« Tom's column this week | Main | Ben Barrack show ... [corrected] »

Comment upgrade: ethanol FDI

Mark in Texas commented on Looking for that flow:

You want a "flow" tied to climate change?

Let me get out my drum and beat it again. Ethanol. Carbon neutral ethanol.

Right now in the US, all of the growth in energy consumption is being satisfied by increases in ethanol production. Almost all of the ethanol used as motor fuel in the US is produced here from domestic feed stock, however current law allows the importation of 7% of last year's domestic ethanol fuel consumption from Caribbean Basin Initiative countries without the $0.51 per gallon import tax. Since ethanol can be made from sugar cane more economically than it can be made from corn, it would seem that we ought to be experiencing FDI flows into the Caribbean nations to build ethanol plants and to upgrade the farm infrastructure that feeds those plants and that we should also be seeing a flow of energy from our nearest Gap neighbors into our gas tanks.

We are already seeing Japanese investment in ethanol production in the Philippines. There is some European investment in Africa, although not as much as you would expect to see if the Europeans really took all this global warming stuff seriously.

Tom commented and asked:

Mark: that is a fascinating bit of analysis there.

But notice how it gets expressed in one of the flows?

Thanks a lot. I will definitely watch that one.

When I started reading your comment, I thought to myself: here comes the pitch on corn. But then you zag to FDI and it makes perfect sense: that staring-you-in-the-face obviousness that always gets my attention (for if it isn't that obvious, why would it work?).

So definitely one worth watching.

Can I assume, by your analysis, that some soil-climate function drives the sugar cane-centric FDI?

Or do we grow sugar cane across the Plains (sounds implausible, but I must ask)?

So how about an answer, Mark?

Comments (14)

Ethanol is a lie, and here's why. First off let me start by saying that my father is a farmer, and that side of my family have been farmers in northern Missouri for several generations, small farmers who primarily raised corn, soybeans, wheat and alfalfa. We also raised hogs for many years as well.

We own about 500 acres, and rent another 400. It looks like my father and my uncle will be the last generation of farmers in my family, since neither I nor my brother nor any of my cousins chose to go into farming. Some of us spent a lot of time working the farm when we were young, and we could see the writing on the wall. Small farming is far too much work for far too little return. Our next-door neighbor could be considered a large-scale farmer, he has about 20,000 acres, and I worked for him on occasion when I was a teenager and young adult.

My dad, who is in his 60s, is thankful that the price of corn is up in the $3-$4 per bushel range now since back in 2005, he was lucky to get $1.90 a bushel. At that price it costs more to produce the corn than it returns, effectively making it worthless. So he's glad that he can sell his crops for profit, and planting corn and soybeans isn't a complete exercise in futility.

Unfortunately what no one seems to want to talk about, or mention when they go on about the benefits of ethanol, is that the amount of energy that goes into creating those crops is about 4 to 10 times, (depending on whose numbers you go by and fluctuations in costs) what it takes to pump oil out of the ground and refine it. The fact of the matter is that cultivating corn requires an enormous amount of petrochemicals. Fertilizers and herbicides are all petroleum based, tractors, combines and trucks all require enormous amounts of diesel fuel to run. In addition all that machinery require a continuous supply of high grade oils, greases and other lubricants to function, not to mention manufacture.

[edited for length]

I don't know about sugar cane growing in the Plains but they have grown sugar beets in the past. Beets have higher sugar content than corn.

Aaron, you seem to be missing the point of this post and Mark's original comment.

The corn argument doesn't work. The sugar cane argument--as displayed by Brazil--apparently does.

That's what we're talking about here.

Just as a clarifier, when you say "corn argument" do you mean the production of ethanol via processing corn specifically? Or are you saying that the production costs are irrelevant?

Now is the time to start talking to Cuba. They need the currency we could use the sugar.

This move actually gives us some leverage in the Middle East, as its oil becomes less vital.

If want to go global you have to think global.

The old fear of Cuba spreading Communism goes the way of the Bogeyman, as commerce rules in a globalized world.

You might be interested in this:

"U.S. Energy Secretary Samuel Bodman said the United States "will need to have more imports of ethanol" if it is to meet the new mandate to cut gasoline use. The secretary also said that he did not see subsidies to U.S. farmers remaining in place beyond 2010 or import tariffs on ethanol beyond 2008"

http://biopact.com/2007/01/us-ethanol-subsidies-and-tariffs-to-be.html

I seem to recall Brazil passing a 'self-reliance' threshold some time ago as far as production, refining and market availability go. No? Somebody got the stats on that? Second, all the diesel farm machinery could easily be converted to bio-diesel. That was Rudolf's original intent and design. This really is a question of will - nothing more.

ACtually, there is a problem with ethanol and the claim of 'carbon neutrality'.

Ethanol is so volatile it cannot be pumped in a pipeline, unlike the longer chain hydrocarbon petromleum(remember that this is often cryolytically cracked down to octane).

So you have to truck it around. That burns up fuel. Nor does burned ethanol (2 carbon dioxide and water---nasty green house gas water vapor--- as products) exactly match the amount of carbon dioxide a crop will then extract.
Closer to unity than petroleum? Sure. But dynamic equilibrium? No. Farking. Way. If that were true than the cutting down forests and replacing them by timber companies is the most responsible ecological practice ever, which it isn't.
Better than what we're doing now but not great. And the 'carbon neutral' should be deep sixed. It isn't close to true---plants both eat and secret CO2 in growth, so it cannot be totally zeroed out. General biology and chemistry.

Again, better toward a dynamic equilibrium than oil, but a wild claim.

The economics seems sound, but the environmental impact aspect is way over hyped and wrong. H2O is a serious greenhouse gas---absorption in the right wavelength thanks to bond energies(not making it up). THe IR absorption of CO2 and water(gaseous) are very similar.

The fact that it's better (since more carbon is recycled than current) and the other bennies still make it an attractive waypoint onto 'something better'. I just get annoyed when we write paeons to something, and the facts don't support it.

I admit I know less than nothing about the economics of the endeavour but I do know something about the chemistry of it. Not what it's cracked up to be. Worth doing, I guess, but not because it's going to stop global warming(1/4 as much carbon in the air per gallon, with how many extra Chinese and Hindustani cars coming online? Show me the savings, please.)

Wow. I feel like I was singing along in the back row of the concert hall when Eric Clapton invites me up on stage. I'll try not to embarrass either of us.

Sugar cane likes a warm wet climate. They used to grow lots of it in Florida and on the Gulf Coast (Why do you think they call Tom Delay's old Congressional district Sugarland?) but in the last few decades, the economics have not been too good for raising sugar cane in the US. We'll see if the demand for ethanol changes that.

You can produce twice as much ethanol from an acre of sugar cane as you can from an acre of corn. Interestingly enough, you can produce three times as much ethanol from an acre of sweet potatoes.

One of the nice things about sugar cane is that after you squish the sugar juice out of the cane and ferment it, you can burn the bagasse (the sugar cane after the juice is squished out) to boil water into steam to run electric generators and use the waste heat to distill out the ethanol. The Brazilians have gotten this process so efficient that they are down to a cost of $0.50 a gallon to produce ethanol. The cost of producing ethanol from corn in the US is now ~$0.90 to $1.00 a gallon. This is significantly less than the wholesale price of gasoline.

Before the investor fad of the last few months, most of the people putting up their money to finance the construction of new ethanol plants were people like Aaron's father and neighbor. They were not looking to get rich from ethanol. They were looking to increase the price they got for a bushel of corn by five or ten cents a bushel. As long as the plant did not lose money, they were happy.

There is still room for corn based ethanol to grow in the US. There will be another few dozen ethanol plants coming on line this year. They will increase the demand for corn. Of course, after the $4.00 a bushel price of corn in 2006, a lot of farmers are going to be planting a lot more acres in corn this year. That is how it works in a market economy. My guess is that there will be enough corn that the price won't hit $4.00 this year but that soybeans and other crops that were planted in the acres that are switched to corn will go up in price this year, but opinions are worth what you pay for them.

Anyhow, the important function that American corn farmers and corn based ethanol producers serve right now is to provide the political and economic pressure for the United States to install the infrastructure to handle ethanol as a motor fuel. My one hope for the Democrat controlled Congress over the next two years is that they pass a mandate that all new cars that are not diesels must have Flex Fuel engines.

The crucial thing about alternate fuels is that they provide us with an alternative. When petroleum products get too expensive we will use more ethanol. When ethanol gets too expensive, we will use more petroleum. This extracts our dangly bits out of the vice controlled by Saudi Arabia, Iran, Venezuala and Russia.

There are the added benefits that using ethanol as motor fuel decreases the release of CO2 from fossil fuels, produces cleaner exhaust, allows more efficient high compression engines because of higher octane (E10 is 95 octane, E85 is 105 octane) and most important, redirects some of the money we spend on motor fuel to Gap countries that adopt rule sets that will help them join the Core.

I'm sorry for the comments I haven't addressed but this post is already too long.

Now is not the time to start talking to Cuba. That can wait until Castro is dead. Now is the time to be investing in ethanol plants in Jamaica, Guyana and other British Commonwealth nations in the Caribbean. Those countries were part of the EU subsidy system that kept sugar above $0.30 a pound. Because of the WTO decision, they are now facing the world sugar price which is more like $0.09 a pound. With investment in ethanol plants and modernizing their sugar farming, their sugar industry will not die out and we will grow more connections between these nearby Gap countries and the Core. Hopefully these connections will help expand the Core to include these countries. Eventually, either during or after the Raul Castro era, Cuba can join the party. Haiti will probably be the last remaining Gap country in the region but at least their economic refugees will have a lot more Core countries to flee to.

The process of producing ethanol from plants is inherently carbon neutral. Carbon dioxide is removed from the atmosphere and converted into plant material. Carbon is sequestered in the plants and the ethanol until it is used. The growing of the plants and the production of the ethanol currently uses fossil fuel energy because that is how our economy has developed over the last few centuries, but there is nothing inherent in the growing or production of ethanol and its feedstock that requires fossil fuels. It seems reasonable to assume that over the next few years we will see a lot of farm machinery powered largely by ethanol, avoiding a whole lot of transportation and transaction costs.

Water vapor in the exhaust of ethanol fueled cars is released at ground level. There the water vapor in the atmosphere reaches equilibrium with the water vapor released by other sources, most of which are transpiration by grass, bushes and trees. As the cars put out more water vapor, the plants will put out less.

I kind of hope the Europeans mandate Flex Fuel for all new vehicles first. The EUrocrats love to tell people what to do so they will absolutely love any kind of mandate. However, if the US does it first, the Europeans would balk for no other reason than because George Bush signed it into law.

I'm no scientist, but the top-level facts that I've heard support a positive environmental impact in Brazil.

Corn ethanol is clearly economically viable now (look at all of the plants opening up all over the US), but sugar is the more efficient process. The FDI-to-Caribbean angle is a strong one, and could go a long way to shore up foreign relations in "our" half of the world. Could help fulfill World Bank/IMF demands of viable niche markets in the Carib.

I prefer domestic and/or N/S American production of ethanol to foreign oil, just on its face. Not from an enviro perspective (the China/India consumption obviates that) but from a dependency and the longview funding destinations (better Brazil and the Carib rather than dictators and zealots running things in Africa and the ME). I'll take FDI in our backyard now and let the Chinese do the heavy lifting in Africa and the ME -- for now.

It's plain silly not to at least talk to another nation that can help this nation. I submit that two guys with brief cases can do more for the United States than the two aircraft carrier groups now going to the Presian Gulf.

The details on sugar and ethanol are expined very clearly by the USDA http://www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf

Mark, dude, look at the stoichiometry. how many moles vs. how many moles type question is what I'm asking here. Just because a plant uses CO2 does not make it carbon neutral. How many moles of CO2 get consumed to make the plant vs. how many get generated by burning(I could be mean and include production too, but I won't)? If you can't show that the ratio of MolCon/MolGen is unity or nearly so you haven't got anything remotely close to 'carbon neutral'.

That's what I'm saying. It isn't. The ratio of moles is nowhere near that good. If it were that simple the sol'n to greenhouse emmissions would be to plant fast growing plants---which lumber companies do to replenish tree stocks which doesn't deplete CO2 stocks.

H2O vapor being caught at ground level? I'd love to hear the explanation of this one. Sure, plants have feedback mechanisms, but seeing as how ground-level water vapour gets into the stratosphere anyways I'd love to hear the technical explanation for why steam generated in a car engine isn't going to go higher than 6 thousand feet.

This is why I call it hype. Where's the details? Long on claims. Little evidence. Just like when JPL showed the hydrogen fuel cell guy up. Lots of claims that leaked H2 won't go atmospheric but little explanation for why.

This is worth doing as an intermediate step to something else. But great for the environment? Absent a tons/tons(moles/moles)explanation though.....

Photosynthesis takes 6 moles of carbon out(net). Don't know about the reactions of actual physical structure formation. They need to be accounted for.

Ethanol burning gives you 2C2H6O+6O2--->4CO2 + 6H2O.
How many moles to a gallon? How many moles will a plant actually take out of the air?

1 gallon of ethanol is 64.35 mole of ethonal. That generates 128(roughly) moles of CO2. Show me where a plant removes 128 moles of CO2 for every 128 moles CO2 produced and I'll buy it. No math no buy.

(3.7485Lx.79g/mLx1mol/46.02g=64.35 moles of ethanol per gallon. One gallon is 3.785L.)

It's a nice waypoint, but it isn't all it's cracked up to be.

Since Dan at tdaxp has linked to this post, I should probably reply to ry.

How many moles versus how many moles? All of the carbon used to make up the structure of a plant such as sugar cane comes from carbon dioxide in the atmosphere. All of the carbon in the cellulose and lignin in the cell walls, all of the carbon in the sugar, all of it comes from atmospheric carbon dioxide. It is then sequestered in the structure of the sugar cane during the time that it is growing. Once the sugar cane is harvested and the juice is squeezed out and fermented, some of the carbon dioxide is returned to the atmosphere as part of the fermentation process. When the bagasse is burned to generate electricity and distill the ethanol from the fermented mash, more carbon dioxide is returned to the atmosphere. When the ethanol is eventually burned in an internal combustion engine, pretty much all of the carbon dioxide that was had been removed from the atmosphere during the process of growing the sugar cane plant is returned to the atmosphere. That is why the process is carbon neutral. It does not increase or decrease the amount of carbon dioxide in the atmosphere.

Water vapor released at ground level from tailpipe exhaust is not going to be radically different from water vapor released at ground level by lawn sprinkler systems. Does it get to the stratosphere? Maybe. I dunno. If it is a problem, perhaps we ought to put an end to crop irrigation.

Ethanol is being done right now economically with current technology and with only minor changes to existing infrastructure. Hydrogen power, and the other "better" energy alternates are not yet able to make that statement. Maybe someday they will overcome the obstacles that keep them from being as attractive as ethanol. Until that happens, it is worthwhile to make ethanol out of corn in the United States and from sugar cane in those places where sugar cane grows.

Post a comment

Comments must adhere to the comment policy. All TypeKey comments will post immediately (but are still subject to moderation) All other comments must wait for moderation before they publish. Please also read How to write so Tom will post/reply.

'Development-in-a-Box' is a registered trademark of Enterra Solutions.

Buy Tom's books online









About

This page contains a single entry from the blog posted on February 4, 2007 7:37 AM.

The previous post in this blog was Tom's column this week.

The next post in this blog is Ben Barrack show ... [corrected].

Many more can be found on the main index page or by looking through the archives.

Powered by
Movable Type 3.31