The aftermath of the EPA’s decision to approve E15 (15% ethanol) use in 2007 and later vehicles has settled. Industry and trade groups are lining up on both sides of the issue, either applauding the decision (the ethanol industry) or urging caution (automakers).
2010 has been a historically good year for the ethanol industry. It’s estimated that when 2010 concludes, 41% of the United States’ corn supply will have been diverted from conventional uses (like food) to make ethanol. That’s a historic level of use, to say the least. Yet it is reasonable to say that the biggest reason it’s gotten to this point is the governmental support of tax breaks for ethanol producers. Government subsidies of ethanol production play the single largest role in making ethanol competitive with pure gasoline in the marketplace. Government subsidies also play the biggest role in depressing ethanol’s true cost to the level where consumers view it as similar in price to gasoline and therefore use it at the pump. If one were really cynical, one would say the taxpayers are actually paying in order to convince themselves that they’re not paying.
Ethanol producers can thank both of the Clinton and Bush administrations for such favorable tax policy. So it is indeed eye-opening to see Al Gore recently come out and express regret for his position within the previous administration as a supporter of ethanol. Speaking in Europe, Gore said he regretted being a champion of the effort to provide such a favorable policy position to ethanol production. His regrets and misgivings were, he said, rooted in the realization that ethanol’s “energy balance” was very small – that when you subtract from the energy savings the amount of energy it takes to grow corn and make ethanol, through all stages of the process, you find that you don’t really save that much energy or carbon or greenhouse gases. When pressed on the issue, Gore offered that the reason he supported ethanol within the Administration was to show political support for the farmers in his home state of Tennessee and their allies in corn-belt states like Iowa.
This admission is small consolation for consumers facing expensive repairs and lost performance caused by ethanol’s effects on their machines. A summer of using E10 has already opened a lot of eyes, with its effects on 2-cycle engines such as those common in lawn mowers and small power equipment, where ethanol interferes with the essential lubrication of the oil within the fuel and eats away at fuel lines. Now Congress (with a new Republican majority) will, by the end of this year, face the choice of whether to extend the favorable tax breaks for the ethanol industry. Stay tuned for the debate.
This post was published on November 24, 2010 and was updated on February 12, 2015.