"...and it doesn't do much for your food bill".

maybe you didn't read the second paragraph above? doubling the price of corn will certainly not reduce your food bill. I guess you could argue that raising it is "doing something", but that isn't the usual sense.

corn ethanol will also make land speculators very happy, in fact it has already done so.

from the byline: COLIN A. CARTER is a professor of agricultural and resource economics at UC Davis.

I guess they don't grow much corn in California, because even tenure can't protect you from being run over by a combine.

I had dismissed Castro and Chavez's attacks on US use of ethanol as a move to protect Chavez's cash cow. Certainly Brazil, the world leader in ethanol fuel production, seems to be taking it that way. But if Bush is seriously talking about diverting the entire US corn crop (or even a significant chunk of it), then it seems Castro's correct: using that much corn for ethanol takes food out of the mouths of the poor.

The story is different if ethanol can be produced from other crops that don't require prime agricultural land. But we're not going to manage to give everyone in the world a car that is driven 10,000 miles a year on ethanol fuel.

If by "corn farmers" you mean huge agribusiness interests like ADM which are already subsidized by the government -- and which stand to gain even more outrageous sums if the current farm bill goes through -- then, yes. Michael Pollan had a useful piece on this in the New York Times a few weeks ago:

http://www.nytimes.com/2007/04/22/magazine/22wwlnlede.t.html?ex=1179547200&en=312ec0fa7899f59b&ei=5070

(I'm not sure if that's subscription-only. My apologies if it is.)

The advantage is that this gets the ethanol distribution and utilization infrastructure in place, so that it's ready to go when cellulosic ethanol becomes available.

The corn farmers won't be quite as happy as Archer Daniel Midland

In The Omnivore's Dilemma, Michael Pollan points out that most of the food we eat in the U.S. is dependent on corn: Beef cattle eat corn feed, most soft drinks are sweetened with corn syrup, corn oil is used in food processing and frying, and so on. So an increase in corn prices will affect more than just corn chips and the ears of corn at the grocery; it'll affect almost everything on our plates.

All it does is make corn farmers happy.

The family farm is the backbone of this country. Liberals want to destroy it through death taxes and the stifling of new technology like ethanol.

Liberals claim they are for the environment, but when that clashes with their attack on the family farm, guess what wins out?

As practically everyone except politicians pandering their way through Iowa knows, corn ethanol is a boondoggle.i/>

Which is why I do not want any small-assed (or large-assed) farm state essentially telling us who our candidates for president are going to be.

Screw Iowa.

BTW, I grew up on a small farm and spent time on tractors, combines and corn pickers.

That must qualify as the stupidest Al comment I've seen yet (out of stiff competition). Every statement 180 degrees wrong.

I am a cattle feeder and corn farmer from west-central Iowa.Ethanol production has been been very beneficial to our country.There has not been a new oil refinery built in our country in 30 years and the the fact that ethanol plants produce blendable fuel that can be added to the gasoline supply is helping keep the price of fuel from being higher than it already is.Corn ethanol is a bridge to get us to the next step.Cellulosic ethanol, hydrogen fuel cells, etc. In the mean time be glad we have the extra fuel. ctlfdr

You can make ethanol from lawn clippings, but as chaunceyatrest pointed out, ADM and thier owners, the Andreasson family are big GOP campaign contributors, so naturally, Bush wants it made from corn. Surprised?

So Al... tell me about your experinces growing up on your family's farm.

Josh Yelon: The advantage is that this gets the ethanol distribution and utilization infrastructure in place, so that it's ready to go when cellulosic ethanol becomes available.

And only by an astounding coincidence is a big fat gravy train for corn farmers, ADM, and the like.

Of course we could do the same thing by eliminating the ethanol tariff and importing from Brazil, but that "comparative advantage" stuff is only a line for the chumps in manufacturing.

Want to guess how long it would take for us to become ethanol free traders if US based MNC's had land in Brazil instead of just factories in China?

Yes, corn ethanol requires so much energy/etc. input and hurts poor people. Better to use plants that mostly just grow on their own, and harvest it. Switchgrass is one idea, but another is hemp oil etc. for biodiesel. It does a good job. Pls. check out Hemp Car. I rode on the hemp car in VA a few years ago, it ran great. Look for the establishment to object using drug concerns as a cover.

the family farm has been destroyed by agrabusiness and developers and bankers, backbones of the Republicant party.

as someone who operates a family farm with corn as one of our staples, I say corn based biofeul is a boondoggle.

Enriching ADM may be the first-order effect of corn price increases. However, a possible second-order effect will be to spur research into other crop-based fuels. Sometimes it takes profits above a certain threshold to begin future-looking research.

By research, here I mean serious, big-money efforts aimed at bringing a new technology to maturity quickly and integrate it into the markets. Obviously, there's lots of gee-whiz demonstration work already underway. But to be impactful on society as a whole, it's got to be capitalized at a significant level. Sometimes it takes huge profit potential to make that level of capital commitment happen.

"Al": a conservative isn't supposed to believe in subsidies/interfering in the private free market, so you think the government should not specifically prop them up with corn ethanol or buyup programs, right?

using that much corn for ethanol takes food out of the mouths of the poor.

Via The Oil Drum:

Biofuel Prodution to Trigger Corn Shortage in Guatemala

According to Granma newspaper, in the last six months, a bushel of corn (56 pounds), doubled its price on the US market, from $4 to $8 US because ethanol producers consumed 86 million metric tons, 5 million over the figure planned.

The Meso-American Food Security Early Warning System (MFEWS) alerts that high prices and shortages will affect lower-income families from June to August, when the second harvest of the year has not even begun.

So, we got that going for us. Starve the developing countries so we can commute 50 miles to work so we can buy logo shirts made in developing countries in sweat shops. Globalization, baby!.

God forbid if we just reduce our energy consumption through smart planning and local & regional mass transit.

Naw, f' that. We need cars.

Greg in FL: However, a possible second-order effect will be to spur research into other crop-based fuels. Sometimes it takes profits above a certain threshold to begin future-looking research.

Yeah, and sometimes it takes subsidies to kill the incentive for R&D and capital investments.

You could achieve a better effect with a carbon tax, or even just higher gas taxes. Don't like the taxes? That's the point. It gives you an incentive to reduce oil use. But here my income tax dollars will go to subsidize it, and nothing I can do will change how much money they take from me to provide welfare for corn farmers and agribusiness. Oh, and I'll wind up paying higher food prices too.

Hey alex,

I actually would prefer government involvement more directly on the R&D side, perhaps a joint Ag. Dept./DOE advanced research projects plan, rather than subsidies which are not so targeted.

But this is the hand we're dealt now. All I'm saying is, don't discount out of hand the potential future upside.

"...There has not been a new oil refinery built in our country in 30 years and the the fact that ethanol plants produce blendable fuel that can be added to the gasoline supply is helping keep the price of fuel from being higher than it already is..."
Posted by: ctlfdr on May 17, 2007 at 12:46 PM

Interesting point about refining capacity. However, I think that worldwide refining capacity is probably only in a temporary pinch because we are entering a peak oil era. The total world output of oil is probably flattened already and maybe heading down soon. As the total output of oil slowly falls, refineries can catch up and that bottlekneck should slowly go away (that is if we can maintain current refining capacities in the future). The most cost effective way to manage is to diminish the tariff on the imported ethanol to be in parity with domestic ethanol and import extra ethanol (so you don't snuff the domestic production and keep food prices from spiralling) AND most importantly - to cut demand sharply through efficiency increases using CAFE (i.e.) and tax incentives for fuel efficient vehicles.

Dear Lord, Deliver me from Corn syrup.

It may be true that the push for ethanol helps ADM, but it also helps small farmers survive who can't make a profit on $2 corn but do make money off $4 corn -- and that's a good thing.

Doubling the price of corn in the US should help Mexican corn farmers and perhaps keep some of them on the land there instead of migrating north to take minimum-wage jobs in the USA.

Also, doubling the price of corn has a relatively low impact on the price of processed food. I think you will find that commodities generally account for less than 10% of the final cost of processed foods.

It may be true that the push for ethanol helps ADM, but it also helps small farmers survive who can't make a profit on $2 corn but do make money off $4 corn -- and that's a good thing.

Doubling the price of corn in the US should help Mexican corn farmers and perhaps keep some of them on the land there instead of migrating north to take minimum-wage jobs in the USA.

Also, doubling the price of corn has a relatively low impact on the price of processed food. I think you will find that commodities generally account for less than 10% of the final cost of processed foods.

The case for corn base ethanol is even weaker than the article indicates. Fertilizer, tractors, distilleries, etc. all require energy. The exact amount of energy required to produce corn based ethanol is the subject of controversy, but the estimates range from 75 percent to over 100 percent of the ethanol produced. It gets even worse, coal derived energy is often used for the distillation, which ends up making corn based ethanol a worse CO2 producer than gasoline. So much for fighting global warming. Like most (all?) agricultural subsidies, this is about pork, not farming or ethanol. As for supporting family farms, the vast majority of subsidies go to agribusiness. The people with clout in Washington get the subsidies, and this doesn’t include the small family farmer.

As practically everyone except politicians pandering their way through Iowa knows, corn ethanol is a boondoggle. It doesn't do much to reduce oil use, it doesn't do much for the environment, and it doesn't do much for your food bill.

Actually, it increases oil use, does a lot (most of it bad) for the environment, and does a lot (in terms of increases) for your food bill.

OTOH, buying up the entire US corn crop for ethanol production would make it economically unviable to keep putting high fructose corn syrup in everything, so it might do wonders for the US diet.

ctlfdr: I am a cattle feeder and corn farmer from west-central Iowa.

from the article: These biofuel goals are propped up by a generous federal subsidy of 51 cents a gallon for blending ethanol into gasoline, and a tariff of 54 cents a gallon on most imported ethanol to help keep out cheap imports from Brazil.

Sounds like welfare for corn farmers to me. Meanwhile, manufacturing is being killed thanks to Chinese currency manipulation that the US government has shown no serious intention of stopping.

There has not been a new oil refinery built in our country in 30 years

So what? You can (and we do) import refined petroleum products just like we import crude.

and the the fact that ethanol plants produce blendable fuel that can be added to the gasoline supply is helping keep the price of fuel from being higher than it already is

If it was competitive, you wouldn't need the tariffs and subsidies.

Corn ethanol is a bridge to get us to the next step. Cellulosic ethanol ...

Brazilian ethanol would do that just as well, and cheaper.

http://www.twincities.com/ci_5820199?

"Cargill, the Minnetonka-based agribusiness, just reported the best quarter in its 141-year history."

I'll vote for anyone who runs for President on the platform of ending all crop subsidies and tariffs, the imposition of a gas and diesel tax offset by a reduction in FICA taxes on the first $10,000 in wages, and ending the War on Drugs. These measures would immeasurably help both our domestic and international situations.

Of course, I likely won't vote in '08.

You're all missing the key word in Bush's statement.

"Goal"

That means that the Mars rocket will be ethanol powered.

forget about terrorist in the middleEast, when tortilla prices go out of sight we won't have enough soldiers in North America to defend us from mexico and central america.

If there's a side benefit of reducing corn syrup usage, I'd be happy with that.

Will Allen: I'll vote for anyone who runs for President on the platform of ending all crop subsidies and tariffs, the imposition of a gas and diesel tax offset by a reduction in FICA taxes on the first $10,000 in wages, and ending the War on Drugs. These measures would immeasurably help both our domestic and international situations.

Speaking of drugs, are you on them? You're making sense.

Of course, I likely won't vote in '08.

Ok, as long as you remember not to complain.

We also should be pushing for non-carbon sources of electricity: photovoltaics/wind and yes nuclear, and combine that with zero emissions vehicle requirements (%of fleet) on car manufacturers, so we can get 100% electric vehicles available for urban commuters (perhaps even for rural or suburban commutes with battery technology advances). That skips the liquid fuels-blendings hassles entirely and burning up food for fuel.

Brazilian ethanol

How much Brazilian ethanol comes from former Amazon rainforest? Just asking, I don't really know.

Using even "marginal" cropland to grow fuel for a profligate, energy-wasting economy like ours ("us" being the industrialized world, in this case) can never be anything but a recipe for environmental disaster.

I grew up on a farm and I can tell you that maybe "corn farmers" are happy, but "animal farmers" who buy corn to feed their animals, are not.

Expect beef, pork, and chicken prices to increase with the cost of corn along with their byproducts, leather, milk, etc.

By the way, corn is not the only crop that can be turned into ethanol using existing commercially available technology. Sugar beets (California) and cane (here in Florida), and potatoes (hello Idaho) come to mind. Naturally, the question is really all about economics, not technology.

I think we all understand that if oil were $200 a barrel, there'd be no need for subsidies - the ADMs of the world would have plenty enough motivation to actually produce biological fuels that actually would take less energy to produce than what is generated.

Second, I think most of us would agree that the age of $200 a barrel oil is somewhere in our future, not some abstraction.

So the question is, how do we get from here to there with the least amount of pain? Liberals (I count myself as one) would prefer proactive action, because we know that the conservatives solution of free markets leads naturally to speculative price swings, delays while companies come to realize and deal with the problem, and painful disruptions that always always hit the least fortunate among us the hardest.

My first post above was meant to point out that even the subsidy boondoggle can have positive consequences if we are willing to look more than one chess move ahead. And as I said in my second post, a proactive program of funding advanced reasearch and development on a significant scale makes more sense to me than subsidies. I think it's pretty widely recognized that public risk sharing on the front end of new ideas can result in a situation that is beneficial to both the private sector and society as a whole.

Corn's a poor feedstock for ethanol, compared to sugar cane, which is what they use in Brazil.

Dubyah's switchgrass is a poor feedstock for ethanol.

Are any of these jackasses remembering that you gotta burn fossil fuels to distill starchies into ethanol? And that fossil fuels will be burned to transport the resultant ethanol across the US (remember, distillation will likely happen where the feedstock is grown). I'm sure this makes the petroleum lobby very happy indeed.

The input manufacturers for corn cultivation are also well served by this very bad policy of using food for fuel.

The notion that one can only legitimately assemble or petition, which I'll substitute for the vague "complain", if one has voted, is noxious. If one participates in the political process, but come that Tuesday in November, the available candidates are wholly unacceptable to the citizen, he or she has not surrendered the legitimate right to assemble or petition in the future. Now, I might favor a "None of the above" option which would result, if the option gained a plurality, in an entirely new slate of candidates in a snap election in the first week of December.

As far as being on drugs, I usually avoid them in the morning, but I have favored those positions which you agreed with for several years. It just has come to the point that the utter idiocy of the drug and agriculture policies mentioned are so obvious and so damaging that I doubt I can vote for any hack who is unwilling to explicitly distance himself or herself from them, and it would be nice to have a reasonably intelligent tax measure passed for once as well.

A system where our demand for food competes with our demand for energy over a single resource is a recipe for disaster.

Nobody is saying that corn based ethanol is the answer. It's a start.

if oil were $200 a barrel how much would the cost of rasing any crop increase? Biofuels aren't just a boondoggle, they're a big step in the wrong direction.

We all know cute anecdotes about people fueling their vehicles with used french-fry oil but you can't run a city that way.

Better to get used to the idea that the age of portable, carbon-based fuels is coming to an end. We can prepare for it, or not.

sara: Dubyah's switchgrass is a poor feedstock for ethanol.

Why? With cellulosic ethanol tech, all you need is a plant with cellulose (ie any plant).

Are any of these jackasses remembering that you gotta burn fossil fuels to distill starchies into ethanol?

You don't distill starches into ethanol, you ferment sugars (possibly derived from starches) into an ethanol solution, and then need energy (not necessarily from fossil fuels) to distill the ethanol solution to a higher concentration.

What that energy source is and how high a purity of ethanol you need (so-called dry vs. wet) are important factors.

And that fossil fuels will be burned to transport the resultant ethanol across the US

Which is true of any fuel not produced on-site. How is it any different for ethanol?

"Are any of these jackasses remembering that you gotta burn fossil fuels to distill starchies into ethanol? And that fossil fuels will be burned to transport the resultant ethanol across the US (remember, distillation will likely happen where the feedstock is grown). I'm sure this makes the petroleum lobby very happy indeed."

Thank you, sara, for pointing out that establishing the infrastructure necessary to make this stuff as widely available as it would need to be to "reduce" the use of oil is simply illusory.

I'm already wincing as I think about the pandering all of the Democratic candidates are going to be doing as Iowa approaches, and this is a particular sore spot for me, as I'm a fan of Obama's. He's going to be shameless on this issue.

thersites, I've read that ethanol demand in Brazil is leading to a lot of rain forest being converted to agricultural use. I'd be surprised if it weren't happening. People are always reluctant to acknowledge that absolutely everything entails trade-offs. It is so much more pleasant to believe in magic solutions that don't have negative unintended effects.

What? You mean Coca Cola doesn't have a lock on the corn crop for their crappy corn syrup? I'm shocked, shocked I tell you!

I wondered why all the farmers here in Iowa have new pickups the size of small houses. The trains stop at pickup crossings.

Will Allen: The notion that one can only legitimately assemble or petition, which I'll substitute for the vague "complain", if one has voted, is noxious.

No, assemble or petition, as used in the 1st Amendment, is about addressing the government. Complaining is what one does with everyone else. Vote for the Libertarian candidate if you want. I have no problem being obnoxious.

As far as being on drugs, I usually avoid them in the morning

No coffee? I couldn't function.

The notion that one can only legitimately assemble or petition, which I'll substitute for the vague "complain", if one has voted, is noxious. If one participates in the political process, but come that Tuesday in November, the available candidates are wholly unacceptable to the citizen, he or she has not surrendered the legitimate right to assemble or petition in the future.

You haven't surrendered the Constitutional right, however, you have surrendered the reasonable expectation of being taken seriously by your fellow citizens.

You have the right to whine, and we have the right to ignore you. See how that works?

I agree that corn-derived ethanol won't do much to solve our energy problems, but...

The article questions the environmental-friendliness of ethanol, but currently we are using much of that corn to feed factory farms, not exactly enviro-friendly.

CAFO meat, high fructose syrups in processed foods, oil used in frying - maybe it wouldn't be bad if those were more expensive.

Yes, cmdicely, and the sort of ass who substitutes "whine" for expressing a political preference can be ignored as well. See how that works?

Alex, it's pretty hard to assemble with fellow citizens (everyone else) unless one communicates with them. Now, I actually will likely change my mind, and cast a protest vote of some sort, just for the hell of it, because I always have in the past, but I really don't think one should ignore the political opinions of others simply because they didn't find any candidate attractive enough to vote for last time around. One doesn't build political coalitions by ignoring the opinions of others, because they didn't vote last time. That's self-defeating.

"The advantage is that this gets the ethanol distribution and utilization infrastructure in place, so that it's ready to go when cellulosic ethanol becomes available."

While there is no magic bullet, cellulosic ethanol comes pretty dang close. And what plant contains the most useful cellulose? Hemp.

I'm just sayin'.

Japan wants to do the same thing with Sake.

If only that loss of corn for food meant less high frutose corn syrup - then we could tackle obesity at the same time.

With current technology, ... .

It isn't going to be done with "current technology". It is being started with "current technology", but it will be completed with technologies now under development, and with other technologies yet to come.

In 1925 you couldn't carry passengers across the Pacific Ocean using "current technology". Yet people were already planning the routes.

latest in biofuels generation, a fungus that converts cellulose to sugar (probably, requires confirmation):

http://www.israel21c.org/bin/en.jsp?enScript=PrintVersion.jsp&enDispWho=Articles^l1648

Corn ethanol is a step towards cellulosic ethanol. The infrastructure, once built, can be modified. The roads, the trucks, the business arrangements, the ethanol market, the companies that distribute the ethanol, the engines that burn it will all be developed gradually, with corn ethanol as the next step.

If corn ethanol were the last step it might be a "boondoggle". As the first step it's a step in the right direction.

Another corporate subsidy :

Rina Palta reports that Tyson Foods and ConocoPhillips are exploiting a nice bit of pork in the 2005 Energy Bill that gives tax breaks to manufacturers of certain "renewable fuels" by combining 20% rendered animal parts with 80% plain ol' diesel. The resulting biofuel takes more than 4.3 times the energy to produce than it yields, and has not been proven to have lower emissions that diesel fuel without chicken fat in it....

Matthew, wouldn't it be lot more efficient, and more likely to avoid the typical missteps of centrally planned regimes, to simply have a substantial additional tax on gasoline and diesel, and then let whatever alternatives come forth that profit seeking entities provide? Remember, the same hacks that prevent a commercial aircraft from taking off from Love Field in Dallas, and landing at Reagan National, will be regulating the proposed switchover from corn-based ethanol cellulosic ethanol.

Mike provides a perfect example of the pitfall I am talking about. Thanks.

Will Allen: I'll vote for anyone who runs for President on the platform of ending all crop subsidies and tariffs, the imposition of a gas and diesel tax offset by a reduction in FICA taxes on the first $10,000 in wages, and ending the War on Drugs. These measures would immeasurably help both our domestic and international situations.

I'd vote for perfection, too. but if the federal govt subsidizes fuel in place of food, I'll vote for that. In CA, the water subsidy for rice and maize growing is a net loss for the state; if they subsidized fuel instead, it would be a net benefit. As it is, the state subsidizes solar power, and when that is finally commercially viable, the state will have some mighty fine factories churning out the PV cells.

corn ethanol is a net energy gain. See Science, vol 315, p. 809. The whole issue of 9 February 2007 is worth reading.

"In the mean time be glad we have the extra fuel."
_____________________

This is a good thing, but as long as ethanol takes more power to create than it gives, it will remain a marginal benefit. Hopefully, the technology will continue to improve. In the meantime, as a rich nation we can afford a little investment.

And for whoever is pretending to be Al, the "family" farm hasn't been the backbone of the country since sometime in the 1940s. Any family that still owns a serious farm probably survived by swallowing all their neighbors. Still, agribusiness remains an important engine in our economy.

corn ethanol is a net energy gain

Even if it is marginally a net energy gain, it's not a solution that is without major problems that will outweigh any perceived benefit of maintaing the dream of the American road.

Will Allen: Matthew, wouldn't it be lot more efficient, and more likely to avoid the typical missteps of centrally planned regimes, to simply have a substantial additional tax on gasoline and diesel, and then let whatever alternatives come forth that profit seeking entities provide?

"efficiency" in economics is largely undefined. consideer the aircraft example: the U.S. created the NACA to study, among other things, wing and propellor design. Then it subsidized trans-oceanic flight by buying large numbers of passenger and bomber aircraft of all types. It might be more "efficient" to let a private agency run the air traffic control network, but interstate commerce falls to the federal government under our constitution. Ideally, economies fall into "equilibria" where something big has to happen to shake them from one equilibrium into another. Federal subsidies are one kind of "something big". I am almost never in favor of postponing something that can work in favor of something nominally efficient later on.

I would, in fact, also support taxes on the carbon content of fuel, and on the toxic elements in effluents. Those don't look that likely in the near future, so I go with subsidizing fuel and regulating effluents through diverse methods, including torts.

Back to "efficiency". Far better for fuel and food to be robustly generated than efficiently generated. You can make your lists of centrally planned failures and failures in the marketplace, but everything that actually works is a joint operation of governments and entrepreneurs. This includes all the transportation networks in the U.S. If you include the military cost of securing petroleum supplies, it includes the petroleum market as well.

ChrisS: Even if it is marginally a net energy gain, it's not a solution that is without major problems that will outweigh any perceived benefit of maintaing the dream of the American road.

Hence the importance of noting that it is the first step, not the last step.

Matthew, having the Federal Government subsidize food production has been hugely damaging to American interests, and to millions of people around the world. The same will hold true for having the Federal Government subsidize fuel production. Why? Because central planning is nearly always hugely damaging, and only very rarely provides benefits in excess of costs.

When photovoltaics are commercially viable, then photovoltaics will be manufactured in a good many places, and California will have wasted a huge amount of capital on technology which will likely be outmoded.

First step or not, ethanol-from-corn is a bad idea, and contributes nothing to the progress towards economically sensible biofuels (and I will simply agree that biofuels are the way to go, for the sake of argument, though strong arguments can be made that the entire proposition is a dead end). As Will Allen points out, the best approach for determining the best alternative is to tax fossil fuel use sufficiently to encourage multiple alternatives to petroleum-based fuels to come to market, and by the process of economic evolution, the best will survive, be advanced, and expanded. However, absent this kind of additional tax, and it looks politically impossible today, then ethanol-from-sugar is a far superior first step, and would seem to require no other government action than the removal of certain tariffs.

Yes, matthew, and what you favor will likely provide all the costs of central planning, with very little of the benefits provided by entreprenurial efforts. Why do you rightly identify the externalities of petroleum extraction, yet ignore the externalities entailed in corn-based ethanol production?

A large oil tax is politically feasable, if packaged correctly. Gore is on the right path here.

MatthewRmarler: Corn ethanol is a step towards cellulosic ethanol. The infrastructure, once built, can be modified.

And how do you know that cellulosic ethanol is a great idea? Maybe algae biodiesel or electric cars are better. Why favor this one technology?

The roads

Even if cellulosic ethanol is a good idea, it may be largely produced on land that isn't good enough for other farming. Meanwhile, you'll have built more roads in the middle of corn country (which apparently already has enough roads to get corn to market anyway).

the business arrangements, the ethanol market, the companies that distribute the ethanol

Oh, you mean future constituents for "keep the ethanol tariff up and where's my subsidy check"? Sorry, but once this sort of pork gets established, it's almost impossible to kill.

The other day your wrote: So, if you oppose "free" trade, who pays for the barriers that you support? Most likely, the barrier harms the common good, as in the ethanol tariff.

That made sense.

the engines that burn it will all be developed gradually

The engines that burn it already exist, and in many cases are in mass production. You can buy such a car today.

All that's required is a few mods to the fuel system, as ethanol corrodes some things that gasoline doesn't.

It might make sense to ensure that cars built now have the capacity. Slap a $500 tax on any new car that can't burn ethanol, and every car manufacturer will figure out how to make their cars ethanol capable for $100.

Preciesely, Alex. Once a corn-based ethanol lobby becomes large enough, potential competing sources of ethanol, to say nothing of other sources of biofuels, and other sources of non-petroleum transport energy, will have their development hugely impeded politically by the existing corn lobby.

Will Allen and I agree? Damn, fact is stranger than fiction.

Will Allen: Matthew, having the Federal Government subsidize food production has been hugely damaging to American interests, and to millions of people around the world.

Compared to what went before, it is a tremendous improvement. What markets hate more than anything else are wide swings in prices and supplies, and those have been eliminated, at least in democratic countries.

More is involved in PV than manufacture. by the time they are economically feasible without subsidies, CA will have a large installed base of solar generation, and a large cohort of expert installers and maintenance crews. Eventually GE may lose its competitive advantage in manufacturing turbine engines, but it has maintained its government subsidized technological advantage for a long time.

there is no either/or in discussion of economics. Everything that works has been a joint endeavor, a private/public partnership. I never dispute the creative power of entrepreneurs, but neither do I dispute absolutely the value of government intervention.

This is a good time for the government to push the economy from the past into the future. Not by subsidizing just one fuel, but by subsidizing many fuels.

A large oil tax is politically feasable, if packaged correctly.

I agree. I wrote in support of that to my Senator. I do not believe it will be included in the clean edge act, when that finally passes. The majority party is committed to protecting Americans from high energy prices.

Corn ethanol is a step towards cellulosic ethanol.

Its an unnecessary step.

The infrastructure, once built, can be modified.

There is no need to build infrastructure that needs to be modified in the first place if your goal is cellulosic ethanol.

The roads, the trucks, the business arrangements, the ethanol market, the companies that distribute the ethanol, the engines that burn it will all be developed gradually, with corn ethanol as the next step.

The roads are largely already in place (though cellulosic ethanol might require new ones in places where corn doesn't), engines that can burn ethanol already exist. And business arrangements don't take that long to evolve, and developing ones focussed around corn ethanol supported by barriers to cellulosic ethanol doesn't get us any closer to the ones needed for cellulosic ethanol than we are today.

If corn ethanol were the last step it might be a "boondoggle". As the first step it's a step in the right direction.

Nope, its still a boondoggle, because it diverts energy that could go in the right direction. Corn ethanol, in addition to subsidies, requires barriers to keep out cellulosic ethanol from foreign sources.

Its a transfer of wealth from the public to already wealthy narrow mega-agribusiness, not a step on the route to a sustainable biofuel infrastructure. Its certainly not a step toward cellulosic ethanol, since the only reason it is marginally financially viable even with government direct subsidies is with simultaneous barriers to cellulosic ethanol.

cmdicely: Corn ethanol, in addition to subsidies, requires barriers to keep out cellulosic ethanol from foreign sources.

There are foreign sources of cellulosic ethanol? Or are you talking about the ethanol tariff having the ability to keep out foreign cellulosic ethanol if it becomes available in the future?

alex, I oppose the ethanol tariff, but my views on this did not prevail.

And how do you know that cellulosic ethanol is a great idea? Maybe algae biodiesel or electric cars are better. Why favor this one technology?

I support everything. How I "know" that cellulosic ethanol is a good idea is from reading, such as the Science issue that I cited earlier. I do not claim that it will ultimately prove to be the best, but it has a lot going for it, including the fact that the whole system in place has a net CO2 reducing effect: CO2 is stored in the perennial root systems of the best fuel crops, and the return of the waste from the fuel plants back to the farms (the truck have to go back there anyway) reduces fertilizer use (this is not the case for food, because the nitrogen (etc)is a necessary component of the food, and is not returned to the farm.)

Do not think of this as a bunch of isolated plants being built: a whole system is being put in place. If it works as well in the U.S. as it did in Brazil, the cost of ethanol will fall below the cost of gasoline. There is no reason for it not to work that well in the U.S. Incidentally, here is a rationale for the tariff on ethanol: the ethanol industry in Brazil was government subsidized up until the price had fallen. Hence, Brazillian producers have an unnatural and "ineffecient" advantage.

What you wrote about engines is true, but engines of the future will be better than engines now.

Just one problem with the thesis, corn markets have already given back $1.25 of that two dollar increase since reaching a peak in February. Ethanol companies didn't magically stop using corn in that period. An ag economist told me a diversification move by hedge funds was responsible for 60 to 80 percent of the corn price run up in 2006. At most, increased demand from ethanol was 40 percent of the price run up and even that is questionable.

I don't absolutely dispute the value of government intervention either, Matthew, which is why I favor intervention in the form of a petroleum tax. For some reason, however, you do not wish to recognize the externalities involved in corn-based ethanol production.

MatthewRmarler: I do not claim that it will ultimately prove to be the best, but it has a lot going for it

And if you subsidize/protect it now more than other alternative fuels, you can get a lock-in effect whereby we keep using an inferior fuel source.

including the fact that the whole system in place has a net CO2 reducing effect: CO2 is stored in the perennial root systems of the best fuel crops, and the return of the waste from the fuel plants back to the farms (the truck have to go back there anyway) reduces fertilizer use (this is not the case for food, because the nitrogen (etc)is a necessary component of the food, and is not returned to the farm.)

Interesting, though personally I've always had a fascination with algae.

Ethanol from corn? Two words: soil depletion.

cmdicely: Corn ethanol, in addition to subsidies, requires barriers to keep out cellulosic ethanol from foreign sources.

To the best of my knowledge, the U.S. is quite up-to-date in the production of cellulosic ethanol. Production is very slow, but growing rapidly from a very tiny base. There isn't enough cellulosic ethanol from foreign sources to matter. The tariff protects from ethanol made from sugar.

Its an unnecessary step.

This is not known. It is a useful step that will make the next step, ethanol from the whole plant, cheaper.

Nope, its still a boondoggle, because it diverts energy that could go in the right direction.

And what step is that?

One of the failings of non-regulated markets is that they wait too long to adjust to new changes, and then re-invest too rapidly in a few new technologies. We all see the looming oil shortage, but the people with huge incomes, the oil companies, are reinvesting too much in foreign developments which will require deployment of military forces to keep them safe. What's more, they receive government subsidies. For the U.S. now to develop every alternative, in small and large amounts, to facilitate the eventual transition will smooth out the transition. It's similar to the role played by the federal government in the development of canal, river,rail, auto, and air transportation.

alex,

Well argued.

Also, I would assume that cmdicely meant to write foreign sources of ethanol-derived-from-sugar, though I would think the tariff probably applies to all sources of foreign ethanol. I know of no economically viable cellulosic ethanol production.

Matthew, if, as you note, oil companies receive subsidies, then it is not an non-regulated market, and thus the oil market cannot serve as an example of the failings of non-regulation.

Fayetteville NC just killed a 100M gallon/year plant this week. The company, E85 Inc., has never built or run a chemical plant. They wanted to build it in the city on a major thoroughfare 1 mile from some ritzy (for Fayetteville) subdivisions.

Our local paper blamed/credited blogs and LttE for helping to kill the project.

MatthewRmarler: It is a useful step that will make the next step, ethanol from the whole plant, cheaper.

No. It will reduce the barriers to entry of cellulosic ethanol by pre-paying (courtesy of a gov't subsidy for nonsensical corn ethanol) for some aspects of an ethanol infrastructure. That's not the same as making it cheaper though.

One of the failings of non-regulated markets is that they wait too long to adjust to new changes

I agree. Of course that may make Yancey retract his "well argued" comment, but until then I thank him for it.

and then re-invest too rapidly in a few new technologies

Like corn ethanol? Sorry, but while that's often a failing of markets, subsidies make the problem even worse.

Ok, here's a compromise worthy of Solomon (no false modesty there, obviously).

Impose a small, say $0.15/gal tax on all motor fuels and petroleum products (like fertilizers and pesticides) used to produce alternative fuels. Give a nickel of that to the defense budget (we gotta pay for the Iraq fiasco) and a dime as a subsidy to any non-fossil motor fuel. Since at first there will continue to be a lot more fossil motor fuel than alternative stuff, the alternatives will receive a subsidy of much more than $0.10/gal. The actual numbers can be adjusted over time.

Of course I'm not sure what to do about electric cars, but at least it would keep non-motorists (or people who use little fuel driving) from subsidizing OPMF (other people's motor fuel), and it sure beats the "let's subsidize ethanol because it's good for corn belt votes" approach.

Oops, had an ambiguous sentence. What I meant was "tax on all fossil motor fuels. Additionally, impose the tax on petroleum used to make products (like fertilizers and pesticides) which are used to produce alternative fuels."

Yes, alex, a non-regulated market can sometimes wait "too long", to adjust to changes. Nothing's perfect. However, the ability of political bodies to consistently make centralized decisions which adjust to changes in a more optimal fashion is problematic, to say the least.

We agree in our doubts regarding Congress to make better decisions regarding changes which occur in bio-fuel markets and technology.

Ethanol just as crappy as gas,

Fuels high in ethanol may pose an equal or greater risk to public health than regular gasoline, new findings suggest.

''Ethanol is being promoted as a clean and renewable fuel that will reduce global warming and air pollution,'' said Stanford University atmospheric scientist Mark Jacobson. But he found the number of deaths and hospitalizations linked with respiratory ailments might increase if every vehicle in the United States used the latest automotive technology and ran on fuel containing high levels of ethanol.

The findings counter the environmentally friendly image of ethanol fuels. Ethanol is made from corn and other plants, which naturally soak up carbon dioxide. Research suggests that ethanol production and consumption might therefore release less of this greenhouse gas into the atmosphere than gasoline use does. . . .

He programmed the model to compare two future scenarios—one in which all the cars, trucks, motorcycles and other autos in the country are fueled by gasoline, and another in which vehicles are driven by E85, a popular blend of 85 percent ethanol and 15 percent gasoline.

''We found that E85 vehicles reduce atmospheric levels of two carcinogens, benzene and butadiene, but increase two others, formaldehyde and acetaldehyde,'' Jacobson said. ''As a result, cancer rates for E85 are likely to be similar to those for gasoline. However, in some parts of the country, E85 significantly increased ozone, a prime ingredient of smog.''

. . .

''In our study, E85 increased ozone-related mortalities in the United States by about 200 deaths per year compared to gasoline, with about 120 of those deaths occurring in Los Angeles,'' he said. ''These mortality rates represent an increase of about 4 percent in the U.S. and 9 percent in Los Angeles above the projected ozone-related death rates for gasoline-fueled vehicles in 2020.''

"We found that nationwide, E85 is likely to increase the annual number of asthma-related emergency room visits by 770 and the number of respiratory-related hospitalizations by 990,'' Jacobson said of his findings, detailed in the April 18 online edition of the journal Environmental Science & Technology. ''Los Angeles can expect 650 more hospitalizations in 2020, along with 1,200 additional asthma-related emergency visits.''

. . .

These numbers might change if better ways to treat ethanol fuel emissions develop in the next 10 years, Jacobson said. "But based on what we currently know, ethanol is at least as bad to public health as gasoline, and possibly worse," he told LiveScience.

"People might say that these aren't huge increases in deaths we're seeing here," he added. "My response would be that I don't think 10,000 deaths a year from gasoline is a good thing to begin with. There are technologies we can use instead of any type of combustion engine that would result in no tailpipe deaths, such as battery-electric vehicles whose energy can come from wind or solar power."

alex: No. It will reduce the barriers to entry of cellulosic ethanol by pre-paying (courtesy of a gov't subsidy for nonsensical corn ethanol) for some aspects of an ethanol infrastructure. That's not the same as making it cheaper though.

that's what I meant to say.

Impose a small, say $0.15/gal tax on all motor fuels and petroleum products (like fertilizers and pesticides) used to produce alternative fuels. Give a nickel of that to the defense budget (we gotta pay for the Iraq fiasco) and a dime as a subsidy to any non-fossil motor fuel. Since at first there will continue to be a lot more fossil motor fuel than alternative stuff, the alternatives will receive a subsidy of much more than $0.10/gal. The actual numbers can be adjusted over time.

I would support such a tax. I included it when I wrote to the government with my suggestions. Better, in my view, would be to transfer funds out of weapons development into fuels, for a period of 10 years or so. [militarily, we could not possibly preserve our current fuel supply in time of war, so money put into secure fuels would be better for national defense.] Or to halve the federal COLAs, again for a period of ten years or so.

Interesting, though personally I've always had a fascination with algae.

I do not know which technology will ultimately prevail in the market, so I support federal subsidies to all of them. there are federal research projects on algae for fuel, but I do not know how well they scale up to industrial production.

Incidentally, U.S. agriculture is another private/public partnership, with university-based crop research as well as private research. It isn't the case that the subsidies "lock out" competitive products.

Will Allen:Matthew, if, as you note, oil companies receive subsidies, then it is not an non-regulated market, and thus the oil market cannot serve as an example of the failings of non-regulation.

Well, in fact all markets are regulated. So the choice is always between these regulations (and subisdies) and those regulations (and subsidies.) It isn't always obvious whether the particular failures in a particular market in a particular time are caused by the regulations or the things that are not regulated. We have too many automobile accidents, but it is not necessarily because the government requires airbags or turn signals.

Matthew, upon what basis do you believe that Congress will make their future subsidy choices based upon an empirical evaluation of which avenue will achieve the best results in terms of energy production, as opposed to an empirical evaluation of which avenue will achieve the best electoral results for the most powerful Congressional incumbents? Or do you suppose that the set known as "best avenue to pursue for energy production" is the same as the set known as "best avenue to pursue to provide optimal electoral results for the most powerful Congressional incumbents"?

There are foreign sources of cellulosic ethanol?

I think my brain crossed production sugar ethanol systems within demonstration sugar cane bagasse cellulosic ethanol systems.

Or are you talking about the ethanol tariff having the ability to keep out foreign cellulosic ethanol if it becomes available in the future?

It certainly would have that effect, and I suppose if I wanted to pretend I didn't make a mistake, I could probably pretend that was what
I meant.

"The family farm is the backbone of this country. Liberals want to destroy it through death taxes and the stifling of new technology like ethanol."

Can Kevin determine if someone is impersonating Al? We haven't heard from him again in this thread, and this sounds more like subtle mockery than Al himself.

One of the failings of non-regulated markets is that they wait too long to adjust to new changes, and then re-invest too rapidly in a few new technologies.

Uh, yeah. Who is arguing for unregulated markets here? (Oh, okay, Will, but you weren't responding to him.)

We all see the looming oil shortage, but the people with huge incomes, the oil companies, are reinvesting too much in foreign developments which will require deployment of military forces to keep them safe.

To be fair, they are also investing heavily in politicians to make sure those military deployments happen, so its not like they aren't considering security.

What's more, they receive government subsidies.

Which makes characterizing the status quo as an "unregulated market" rather silly.

For the U.S. now to develop every alternative, in small and large amounts, to facilitate the eventual transition will smooth out the transition.

Corn ethanol technology is hardly immature, its just not very viable in the long-term, and never will be because it doesn't save much of anything, and there is plenty of other demand for corn. There really is no, at best, and negative, at worst, benefit to using a high-value food crop for fuel.

It would be better for the government to invest in making practical technologies which actually offer a benefit but are more distant; it could do this while still providing corn ethanol (as an easy current technology) an opportunity to make some money without a preferential subsidy simply by subsidizing, e.g., retail sale of ethanol-as-fuel period (or increasing taxes on fossil fuels) which would give corn ethanol an immediate, short-term role (along with largely foreign sugar-based ethanol), without establishing a preferential subsidy that would inhibit investment and development of non-corn ethanol.

Oops, had an ambiguous sentence. What I meant was "tax on all fossil motor fuels. Additionally, impose the tax on petroleum used to make products (like fertilizers and pesticides) which are used to produce alternative fuels."

Seems to be more sensible to just tax petroleum and petroleum derivatives wherever they are used, whether to make alternative fuels or not.

Most of the people here seem to agree that cellulosic ethanol is more logical path to take, and I concur. Considering that, a lot of the investment in the corn-based production infrastructure is going to go down the tubes. Especially at the front end, the production process for corn-based vs. cellulose-based ethanol is somewhat different. You can't just put different stuff in the hopper and keep pumping out ethanol. Ergo, retooling corn process facilities for cellulose means about 20%-30% of the plant will have to be rebuilt.

One can argue that corn-into-ethanol has any number of salutary effects, e.g.: farm income. That said, the whole enterprise is based more in farm-state politics and corporate agribusiness than efficiency or sustainability.

One other point: as far as the food-into-fuel issue with corn, a large proportion of the corn comes out the other end of the process as a product known as Distiller's Grain. People can't eat it, but it has a long history as an excellent animal feed.

Interesting, though personally I've always had a fascination with algae.

We've all been meaning to talk to you about that....

MatthewRmarler: Better, in my view, would be to transfer funds out of weapons development into fuels, for a period of 10 years or so.

Far from all military activity is due to protecting oil supplies. While you can make arguments for reducing weapons development expenditures, I see no reason to target this in particular in order to get money for alternate fuels research.

militarily, we could not possibly preserve our current fuel supply in time of war, so money put into secure fuels would be better for national defense

In time of war that cut off foreign oil supplies we would still have enough domestic production to supply the military, and hopefully emergency services, basic food production, etc. Of course the economy would die and we'd be in survival mode.

BTW, the military is looking into alternative fuels for the reason you mention. IIRC correctly the navy has committed to using bio-diesel for non-tactical uses, and the USAF is running a test B-52 on alternative stuff (unfortunately from coal, but they're main concern is fuel availability rather than environmental concerns).

Or to halve the federal COLAs

Why COLAs? Who gets hurt by that one?

there are federal research projects on algae for fuel, but I do not know how well they scale up to industrial production

Actually much of the basic research was funded by the federal gov't back in the 1980's. There's now at least one company working on scaling it up.

Gov't funding is good for long range and basic research, as the payoff period is often too long to attract much private funding. However, when it comes to scaling to production I think that private funding is better - that's the area where gov't funding can become a gravy train.

Incidentally, U.S. agriculture is another private/public partnership, with university-based crop research as well as private research.

I favor gov't funded agricultural research. It's not terribly expensive and has the potential to reduce food prices for everyone. Joe Farmer can't afford to fund it, and if agribusiness does it then they extract a big premium via the anti-free-market mechanism called "patents". Not that I think that we should get rid of patents, but they're a gov't granted monopoly that's the antithesis of a free market. There's an economic argument to use gov't funded research for things that can be used by almost everyone.

It isn't the case that the subsidies "lock out" competitive products.

Yes, it is. Production subsidies are a very different matter from research subsidies. I'm ok with them if they're applied to all alternative fuels, because it's obvious that we need something. However, subsidizing a specific technology makes the other alternatives less competitive. It locks them out both by virtue of first mover advantage and because it creates a constituency dependent on, or at least highly desirous of, handouts.

a large proportion of the corn comes out the other end of the process as a product known as Distiller's Grain. People can't eat it, but it has a long history as an excellent animal feed.

I was wondering if anyone was going to mention this. of course, a related problem with current ethanol refineries is that they are too far away from the livestock that would eat the Distiller's Grain. This is why several new refineries are in developmet in Texas.

Having said all that, anyone seen Simp-the-biodeisel-pimp lately? I'm suprised that he hasn't weighed in on this discussion. Corn based ethanol as a fuel (additive or primary source) is poor policy, even if it's good politics.

cmdicely: Seems to be more sensible to just tax petroleum and petroleum derivatives wherever they are used, whether to make alternative fuels or not.

Or even better, a fossil carbon tax. I was playing at politically feasible though. Try to slap a tax on petroleum used to grow food and there will be howls. Maybe there's even some logic to the objection - we've all gotta eat.

Btw, for all you-all whiners who keep complaining that CA and NY are more representative of the US than those of us in "fly-over land", read THIS and weep:

The Associated Press has produced an analysis of U.S. Census Bureau data that ranks the 50 states and the District of Columbia according to how closely they resemble the country's demographics.

They looked at 21 demographic factors — from race, age, income and education to immigration and the percentage of residents living in urban and rural areas.

Illinois came out on top, because the state's racial, urban, and rural characteristics almost match that of the nation

NY? Tied for 16th with Nebraska.

CA? A paltry 32nd.

It's frustrating when progressives are taken in by corporate spin. Brazil became completely independent of foreign oil. how? Ethanol made from cane sugar. The reason studies show ethanol as costing more energy to produce than the energy in the ethanol is because the researchers have a novel approach to costing the ethanol, including many other factors that are not counted in other forms of energy's cost calculations. This is a deliberate effort to skew the results.

If we need more corn, farmers will produce more corn, perhaps taking acreage out of land banks and into production. Right now, ag fat cats get paid small fortunes to sit on their asses and not produce sugar beets. Why not cut the sugar subsidy and get those farmers to have to do more each year than deposit their subsidy check.

If you doubt me, check into it. There are sugar beet farmers in the Red River Valley who lease land, claim they intend to grow beets, sign a contract agreeing not to grow beets on that land they rented and cash their check. That's the sum total of work they do in a year. There's at least one beet farmer that doesn't own even one acre.

Disputo: Illinois came out on top, because the state's racial, urban, and rural characteristics almost match that of the nation

It doesn't surprise me that Illinois' urban/rural split line it up well. But Iowa is not Illinois.

NY? Tied for 16th with Nebraska.

Of course we're non-representative - we're better than everyone else.

CA? A paltry 32nd.

I thought this survey was restricted to the United States?

Or even better, a fossil carbon tax. I was playing at politically feasible though. Try to slap a tax on petroleum used to grow food and there will be howls. Maybe there's even some logic to the objection - we've all gotta eat.

So, offset with a tax credit for selling the food, without regard to how it is produced. Scaled properly, the impact is basically neutral on food production costs overall, but there is a strong incentive to shift to methods of production which use less fossil carbon. Perhaps best you start out with a generous credit to subsidize food production in the short term, with a phase out of the credit entirely over a period of years.

cmdicely: offset with a tax credit for selling the food

Ok. Makes it easier to do the bookkeeping too.

City parks could cool urban areas by 4°C

"If you look at infrared maps of cities, the woodland areas are 12°C cooler than city centres with no trees," says Roland Ennos at Manchester University in the UK, who carried out the study with colleagues.

Ennos's team used the city of Manchester as a template for their study. With two computer models – one to calculate changes in temperature and one to calculate changes in rainwater run-off – they investigated how the urban climate would change if world greenhouse-gas emissions continue to rise at the current rate.

"We found that the temperature in Manchester will go up by 4°C by 2080 if the amount of green area remains unchanged," says Ennos.

But, by altering the amounts of green cover in the city, the researchers found that the temperature rise could effectively be cancelled out. "Adding 10% of green cover could reduce surface temperatures by 4°C by 2080," Ennos told New Scientist.

Vegetation cools local temperatures when the water it has absorbed is evaporated from its leaves - much like the cooling effect of perspiration. The researchers say that the increased greenery would not have to involve building new parks. For instance, green roofing - roll-out strips of soil planted with succulents, commonly used in Germany - would have a similar effect.

"Even if a fraction of city's buildings had green roofs, this could have a big impact," says Ennos.

Chris Huntingford of the Centre for Ecology and Hydrology in the UK says that unless people undergo significant lifestyle change, heat stress is likely to be the biggest health issue facing city dwellers in the UK as a result of climate change.

Will Allen:Matthew, upon what basis do you believe that Congress will make their future subsidy choices based upon an empirical evaluation of which avenue will achieve the best results in terms of energy production, as opposed to an empirical evaluation of which avenue will achieve the best electoral results for the most powerful Congressional incumbents? Or do you suppose that the set known as "best avenue to pursue for energy production" is the same as the set known as "best avenue to pursue to provide optimal electoral results for the most powerful Congressional incumbents"?

Congress is never completely rational, nor completely irrational. I support subsidizing all kinds of energy production, and then letting the market choose the winners. On a smaller scale, it works that way with biological/pharmacological research. The government supports everything that is promising, and the commercial sector tries to make effective drugs.

Why COLAs? Who gets hurt by that one?

In my letters to my elected officials, I have proposed two principles:

1. everybody pays. Taxes, benefit reductions, borrowings, subsidy transferrals, etc. Every interest group, every demographic group, every income group. The U.S. spends about $2.9T per year, and can afford to invest $100B - $200B per year on energy development. It would be nice to end the sugar subsidy completley, along with the honey subsidy, but it all they did was scale them back I wouldn't lose sleep at night.

2. everybody benefits. Build facilities in every state, and in almost every congressional district (or on their borders). Synfuels plants on closed military bases in W. VA; PV factories in TX and CA; wind farms in NoDak and CO; shale extraction in UT. Once everybody sees something being built in his or her locale, he or she will be more willing to pay the tax necessary to build the next generation. As you may recall, this was how they built the B-1 bomber.

For the fun of it, here are a few federal programs that have worked to the benefit of the general welfare.

a. land grant colleges, and the federal research done in them;

b. transcontinental railway, and the other large railway systems built in the second half of the 19th century;

c. the Panama Canal;

d. the Intracostal Waterway;

e. the Sabine vaccine, other vaccines, and research on retroviruses leading to protease inhibitors;

f. the air traffic control system;

g. the TVA and the western dam systems;

h. the interstate highway system;

i. the Apollo moon project.

And of course, there was the Edsel, which was not a government project.

A last note about cellulosic ethanol, again from Science, vol 315, p. 809, Feb 9, 2007, table 2. According to this source, cellulosic ethanol cost $US 2.25/gallon in 2006. It produced 10 times as much energy as the energy required to make it. If American energy companies were sure that petroleum costs would never come down, they would invest in cellulosic ethanol now.

The reason that federal investment is necessary (or at least really useful) is so commercial installations can continue to operate at a profit if petroleum costs fall. To "free market" zealots, such an eventuality would look like a disaster, an "inefficiency" of monumental proportions. I would consider it to be a desirable, though not very likely, outcome of an energy policy aimed at producing surpluses.

As with the policy of subsidizing food surpluses, it would reduce price swings dramatically.

And to repeat a point that I think is overlooked: it would be cheaper and more likely to succeed than building our navy larger to protect the oil supply in time of war.

cmdicely: So, offset with a tax credit for selling the food, without regard to how it is produced. Scaled properly, the impact is basically neutral on food production costs overall, but there is a strong incentive to shift to methods of production which use less fossil carbon. Perhaps best you start out with a generous credit to subsidize food production in the short term, with a phase out of the credit entirely over a period of years.

I support that. Again, however, as you and others have pointed out, the concept of phasing out a credit entirely is sort of abstract. If yours can be faded out, so can any of them.

alex: It locks them out both by virtue of first mover advantage and because it creates a constituency dependent on, or at least highly desirous of, handouts.

Will California PV manufacturers enjoy a "first mover" advantage? I think that you argued earlier that they would not. I believe they will have a very short-lived "first mover" advantage, that they will have to hustle to take advantage of. "locking out", then, is not permanent. The biggest "locking out" effect in modern times that I know of was achieved by Microsoft with MS-DOS, Windows, et seq.; but even they have had to hustle to stay ahead of OS/2 v. 2.0 and Linux.

here's a fun site:

http://www.insidegreentech.com/

On the contrary, Matthew, it is completely rational for powerful Congressional incumbents to use their spending authority to further their careers at the expense of what technology actually makes the most sense. That's why things like the Space Shuttle, or the Crusader Artillery System are so prevalent. It is ironic that you mention the Edsel as a private industry failure. Guess what? Ford recognized it's failure in fairly short order, and stopped pouring capital into the project. In contrast, boondoggles like the Crusader go on, and on, and on, year after silly year, for no other reason than it getting a few Congressman elected. Your proposal is dependent on the notion that Congressman will ignore their short-term political interest. How much evidence exists to support the notion that they will do so, compared to the amount of evidence that exists to support the notion that they will not?

MatthewRmarler: In my letters to my elected officials, I have proposed two principles

None of what you wrote explains why you specifically proposed cutting COLAs to pay for this.

For the fun of it, here are a few federal programs that have worked to the benefit of the general welfare.

I'm not a libertarian, and don't share their philosophy that gov't funded research, infrastructure projects, or even, in some cases, subsidies are always a bad idea. Above I even proposed a subsidy for alternate fuels.

However, there are some guidelines that should be followed in order to truly promote the general welfare, and not provide a gravy train for a few or create needless inefficiencies.

For very large infrastructure projects, especially ones involving natural monopolies, gov't financing combined with a mechanism for the users to pay back the cost is a good way to go.

the interstate highway system

This was, at Ike's insistence, handled well. Construction was paid for by a gas tax, so the people who used it paid for it.

and the other large railway systems built in the second half of the 19th century

Great idea to promote this, but the details were very corrupt. Railroads were given enormous land grants along the right of way as an "incentive" of questionable necessity. Worse, even if they didn't build a railroad, they still got to keep the land. And the freight rates weren't regulated, even though they had been given natural monopolies for free.

western dam systems

A good idea for the gov't to initially fund them, but in many cases a giveaway to western states. For example, growers in Washington state still get subsidized irrigation water. That's a handout, not an infrastructure project.

cellulosic ethanol cost $US 2.25/gallon in 2006. It produced 10 times as much energy as the energy required to make it. If American energy companies were sure that petroleum costs would never come down, they would invest in cellulosic ethanol now.

Sold! Now there's really no argument for corn ethanol.

I agree that the short term volatility of oil prices inhibits investment in alternatives, and have no problem with a varying excise tax that would keep the price up enough to change that. That tax could also subsidize alternatives, though at $2.25/gal production cost it doesn't seem necessary. Use it to increase the Social Security Trust Fund or something.

Will California PV manufacturers enjoy a "first mover" advantage? I think that you argued earlier that they would not.

No, that was someone else. On the contrary, I argued that first mover can be important.

Who needs corn ethanol or switchgrass?

http://www.greenfuelonline.com/

Algae all the way.

I'm flatly against any carbon taxes and hydrocarbon fuel taxes to provide profitability for alternatives because of the inelasticity of demand for fuel. It is much better to reward people with tax incentives to purchase fuel efficient vehicles and to mandate higher CAFE standards (structurally) on manufacturers (that's everybody that sells cars here regardless of source). IF you just jack up the taxes of fuel you disproportionately harm the working class and if you have the cash$$$ you just keep filling up your SUV and you have more carbon emissions not less.

None of what you wrote explains why you specifically proposed cutting COLAs to pay for this.

Cutting COLAs was only one item in a long list. There was nothing specific about it. However, if "everybody pays", then people who receive money from the federal government are eligible to "pay" by receiving a smaller increase. Note, I did not propose ending them, any more than I proposed that the entire cost be paid by increased taxes on the rich. Everybody pays; everybody benefits. People who use govt. money to buy fuel would soon pay lower prices for the fuel, partially recouping the reduced federal support. After 10 years or so, the COLAs would be restored to full value. The long-term prospects for alternate fuels are good; it's the transition over the upcoming 10 - 20 years that promises to be harsh.

Sold! Now there's really no argument for corn ethanol.

Corn ethanol costs $1.03 to produce, according to the same table. In addition to the subsidy for corn ethanol, the federal government subsidises cellulosic ethanol.

Above I even proposed a subsidy for alternate fuels.

At this time, I propose a subsidy for every alternate fuel.

A good idea for the gov't to initially fund them, but in many cases a giveaway to western states. For example, growers in Washington state still get subsidized irrigation water. That's a handout, not an infrastructure project.

true enough. I do not think it is a good idea to oppose a step because the second step may be mistaken. I have argued against subsidized irrigation water in other contexts. It isn't an argument against building a dam.

I agree that the short term volatility of oil prices inhibits investment in alternatives, and have no problem with a varying excise tax that would keep the price up enough to change that.

If I thought that were on the cusp of being adopted, I would support it. However, I think that direct subsidies are both simpler and more transparent. On the principle that "everybody pays", the varying excise tax is good, with the understanding that people who use the gasoline pass the extra costs on to their customers. That way, everybody pays an amount proportional to their use of fuel, directly or indirectly. I mention this because the Clean Edge proposal of the Democrats seeks to protect consumers from increased fuel prices. Also, there would need to be a way to tax imports approximately proportional to the fuel used in their manufacture.

Lots of the things that you support I also support. I just think that the corn ethanol subsidy is one step in the right direction, when many steps are needed. Eventually the advantages of cellulosic ethanol will convert a lot of the corn growers to other stuff; or they'll sell the grain for food and the stover for fuel.

Will Allen: That's why things like the Space Shuttle, or the Crusader Artillery System are so prevalent.

Is it your actual opinion that everything done by the federal government has always made everything worse? As you know, the Panama Canal has been subsidized by the feds continually since its construction, even with Panama owning it; you think the whole thing ought to have been left entirely to commercial enterprises? Next you'll be telling us that the air traffic control system doesn't work.

JonBuck: Algae all the way.

I support algae as well. Right now, no one can tell which technologies will actually work best 20 years from now.

On a related note, it has often been proclaimed that current investment in corn-based ethanol is very positive, as that infrastructure will be modified for use in cellulosic ethanol. One my greatest concerns about that view is the fact that we are building the vast majority of our corn-based ethanol plants in geographic locations where cellulosic crops are unlikely to ever be planted.

It appears the most promising cellulosic plants would utilize agricultural wastes as a feedstock. Examples would include rice husks, sugarcane stalks, and wood chips left over from forest products processing. This would be fantastic.

But we aren't building very many ethanol plants anywhere near sugar-producing areas. Cellulosic plants in the heart of the corn belt would almost certainly have to use corn stover as their primary feed crop, and that is not agricultural waste; it is organic matter sorely needed for the health of the soil. The environmental implications of removing a large percentage of corn stover from fields could be staggering.

www.cfra.org/blog

And one other thing- Archer Daniels Midland HATES high-priced corn. Really. Almost as much as livestock guys. They love the ethanol tax subsidy, for sure. But they also love buying corn for at a price that is lower than the cost of producing said corn. If they can buy corn for $2/bushel that actually cost $3 to produce, they receive a $1 subsidy- and that is in fact what are current farm programs promote. Farm subsidies primarily benefit a very few enormous farms and the agribusinesses who purchase commodities, to whom the vast benefit of farm programs flow.

Center for Rural Affairs
http://www.cfra.org/blog/2007/05/15/shock-profitable-corn

incidentally, a nice item on wind power:

http://www.popularmechanics.com/science/earth/4216776.html?series=15

Dan Owens: One my greatest concerns about that view is the fact that we are building the vast majority of our corn-based ethanol plants in geographic locations where cellulosic crops are unlikely to ever be planted.

I think that is a reasonable concern. There are other problems with growing corn in the same soil year after year -- persistent pests and soil depletion among them. The best source for cellulosic ethanol is a mixture of 14 grasses and legumes (again, according to a recent article in Science). They are better for the soil than corn, and a farmer looking to grow fuel would probably switch from corn to this mixture in order to sustain higher productivity over time. But, you never know.

No, Matthew, and please don't be so dishonest as to put words in my mouth. There are some things that only Congress can do. There are many, many, things the Congress does not and will not do well. One of the things Congress does not do well is allocate capital for technology innovation, beyond very basic research. The incentives are wrong, which is why the DOD will always be allocating capital poorly. Now, since there is no alternative to having the DOD, with Congressional direction, allocate capital for technology innovation, right up through application, we have to live with the hideous use of capital.

Doing so with regards to transportation energy will be even more problematic than for defense technology, because there will be more incumbents, compared with defense contracts, with a direct short term interest in buying votes, without regard to how well the technology actually works. A real recipe for disaster, unless you are of the mindset that there is a endless supply of capital. The only thing that will employ capital well is insuring that petroleum stays at a high enough price to incentivize alternative technolgy development, without having Congress choose winners, and make no mistake, Congress will always chsoose winners. Why on earth would you put faith in a paradigm which is dependent on Congressmen ignoring their short-term interest?

Will Allen: then quit trying to argue that everything the government does is wrong. There is a sense of urgency about both global warming and fuels: biofuels development (see Jon Buck's item about algae) contributes to solving both problems. Government support for all biofuels can speed up the process of adjustment.

Well, Matthew, you are plainly lying when you state that I ever said that everything that government does is wrong. Please stop lying; it makes for a better dialogue. I strongly suggested that government take action in the form of taxation, because one thing government does very well is tax. I'll ask again, on the off-chance you have the intellectual honesty to provide an answer; how much evidence exists which indicates that powerful Congressional incumbents will ignore their short term political interests in order to allocate capital to those purposes which provide the best, or even an adequate, technological result, compared to how much evidence exists which indicates that such incumbents will allocate capital mainly for the purpose of securing their short term political interests, without regard to what technological result the capital procures?

Again, however, as you and others have pointed out, the concept of phasing out a credit entirely is sort of abstract.

On the scale of policy-generated problems, artificially low (due to subsidy) food prices are low on my list of concerns. OTOH, the potential problems with even a preset phase-out (as excuses can later be found to delay it indefinitely) is why the extra-generous credit with a phase-out was a possible alternative. A reasonable credit for food sale even without a phase-out combined with a fossil carbon tax acheives the basic purpose. The initially generous but entirely phasing out credit is a more ideal policy that is more practically difficult to maintain the necessary political discipline over time to manage.

Will Allen: you are plainly lying when you state that I ever said that everything that government does is wrong. Please stop lying;

Every example that you have given is of government error; and your claim is that government will for certain mess up energy. Why not explain to us how you know that a set of fuel subsidies will not work as well as the Panama Canal, NACA, or the Apollo Program?

Matthew the fact that I cited boondoggles does not obviate the fact that I clearly stated that there are some things that only government can do, rendering your characterization of my position inaccurate. The Panama Canal does not hold the potential for getting dozens and dozens for incumbents re-elected, despite the Panama canal not providing value. Why? Because there are only so many ways to get from the Atlantic to the Pacific, and not very many voters get a government check dependent on the operation of the Panama canal, and they don't all have their votes concentrated in a small state.

I'm not going to take the time for now to debate your rosy view of the Apollo Program, in terms of a cost benefit analysis, at least not until you make an honest effort answer the question I put to you on more than one occasion.

Will Allen: I'm not going to take the time for now to debate your rosy view of the Apollo Program, in terms of a cost benefit analysis

The Apollo program accomplished its goals, which apparently were not your goals. There is no good reason to claim to know a priori that a federal program aimed toward reducing CO2 and enhancing fuel security can not achieve its goals.

I forgot to mention. About runaway federal programs. The new energy bill is slated to have a cap on the amount of corn ethanol that is subsidized. Stay tuned as news of the new energy bill dribbles out.

Matthew, to examine whether a goal was achieved, without reflection upon what was expended to achieve it, well, let's just drop the matter. Sheesh.

Yes, yes, it is so significant that there is an initial cap, because, really, Congress has a tremendous track record of avoiding ignoring limits such as this at a later date, after a constituency becomes even more entrenched. Really.

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