Biofuels industry liable to lose their federal funding

posted at 2:01 pm on July 11, 2012 by Erika Johnsen

House Republicans are looking to eliminate government funding for the biofuels industry through the farm bill — and it feels so good. I am always pleased when any federally subsidized product, service, or industry is finally forced to face the music and compete in the free market based on its meritorious profitability rather than its political profitability.  …Granted, that doesn’t seem to happen often, due the ever-expanding size of our federal bureaucracy and the ensuing tendency to nurture bad policies, but it looks like the biofuels industry may at last find itself released back into the wild of unsubsidized competition.

Biomass and biofuels groups warn that the loss of $800 million in guaranteed federal support would stall progress in developing the fuel source and cause job losses in rural communities that can least afford it.

The industry claims interest groups such as fossil fuel producers and livestock owners have hijacked the process as the House Agriculture Committee begins a markup of the bill this week. …

House Republicans say the plans to choke off funding for biofuels and biomass projects reflect the basic fiscal reality that cuts have to come from somewhere. …

The funding goes toward a variety of loans and grants for bio-refineries and renewable-energy programs, as well as subsidies for dedicated energy crops.

Hmmm. If the loss of federal funding would stall biofuels’ progress, can we be sure that it’s a viable fuel source currently worth the costs? If, without government subsidies, the biofuels industry would bleed jobs, are those really productive jobs that add to economic growth, or are they unproductive jobs that detract from economic growth at taxpayer expense?

While the biofuels industry is of course going to play up the angle that they’re the victims of well-monied interests like big oil, they can really quit acting as if they don’t have powerful political influences of their own. Farming-heavy states and agribusinesses have demonstrated a remarkable penchant for endorsing both liberal and ‘conservative’ politicians who manage to find ample justification for supporting agriculture-related handouts. Even Grist had a post yesterday acknowledging that ethanol is “beloved by farmers,” but obviously, farmers don’t love ethanol itself — they love ethanol subsidies.

What’s most interesting about the debate over the RFS and, specifically, the increase from E10 to E15 is the light it shines on the political process. Midwestern corn-producing states (and their elected officials) are happy about the mandate. Including more ethanol means buying more of the corn from which ethanol is made. Oil producers (and their elected officials) don’t like the increase. More ethanol means less gasoline; less gasoline means less money.

The Grist article also points out that a lot of greenie groups don’t like ethanol, either — the analyses of the environmental benefits versus the costs are highly dubious at best. So, remind me, why are we providing the biofuels industry with all of this “free money,” again? I say it’s time to cut ‘em loose.


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Chain saws, electric generators, ATVs, power pressure washers, mowers…you name it. Ethanol shortens the life of these expensive, but necessary tools.

cartooner on July 11, 2012 at 2:23 PM

Amen to that! I had to replace and rebuild most of the rubber pieces in the fuel systems of all my small engines about 3 years ago. I get high test now which doesn’t have it here.

TugboatPhil on July 11, 2012 at 5:45 PM

Go to Lowes and look for ‘Trufuel’. They have it for 4 and 2 cycle in a couple of mixes. Basically overpriced but pure gasoline.

slickwillie2001 on July 11, 2012 at 6:17 PM

Better yet, go to pure-gas.org and see if there is a station with ethenol-free gas reasonably close by.

Random Numbers (Brian Epps) on July 11, 2012 at 8:43 PM

I’m a firm believer that the government shouldn’t own anything but subsidizing some industries that provide benefits for a short period are not horrible plays. Aside from the ecological affect of reducing fuel usage and stopping cooking oils and other vegetable oil waste from being dumped down the sewer, businesses are making extra income by selling these essentially useless by-products because the subsidy is in place. Eventually, this will be an industry that will succeed and big companies are now coming to play.

this industry started from scratch and has been steadily growing. The government should get out but not yet.

sswenviron on July 13, 2012 at 6:53 PM

A local ethanol plant has been wildly profitable, the subsidies only amount to about 10% of their bottom line. The effort that oil companies have made about misinformation concerning ethanol have been very successful. Amazing number of parrots on this thread.

A few facts:

regular gas has about 114,000 BTU’s per gallon of energy.
E10 fuel has 112,000 BTU per gallon. How is that possible when ethanol has only about 2/3rds the number of BTU’s than gas? It’s because it takes about 9.5 gallons of gas and one gallon of ethanol to make 10 gallons of E10.

The oil companies can refine more gasoline out of a barrel of oil when it is being mixed with ethanol. Something like 2 or 3% more.

Ethanol replaced MTBE in gas, which is a nasty cancer causing chemical. It was turning up in lakes and streams, and will not be missed. But it was produced by the oil companies.

Flex fuel vehicles are really stupid. The engines are set up for low octane regular fuel, but will also run on E85 which would work best with a high compression engines. Engine efficiency is improved when operated at high compression. For example look at the typical diesel engine in a car. They typically have about 30% better fuel milage than a gas engine. But diesel fuel with 130,000 BTU only accounts for 14% of the increased range. The rest is due to the higher efficiency of higher compression.

The same would be true if car engines were properly designed to operate on gasoline/ethanol mixes. For instance a car engine designed for 87 octane fuel is only about 28% efficient due to the low compression ratio. But if the fuel were to include 20% ethanol, then the compression ratio could increase enough to get the engine up to about 32% efficiency. So inspite of using a fuel with a lower energy content, it would achieve a higher mileage than the vehicle with 87 octane.

As far as ethanol damaging engine components, there are 1000′s of materials available to engineers that work with with. Modern engines have no problem with ethanol unless that was designed in. My small Honda engines have only run on E10 and alway start and run fine with the first pull of the rope.

Highplains on July 13, 2012 at 7:52 PM

Comment pages: 1 2