Is yellow the new green?
Governor George Pataki thinks so. The gov came to Western New York last week to tout a plan to build a new ethanol plant in the town of Shelby in rural Orleans County, near the village of Medina. The plant will make the alcohol-based fuel from corn and be the first in the state to employ what Pataki calls "state-of-the-art dry mill" technology. When it's built --- the target is January 2008 --- it will produce 50 million gallons of "fuel grade" ethanol a year and employ just under 60 people.
It will also churn out, as byproducts, a quarter of a million tons of distiller's grains and a little less than 100,000 tons of carbon dioxide (in a commercially resalable form, not as a greenhouse gas). About 30 percent of the estimated 20 million bushels corn it will use will come from local sources.
The state is sending nearly $6 million the project's way in direct aid, transportation infrastructure upgrades, and tax incentives. Tom Reynolds, the powerful Buffalo-area Congressman, said that the USDA is looking at giving the plant a whopping $25 million benefits package. The plant is also in an Empire Zone, so the actual state benefits will be somewhat higher.
To read the rapturous comments of the politicians in attendance, an ethanol plant here in New York is only slightly less exciting than, say, the discovery of an oil well.
Straight from the press release, here's a sampling of the rhetoric:
Pataki: The plant "will help us take advantage of this opportunity to reduce our dependence on unstable foreign energy supplies."
Reynolds: "This new facility will help Western New York become a leader in helping to reduce America's reliance on foreign oil."
State Assemblymember Steve Hawley: "Today marks the beginning of this state's transition to alternative fuels and an end to our addiction to foreign oils."
The CEO of Western New York Energy (the company building the plant), the president of the New York Farm Bureau, the state's Energy Research and Development Authority president and CEO, and the commissioners of Agriculture and Transportation all got a chance to praise the benefits of ethanol.
But just how great is this magical new fuel?
John Deutch isn't convinced. The day after Pataki's announcement, the Wall Street Journal published an op-ed by Deutch raising serious questions about whether ethanol is worth all the trouble.
"Most energy experts believe using corn to make ethanol is not effective in the long run because the net amount of oil saved by gasohol use is minimal," Deutch wrote. (Gasohol is a blend of 10 percent ethanol and 90 percent traditional gasoline; ethanol produced by the Shelby plant would likely be used, at least partially, this way.)
Deutch has impeccable credentials. A professor at MIT, he served as director of the CIA and deputy secretary of Defense under President Clinton and was director of energy research and undersecretary of Energy under Carter. In his op-ed, he explained that cultivating, fertilizing, and harvesting the corn, plus fermenting and distilling it into alcohol are all "energy-intensive" processes that require, you guessed it, petroleum products.
It takes about two-thirds of a gallon of petroleum to yield a gallon equivalent of ethanol from corn, wrote Deutch. Crunching those numbers, Deutch arrived at the estimate that a 10-cent federal tax credit on gasohol displaces oil, but at the cost to taxpayers of $120 per barrel.
"Surely it is worthwhile to look for cheaper ways to eliminate oil," he wrote.
And Deutch is one of ethanol's milder critics.
"Generally it's a scam," says Robert Bryce. "Consumers are being scammed by ADM [Archer Daniels Midland, the agribusiness] and the farm lobby."
The managing editor of the Texas-based energy industry newsletter Energy Tribune, Bryce is also author of several books on energy and energy policy including "Cronies: Oil, the Bushes, and the Rise of Texas, America's Superstate." He has little but scorn for the oil alternative based on corn, which he points out is already the most heavily subsidized crop in the nation.
"We're making subsidized motor fuel out of subsidized grain. How is that a good thing?" he says. Like Deutch, he points out the amount of fossil fuels that goes into making ethanol, although according to Bryce, the ratio of traditional fuel input to ethanol output is more like one-to-one.
"If it's energy neutral, why are we doing it?" he asks. (Bryce takes by no means the dimmest view on the input-to-output ratio. Cornell ecologist David Pimentel, along with an engineer from Berkeley, conducted a study last summer that found that ethanol from corn requires 29 percent more fossil fuel energy than it yields.)
And to some environmentalists' claims that the fuel is a green alternative, Bryce has two objections. First, in today's engines, ethanol, which has a higher vapor pressure than gasoline, burns less completely. That means it emits more smog-causing particles as exhaust.
Second, it's water soluble, which means it's more prone to enter the water systems and contaminate them, something that got the chemical gasoline additive MTBE banned from many states in recent years.
But what about Brazil?
South America's largest nation has gotten lots of glowing press recently for its use of ethanol to offset oil consumption. Bryce gives two reasons why Brazil's experience doesn't mean much for us. First, it has fewer cars. A lot fewer.
"Brazil's motor-fuel market is tiny compared to the US," says Bryce, perhaps as little as one-thirtieth of ours.
Second, the Brazilians use sugar cane, which "has a much higher energy content than corn," Bryce says. But those differences haven't stopped the US government from handing out hefty subsidies for the fuel. Bryce tends to draw the same conclusion from this as Deutch, who wrote that "congressional subsidies for biomass are driven by farm-state politics rather than by a technology-development effort that might offer a practical liquid fuel alternative to oil."
In other words, Pataki's subsidy might make a lot more sense if he were governor of, say Iowa, a state known for its corn production and, umm, early presidential primaries.