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US Energy Bill: Subsidizing China
By Mr Ethanol | February 12, 2008
A push in the U.S. for more biofuels won’t significantly impact oil demand. In fact, any consumption decrease may simply act as a subsidy for Chinese drivers.
Energy Tribune:
In this era of political polarization, particularly on matters involving energy and the environment, if Democrats and Republicans in Congress agree on a bill and the president signs it, the bill must be largely meaningless. That explains how the recent energy bill came to pass, one that will cost lots and do nothing 
for energy independence, greenhouse gases, or the environment. And in the highly unlikely case that the bill’s targets are actually met, the end result may be that it does a lot more harm than good.
Many pundits have written about the new fuel efficiency standards for automakers and the gaping loopholes in those standards. I will focus only on biofuels.
Congress mandated that by 2022, biofuels will contribute 36 billion gallons per year to the country’s energy mix. None of these fuels will ever make any market-based sense without government subsidies. Of the total, 15 billion is to come from conventional biofuels (read: corn-based ethanol), with the accompanying impact on food prices and contamination of ground and surface water. The bill suggests that the share of these fuels should increase to about 5.7% of the total transportation fuels by 2022 (15 billion out of 260 billion gallons total) from about 4% in 2008 (9 billion gallons out of 220 billion total).
That is not even accounting for the multiplier of 0.7, the percentage by which an ethanol gallon must be multiplied in order to get a comparable volume of gasoline. (Ethanol contains about two-thirds as much heat energy as gasoline.) The astonishing fact is that most of the remaining mandated 21 billion gallons will have to come from cellulosic biofuels, and there is no technology, now or on the horizon, to produce them profitably. The biofuel mandate is like mandating that all children born in the U.S. grow to be 6 feet tall, because it would be better for them as adults. Some day, some technology, as yet unknown, may be able to do that.
Topics: Energy, Market, News |
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