December 17, 2007 | WebMemo on Energy and Environment
The United Nations Climate Conference in Bali, Indonesia,
wrapped up on December 14. During the conference, debate
intensified over whether to include in any climate change agreement
greenhouse gas emission targets for developed countries. While most
alternative sources of energy are not economically viable at this
point, environmentalists and policymakers are hopeful for
technological breakthroughs that would provide a cost-effective,
plentiful source of energy that protects biodiversity.
Like many experts and economists, conference participants showed little enthusiasm for first-generation biofuels produced from agriculture--primarily from corn-based ethanol. Biofuels are hitting consumers at the pump, at the grocery store, and even at tax time. Without a doubt, the extremely high cost of biofuel production outweighs its supposed environmental benefits; biofuel production may actually harm the environment more than it helps.
Unfortunately, Washington has yet to get the message. The Senate energy bill includes a mandate to increase the nation's ethanol supply. The House will soon have a chance to avoid that mistake when it returns to working on its version of the bill. Mandates for both first-generation and second-generation biofuels would come at a steep price and would not solve the nation's long-term energy and transportation problems. Congress should remove biofuel mandates from the energy bill and let the market discover the best energy solutions.
The 2005 energy bill mandated that 4 billion gallons of renewable fuel be included in the gasoline supply in 2006; the mandate is set to increase to 4.7 billion gallons in 2007 and 7.5 billion gallons by 2012. A proposal in the latest energy bill would increase the mandate to 36 billion gallons by 2022. As a result of the ethanol mandate, production increased to 5 billion gallons in 2006--up 1 billion gallons from the year before--and is expected to top 10 billion gallons by 2009.
Congress and the Administration are overlooking the following problems with ethanol:
A Second Look at Second-Generation Biofuels
Knowing that first-generation fuels are losing credibility as an efficient energy solution, advocates of biofuels are beginning to consider second-generation biofuels. Second-generation biofuels constitute fuel generated from forest and field waste, switchgrass, crop residues, and cellulosic biomass. Interestingly, second-generation biofuels were ranked seventh by respondents to the aforementioned survey.
Second-generation biofuels are far from a proven technology. Doubts abound concerning whether that they can meet energy demands and protect the environment. Foisting a new mandate before infrastructure or technology is adequately developed is misguided.
In fact, the next generation of biofuels may be as environmentally damaging as the first. A Competitive Enterprise Institute study released in June 2007 reported that no manufacturing plants exist that are capable of producing mass amounts of cellulosic ethanol. Plants can only produce enough for demonstration purposes. Additionally, distinguished agriculturalists are reluctant to endorse second-generation biofuels because of the adverse ecological effects. They claim that only a portion of crop residue can be removed from fields to produce cellulosic ethanol, because that residue is imperative to recycling organic matter, retaining moisture, and preventing soil erosion on farms. Furthermore, according to an Iowa State study, switchgrass will not have the ability to compete with corn for the production of ethanol. It does not bode well for the industry that the only way for corn-produced ethanol to be competitive is through preferential treatment from Washington.
Still in its infancy, the production of second-generation biofuels remains a tentative bet. Congress should not make the same mistake it made with first-generation biofuels by hastily subsidizing the industry through mandates and other government preferences without fully measuring the costs and benefits. If biofuels are to succeed as a competitive fuel source, congressional legislation should not be necessary to mandate its production. Moreover, Congress should not force specific technologies on Americans, especially if they are unproven technologies. Instead, Congress should unleash the power of free enterprise, letting researchers and the markets discover the best new viable alternatives. Federal mandates limit choices and hinder free enterprise from finding the most efficient, cost-effective solution. The high costs of ill-conceived energy plans will simply be passed on to the consumers.
Given the past problems with the ethanol mandate and its harmful economic and environmental effects, Congress should take a cue from the Climate Change Conference in Bali and abandon its quest to expand the mandate for first-generation biofuels. Moreover, it should take a serious look at second-generation biofuels before rushing to legislate. Biofuels are hitting consumers' wallets at both the pump and the supermarket; an expansion would undoubtedly exacerbate this problem. Before impetuously rushing to mandate any biofuels, including for the next generation, Congress and the public should completely understand the costs and benefits of such a path.
Nicolas Loris is a Research Assistant in, and Alison Acosta Fraser is Director of, the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Paul C. Westcott, "U.S. Ethanol Expansion Driving Changes Throughout the Agricultural Sector," Amber Waves, September 2007, at www.ers.usda.gov/AmberWaves/September07/Features/Ethanol.htm.
Ben Lieberman, "The Ethanol Mandate Should Not Be Expanded," Heritage Foundation Backgrounder No. 2020, April 11, 2007, pp. 2-3, at www.heritage.org/Research/Energyandenvironment/bg2020.cfm.
P.J. Crutzen, A.R. Mosier, K.A. Smith, and W. Winiwarter, "N2O Release from Agro-Biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels," Atmos. Chem. Phys. Discuss., 7, 11191-11205, 2007.
Climate Decision Maker Survey, Bali Climate Conference, Indonesia, December 10, 2007, at www.iucn.org/en/news/archive/2007/12/10_climate_change_survey.pdf.