are gone, bad energy policy ideas will have powerful constituencies... Subsidizing ethanol benefits two well-organized groups: corn growers and ethanol producers (especially the corporate giant Archer Daniels Midland). As a result, it’s bad policy with bipartisan support. For example, earlier this month legislation calling for a huge increase in ethanol use was introduced by five senators, of whom four, including ... Barack Obama and Joseph Biden, were Democrats. In a recent town meeting in Iowa, Hillary Clinton managed to mention ethanol twice...

Meanwhile, conservation doesn’t have anything like the same natural political mojo. Where’s the organized, powerful constituency for tougher fuel economy standards, a higher gasoline tax, or a cap-and-trade system on carbon dioxide emissions?

Can anything be done to promote good energy policy? Public education is a necessary first step, which is why Al Gore deserves all the praise he’s getting. It would also help to have a president who gets scientific advice from scientists, not oil company executives and novelists.

But there’s still a huge gap between what obviously should be done and what seems politically possible. And I don’t know how to close that gap.

_____

McCain's flip-flop on Ethanol

This comes from this website.

Castro doesnt need to run in Iowa so I guess he is safe! The corn farmers and the big grain companies profit from the subsidies for ethanol production. Whatever happened to the beloved free market! How is it the World Bank and IMF get after Iraq for all those below market subsidized prices for gas but the US can subsidize ethanol?




John McCain’s Ethanol Flip-Flop
I knew that McCain had flip-flopped on this issue. The upcoming issue of Fortune tells the tale:

McCain's farm flip

It's a pretty good lesson on how tough it is to oppose ethanol and get yourself elected president, since Iowa has one of the first presidential caucus. So, despite McCain's long track record of criticizing ethanol, suddenly it's the thing to do.

Some excerpts from the article that I found interesting:



John McCain has a problem with alcohol - ethyl alcohol, to be precise.

Ethyl alcohol is the fuel better known as ethanol, and over the years, the Arizona senator has made a habit of ripping ethanol subsidies as corporate pork for agribusinesses like Archer Daniels
Midland.

McCain has argued that government support for ethanol actually raises gasoline prices. He has claimed ethanol does nothing to make the U.S. more energy independent. He has even questioned the science behind making fuel from corn - contending that ethanol provides less energy than the fossil fuels consumed to produce it.

But for a front-runner - one presumably interested in getting his as-yet-undeclared 2008 Republican presidential campaign off to a winning start - opposing ethanol is political lunacy.

Iowa, home to the first-in-the-nation presidential caucus, is the biggest corn-growing state in the country, and in Iowa ethanol isn't just another campaign issue. It's the cash cow, the golden goose and the fountain of economic youth all wrapped up in one.


This is how something that is good for Iowa, but not necessarily for the rest of us, can become national policy.

More:


Against this backdrop, it's obvious why McCain's past ethanol opposition is such an albatross. Fact is, criticizing ethanol is hard even for scientists these days.

At a recent BP-sponsored ethanol roundtable, University of California at Berkeley engineering professor Tad Patzek - whose anti-ethanol research McCain has invoked - so riled Roger Conway, the director of energy policy for the very pro-ethanol U.S. Department of Agriculture, that Conway told the foreign-born Patzek to "go back to Poland." (Conway denies making the remark, but four other participants confirm he did, including pro-ethanol scientist Michael Wang of the Argonne National Laboratory.)

Here's the before and after. The before:



For a politician like McCain, the stakes go far beyond a little name-calling. When McCain ran for president in 1999 and 2000, he barely campaigned in Iowa, knowing that his anti-ethanol stance wouldn't cut it in corn country.

Four years later, McCain hadn't changed his tune. "Ethanol is a product that would not exist if Congress didn't create an artificial market for it. No one would be willing to buy it," McCain said in November 2003. "Yet thanks to agricultural subsidies and ethanol producer subsidies, it is now a very big business - tens of billions of dollars that have enriched a handful of corporate interests - primarily one big corporation, ADM. Ethanol does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality."

Even the most slippery politician would have a tough time wriggling away from a statement as unequivocal as that one, yet McCain's Straight Talk Express has been taking some audacious detours during recent trips to Iowa.

The after:



"I support ethanol and I think it is a vital, a vital alternative energy source not only because of our dependency on foreign oil but its greenhouse gas reduction effects," he said in an August speech in Grinnell, Iowa, as reported by the Associated Press.

"Well, at least now we know he's serious about running for president," quips Brown University presidential politics expert Darrell West, upon being told of McCain's ethanol about-face.

And the money quote:



"You can't trash ethanol and expect to win in Iowa," says Schmidt. "You can't continue to say the same things McCain said - even if you believe they're true."

What to do? Maybe some other states need to move their primaries ahead of Iowa's to stop them from having a disproportionate impact on national politics.
Labels: ethanol, Iowa, John McCain

posted by Robert