Science in Christian Perspective

Public Policy and The Alcohol Fuel Binge
Theodore R. Mallock
Association for Public Justice
Gordon College
Wenham, Massachusetts 01984

From: JASA 34 (June 1982): 107-110.

As the world advances closer to the next century and demand for oil is exacerbated, two things are apparent: that the supply of oil is decreasing; and that everyone has a stake in the development of alternatives to crude oil and its derivative-gasoline. Attention has been focused in the last several years on the production of both synthetic fuels and gasohol. It is imperative that we address the production of ethanol or ethyl alcohol as an integral part of both national and international alternative energy sources. As the second of three areas in the Association for Public Justice's research project, "Justice for the Land; Land for the caring", gasohol production deserves our immediate attention, as does the public policy (state and federal) that propels its development.

It seems the American Congress and various state legislatures went on an alcohol fuel binge in the late 1970's and 1980. Tax breaks, loans, and price guarantees were among the ways they chose to help spur production of alcohol fuels.

According to Congressional Quarterly, their efforts paid off. Gasohol was not widely available in 1977 and sold at only a few hundred outlets in 1979. But by the end of 1980, "more than 9,000 service stations sold the fuel, and total consumption for the year was expected to exceed 100 million gallons of alcohol, or I billion gallons of gasoline."¹ The leading seller was Texaco.

After defining the technical aspects of gasohol (ethanol) production, this paper considers the economics of gasohol, certain environmental effects, and finally the political impacts of a move toward wider use of this energy source. A quantitative evaluation of net energy results as well as a discussion of the "food vs. fuel" dilemma is also included.

Ethanol or Ethyl Alcohol is a flammable organic compound (CH₃CH₂0H) formed during a sugar fermentation process where green plant life is distilled to extract the given substance. Gasohol, in turn, is a mixture of one part ethanol and nine parts unleaded gasoline for consumer use in automobiles with conventional internal combustion engines.

The production of gasohol requires two primary factors: ethanol distillation facilities; and their feedstocks. According to a 1979 report by the Office of Technology Assessment entitled Gasohol: A Technical Memorandum, "although ethanol can be produced from any feedstock capable of being reduced to the proper sugars, present U.S. production technologies rely on sugar and starch feedstocks. Suitable ethanol crops include corn, wheat, grain, sorgham, sugar cane, sugar beets, sweet sorgham and Jerusalem artichokes."² There is no "best" ethanol crop since different crops are superior for ethanol production in different soil types and regions of the country. Presently Iowa corn is by far the leading energy farm crop.

The ethanol conversion process itself takes place in four basic steps. First, the feedstock is "treated" in order to produce a sugar solution. The sugar is then converted in a separate step to ethanol and carbon dioxide by yeast or bacteria in a process called fermentation. The ethanol is then removed by a distillation process which yields a solution of ethanol and water that cannot exceed 95.607o ethanol (at normal pressure) due to the physical properties of the ethanol-water mixture. Finally, the water is removed to produce "dry" ethanol. This process is accomplished by adding to the solution a chemical that changes these physical properties and through a second distillation process.³

The material which remains after the ethanol is distilled away, called "stillage," contains dead yeast, bacteria, and the material in the feedstock which was "hot" sugar or starch. Grain feedstocks, for example, produce 4 high protein stillage (called "distillers' grain") that can be used as an animal feed, while sugar and cellulose feedstocks produce a stillage with little protein and less feed value. At the present time, exact nutritional values of distillers' grain in its various forms remain uncertain, although this subject is currently under research.⁴

It should be noted that there are numerous hazards particularly of burns, suffocation, and spillage that need to be considered in the production and storage of ethanol. Currently, the Bureau of Alcohol, Tobacco and Fire Arms (BATF) is responsible for issuing permits to individuals and corporations before production is allowed.

There is presently clouded information on whether gasohol does in fact produce positive net energy results. A study completed by the David, Hatimaher, Buzenberg and Wagner consulting firm that appeared in the New York Times on May 19, 1979 suggested that in the overall production of gasohol, there results a net energy loss. This study argued that 41,000 BTU's are used to grow the corn from which the ethanol is distilled. In addition, 131,000 BTU's are used to ferment and distill the ethanol, combining for a total of 172,000 BTU's of "input" energy. The calculations for "output" energy were as follows: 84,000 BTU's of energy for each gallon of ethanol and 50,000 BTU's of energy value from the feed grain by-product totalling 134,000 BTU's of energy for each gallon ethanol. Thus, it was concluded that an energy deficit of 38,000 BTU's results in the ethanol production process.

To counter this analysis, Barry Commones and Richard Carism of the Center for the Biology of Natural Systems argued thau the New York Times article had gross miscalculations and that ethanol energy production produces positive net-energy results.  The counter-claim suggested that research done by Paul  Middaugh at South Dakota State University proves conclusively that energy expenditure of no more than 40,000 BTUs per gallon of alchol should be needed in the fermentaion, distillation and by-product recovery. "It is also important to note that only two-thirds of the original corn is consumed in the fermentation process; the remaining third is very useful."⁵ Using other evidence Commoner added that alcohol production should be charged with only two-thirds of the energy required to grow corn-about 27,300 rather than 41,000 BTU's per gallon. These corrections reduce the energy needed to produce one gallon of ethanol from 172,000 BTU to 67,300 BTU's.

When these considerations are taken into account, Commoner and Carlson conclude that the net energy gain is 91,700 BTU per gallon of ethanol. This is the case because it takes 67,300 BTU's to produce a gallon of gasohol, whose replacement represents 159,000 (159,000-67,300 = 91,700) BTU's net energy.⁶

Since Commoner's report, there have been at least two additional studies on the net energy result of ethanol production. The nature of these two reports further complicate the issue demonstrating that various factors, when included or excluded, have a significant impact on the net energy calcuation.⁷

Ethanol plants have sprouted like Iowa corn. In fact, U.S. production of ethanol in 1980 had doubled (by August) over 1979 production to 135 million gallons annually. Although there are no exact figures, the U.S. Department of Energy has stated that the pro duction of gasohol reached 300 million gallons by the end of Frost & Sullivan, a Wall Street Research firm has concluded goal of 920 million gallons of ethanol by 1982 and 10 gallons by 1990 is an altogether realistic goal.⁸

In 1979 ethanol for motor fuel was an $80 million industry. In 1980 it grew to $250 million and there was every indication that this trend would continue. These figures uncover reality that private as well as government sources have, for the next several decades, invested a great deal of capital ethanol production and a large promise in this a business.

A 1979 DOE Report says that current rates for ethanol between $1.20 and $1.60 per gallon. The report stated that employing advanced, available technology, optimized for and cost savings, our studies show that ethanol could readily produced for less than $1.00 per gallon and sold profitably around $1.00 per gallon if produced in a plant with as much as a million gallon per year capacity."9 The report goes on to that a key is reducing net feedstock costs. Corn, for example, for about $2.50 per bushel in 1979. Since one bushel of corn yields about 21/2 gallons of ethanol, the feedstock alone would $1.00 per gallon, unless the values of corn products are recovered. Research emphasized that feedstocks need to be viewed as part
processing system-not as raw materials for ethanol alone.¹⁰

Gasohol: A Technical Memorandum agrees that ethanol are influenced by the capital investment in and financing --if distillery, distillery operating costs, and byproduct credits. coal-fired 50 million gallons per year distillery using feedstock, the capital related charges are approximately $0.45 per gallon of ethanol, ¹¹ assuming 100% private equity financing and a 13% after tax return on investment. The two major operational expenses are fuel and feedstock crops.

With corn at $2.50 per bushel, the corn grain costs $0.96 per gallon of ethanol and the byproduct credit is about $0.38 pergallon resulting in a net feedstock cost of $0.58 per gallon. Because of the extreme volatility of farm commodity prices, $0.50/bu. increase in corn grain prices for example, would raise the ethanol cost by $0.12 per gallon.¹²

In addition, costs for transportation and delivery are higher as this time due to the fact that tank trucks are used. If other form of transportation were developed to move the ethanol in larger volumes (barge, rail, or pipeline) this could lower costs by as as $0.03-$0.05 per gallon.¹⁴

It should be noted that federal assistance in the form of loan guarantees, price guarantees and purchase agreements for alcohol fuels are currently in effect. A total of $1.5.billion has been appropriated for use over the next two years by the Department of Energy for biomass energy activities." In addition, tax incentives are provided under the Crude Oil Windfall Profits Tax Act of 1980 for producers, blenders, marketers, and users of alcohol fuels. The National Energy Act motor fuel excise tax exemption on gasoline/ alcohol blends is worth $0.04 per gallon of blend and $0.40 per gallon or $16.80 per barrel of alcohol in 10% blends. (A number of States also have exempted these blends from State excise taxes.) Alcohol fuels are also eligible for Department of Energy entitlements worth roughly $1.00 per barrel of ethanol or $0.02 to $0.03 cents per gallon. Loan guarantees for alcohol pilot plants, administered through the U.S. Department of Agriculture are also noteworthy. Finally, alcohol fuels facilities now qualify for the 20016 investment tax credit enacted in Title III of the Energy Tax Act of 1978. The cumulative value of these Federal incentives and of selected State incentives is truly impressive. Recently the Government has also given increased support through its research and development programs. The DOE's R and D funding relating to alcohol fuels has gone from $2.9 million in FY 1977 to $24.9 million in FY 1980. The U.S. Government has also taken steps to remove regulatory and institutional barriers to alcohol fuel development. Already in 1978 the DOE's Economic Regulatory Administration (ERA) adopted pricing regulations that encourage gasohol production by permitting the full cost of ethanol in gasohol to be passed through by retailers.

Given the incentives that are now being offered, combined with the growing interest (primarily in the farm belt) in ethanol fuel, it is necessary to consider different impacts which would be realized if increased production becomes a reality.

All components of a gasohol "fuel-cycle": growing and harvesting the biomass feedstock, converting it to alcohol, and using the gasohol/alcohol blend in automobiles have significant environmental effect.¹⁵

Clearly the most significant environmental effects are the growing and harvesting of the ethanol feedstocks. A commitment to provide enough gasohol to supply most U.S. automobile requirements would involve putting approximately 30-70 million additional acres into intensive crop production.¹⁶

Assuming that the acreage is actually available, this new crop production will most certainly accelerate erosion and sedimentation, increase pesticide and chemical fertilizer use, replace unmanaged with managed ecosystems, and aggravate other environmental damages.¹⁷

Current soil erosion ranges between 2 and-3 billion tons of soil each year on American farms. These soil particles fill streams and rivers causing turbidity, filling lakes and reservoirs, obstructing irrigation canals and damaging or destroying aquatic habitats.¹⁸ The concern here is that annual crops such as corn (the most widely discussed gasohol crop) are also among the greatest erosive crops. Increasing crop production for ethanol use is definitely going to have damaging results as far as soil erosion is concerned.

Another important issue is the heavy use of chemical fertilizers. Since high yields on these lands will be sought, additional use of certain fertilizers will cause runoff and leaching of nutrients to surface and groundwaters, causing premature aging of streams and nearly irrepairable damage to aquatic ecosystems. In addition, natural gas must be used to produce nitrogen fertilizers for the new crops. At current application rates, 50 million acres of corn production requires over 100 billion cubic feet of gas per year, or close to 207o of total U.S. natural gas production.¹⁹

There are alternative sources of feedstock that need to be investigated for their potential. For instance, forage grasses are known to cause pollution but could be expected to cause far lower levels of erosion than foodcrops.²⁰ Waste products and cellulose also have considerable applicability.

Cellulosic materials contain chemicals called polysaccharides, long chains of sugar-like molecules that can be broken apart by acids or enzymes to yield fermentable sugars that can be converted to ethanol. Cellulose conversion technology is still under development, but progressing. Alternatively, these materials-and other carbon and hydrogen containing materials such as peat and coal can be converted to a mixture of carbon monoxide and hydrogen in a gasifier; this mixture can then be reacted over widely used catalysts to yield methanol. Since there are extremely large quan tities of cellulosic materials and of coal in the U.S., by the late 1980's alcohol fuels need not use significant quantities of food product feedstocks.²¹ New energy efficient ethanol plants will require about 50,000-70,000 BTU per gallon of ethanol produced to power the distilling, drying and other operations. Because New Source Performance Standards have not been formulated for industrial combustion facilities, the degree of control and subsequent emissions from new plants is not predictable. Here is an area that must be considered particularly given the fact that gasohol plants, private and public, continue to grow in size and number.

These are just a few of the more essential technical environmental effects that need to be discussed. There are also important political impacts that are linked to the production of ethanol which must be inspected if we are to have a complete picture of this new fuel supply.

Brazil has one of the world's most widely skewed income distribution patterns, with a ratio of 36 to I between the average income of the richest one-fifth of its population and that of the poorest one-fifth. A 1975 study showed that only one-third of all Brazilians were eating a sufficiently nourished diet . . . Evidence of malnutrition was found in the country's high infant mortality rate and in the fact that less than half the children under the age of 18 at the time had reached their normal weight for their age.²⁴

The decision to turn to energy farms to fuel Brazil's rapidly growing fleet of autos is already driving food prices upward, thus leading to more severe malnutrition among the poorest segments of the population.²⁵ The immediate consequences of the Brazilian energy crops program may be more internal than external; however, the recently launched gasohol effort in the U.S. has much wider ramifications. If American croplands are shifted toward energy production in order to fuel automobiles on a massive scale, it will be at the expense of the exportable U.S. surplus grain. Over the past generation, the entire world has come to depend heavily on North American grain exports, with just over four-fifths of the total exports being from the U.S.

The agriculturally based alcohol fuel program designed to produce fuel for vehicle transportation in both Brazil and the United States threatens to divert food resources to nonfood uses and thus to raise food prices, thereby exacerbating the world hunger situation. However, a carefully designed alcohol fuel program that gave farmers first priority in the use of ethanol for tractors, farm trucks, and irrigation pumps, would help ensure future food supplies when oil supplies begin to dwindle.²⁶ This sort of emphasis would be a major step toward the creation of a sustainable food production system and hence a sustainable society.

The original attractiveness of agriculturally derived fuel must be balanced against the potential impact on the environment and more importantly on world food prices and supplies.

It seems the "stage is set for direct competition between the affluent minority who own the world's 315 million automobiles, and the poorest segments of humanity, for whom getting enough food to stay alive is already a struggle."²⁷ This scenario may in fact have already begun to unfold.

If human beings are called to be stewards of the land, then we must respond by considering the full implications of our action concerning ethanol fuel production. Can we realistically put a dollar figure on the value of human lives? What will the far reaching consequences be if we devote millions and perhaps billions of tons of our grain and previous farm acreage to the production of these fuel additives?

As Christians, we believe that persons are called to be good stewards, caring for all that the Creator has entrusted to us. Public policy on gasohol production is not simple. We must consider how our decisions as a nation will affect other nations of the world, particularly those in need of our grain for their very survival.

The other claim, looking into the distant future, is the state of U.S. agricultural resources. Long range planning has not been a notable characteristic of this democracy. Limits to growth are anathema to many Americans; they would prefer to talk about growth potentials through the magic of science and technology. But the oil is running out, and so is another of our precious resources-topsoil. It is truly time that the U.S. government consider not only justice in the projection of alcohol fuels but justice for the land, so that those who care for this most precious resource may know again what stewardship amounts to.

References

Bibliography

Brown, Lester. "Food or Fuel: New Competition for the World's Cropland" (Washington, D.C.: Worldwatch Institute, March 1980).

Chambers, R.S., et. al. "Gasohol: Does it or Doesn't it Produce Positive Net Energy Results?" Science (November 16, 1979). Vol. 206.

Comptroller General of the U.S. "Potential of Ethanol as a Motor Vehicle Fuel." (Washington, D.C.: June, 1980).

Hearing before the Subcommittee on Agricultural Research and General Legislation of the Committee on Agriculture, Nutrition and Forestry, United States Senate. (Washington, D.C.: U.S. Government Printing Office, 1979).

Hopkinson, C.S. and Day J.W., Jr. "Net Energy Analysis of Alcohol from Sugar Cane" Science. (January 18, 1980) Vol. 207. 

U.S. Department of Energy. "The Report of the Alcohol Fuels Policy Review." (Washington, D.C.: 1979).

U.S. National Alcohol Fuels Commission. "Alcohol Fuels and the Energy Security Act." (Washington, D.C.: August, 1980).

U.S. Office of Technology Assessment. "Gasohol, A Technical Memorandum" (Washington. D.C.: September. 1979).