What Does the Future Hold for Ethanol?
Monday, October 29th, 2007Here in Iowa, ethanol was touted for a while as the fuel for America’s future. With the sheer quantity of corn production in the state, almost everybody was jumping on the ethanol bandwagon without giving it a second thought. Ethanol producing plants began popping up like weeds, with dozens more in the planning stage at any given time. Now, all of a sudden the building of new plants has slowed, and large investors are jumping ship on ethanol projects. A lot of downsides that the industry downplayed at first are now being brought to the limelight, and the future of ethanol is in question.
Ethanol sounded like an all-around good deal for our country. What could be better than filling up with homegrown fuel that supports America’s economy? It would be good for our nation, and especially great for corn producing states like Iowa. One of the biggest hurdles, though, is the fact that our corn production is limited, and anybody that passed Econ 101 can explain what happens next. Demand for corn has already increased greatly already, and corn prices have skyrocketed over the last few years. While this has been good for corn growers, livestock producers are faced with higher costs in feeding their animals. As a consequence, the higher prices are finding their way to grocery stores, where dairy and meat products are becoming more costly. It has become apparent that as ethanol helps one area of the economy, it equally harms another. There’s no shortage of demand for our corn to feed the world, let alone fuel it too.
On top of the shortage of crop to use in ethanol production, there is also questions of how energy positive ethanol is, if at all. Between the planting, fertilizing, harvesting, transporting, and production stages, a lot of fossil fuel is needed to bring ethanol to the market. Some critics of the industry propose that the process is actually energy negative, while those in the industry claim otherwise. One thing is for sure, though, is that ethanol is not as efficient as gasoline. A 2007 flex-fuel Chevrolet Monte Carlo is rated at 31 highway mpg running on gas vs. only 23 mpg on E85.
These are two of the biggest problems facing ethanol right now. Throw in government subsidies, which are keeping it alive for now but might be around for much longer, and the industry has its work cut out for it. Of course, there are other inputs, such as switchgrass, that can be used. Perhaps some of these will help ethanol out in the future. For now it’s tough to see past ethanol’s downsides.