Posted by Jonathan Adler:
Ethanol: "Neither Renewable Nor Reliable":
http://volokh.com/archives/archive_2007_10_21-2007_10_27.shtml#1193148081
Speaking of [1]corporate welfare, the cover story in new issue of
Regulation, [2]"Neither Renewable nor Reliable" by James Eaves and
Stephen Eaves, devastates the environmental and "energy security"
arguments for corn-based ethanol. According to Eaves and Eaves,
corn-based ethanol is simply not capable of displacing a significant
proportion of gasoline consumption, nor would a shift to corn-based
ethanol protect markets from volatility due to supply disruptions.
They conclude as follows:
When we assume the ethanol production process is fully renewable,
it would take all the corn in the country to displace about 3.5
percent of our gasoline consumption � only slightly more than we
could displace by making sure drivers� tires are inflated properly.
There are also ethical considerations. In particular, the United
States is responsible for over 40 percent of the world�s corn
supply and 70 percent of total global exports. Even small
diversions of corn supplies to ethanol could have dramatic
implications for the world�s poor, especially considering that
researchers believe that food production will need to triple by the
year 2050 to accommodate expected demand. Furthermore, ethanol
would not necessarily be a more reliable source of fuel. By
displacing gasoline with ethanol, we are displacing geo-political
risk with yield risk, and historical corn yields have been about
twice as volatile as oil imports. Finally, because high
temperatures can simultaneously increase fuel demand and the cost
of growing corn, the supply response of ethanol producers to
temperature-induced demand shocks would likely be weaker than that
of gasoline producers.
Note: The Regulation article is based upon a longer study forthcoming
in Energy Policy.
References
1. http://volokh.com/archives/archive_2007_10_21-2007_10_27.shtml#1193145437
2. http://www.cato.org/pubs/regulation/regv30n3/v30n3-1.pdf
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