# Interest group forums > Energy and Resource Conservation Forum >  Ethanol

## Graeme

It is not often that _The Economist_ finds itself in agreement with Fidel Castro, but when he roused himself from his sickbed last week to write an article criticising George BushÃ¢â¬â¢s unhealthy enthusiasm for ethanol, he had a point.  Along with other critics of AmericaÃ¢â¬â¢s ethanol drive, Mr Castro warned against the Ã¢â¬Åsinister idea of converting food into fuelÃ¢â¬Â.  AmericaÃ¢â¬â¢s use of maize to make ethanol biofuel, which can then be blended with petrol to reduce the countryÃ¢â¬â¢s dependence on foreign oil, has already driven up the price of maize.  As more land is used to grow maize rather than other food crops, such as soy, their prices also rise.  And since maize is used also as animal feed, the price of meat goes up too.  The food supply, in other words, is being diverted to feed AmericaÃ¢â¬â¢s hungry cars.

Ethanol is a fuel additive in America, and a growing number of cars can use either petrol or ethanol.  It accounted for only about 3.5% of American fuel consumption last year, but production is growing by 25% a year.  ThatÃ¢â¬â¢s because the US government subsidises domestic production and penalises imports.  As a result refineries are popping up like mushrooms all over the American mid-west, which now sees itself as the Texas of green fuel.

Why is the government so generous?  Because ethanol is about the only alternative-energy initiative that has broad political support.  Farmers love it because it provides a new source of subsidy.  Hawks love it because it offers the possibility that America may wean itself off Middle-Eastern oil.  The automotive industry loves it because it reckons that switching to a green fuel will take the global warming heat off cars.  The oil industry loves it because the use of ethanol as an additive means that it is business as usual, at least for the time being.  Politicians love it because by subsidising it they can please all those constituencies.  Taxpayers seem not to have noticed that they are footing the bill.

But maize-based ethanol, the sort produced in America, is neither cheap nor green.  It requires almost as much energy to produce (some say more) as it releases when it is burned.  And the subsidies on it cost taxpayers somewhere between $3.5 and $7.3 billion a year.  

Ethanol made from sugar cane, by contrast, is good.  It produces far more energy than is needed to grow it, and Brazil, the main producer of sugar-ethanol - has plenty of land available on which to grow sugar cane without necessarily reducing food production or encroaching on rainforests.  Other developing countries with tropical climates, such as India, the Philippines and even Cuba could prosper by producing sugar ethanol and selling it to rich Americans to fuel their cars.

There is a brighter prospect still out there: cellulosic ethanol.  It is made from feedstocks rich in cellulose, such as wood, various grasses and shrubs, and agricultural wastes.  Turning it into ethanol requires expensive enzymes, but much research is under way to make the process cheaper.  Cellulosic ethanol would be even more energy efficient to produce than sugar ethanol and would not impinge at all upon food production.  Eventually, it might even allow countries with lots of trees and relatively few people, such as Sweden and New Zealand to grow their own fuel rather than import oil.

Meantime, if America stopped taxing good ethanol and subsidising bad ethanol, the former would flourish, the latter would wither, the world would be greener and the American taxpayer would be richer.

Ethanol is not going to solve the worldÃ¢â¬â¢s energy problems on its own, but its proponents do not claim that it will.  Ethanol is just one of a portfolio of new energy technologies that will be needed over the coming years; good ethanol that is - not the bad stuff America is so keen on.

_The Economist_

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## Dave A

> The automotive industry loves it because it reckons that switching to a green fuel will take the global warming heat off cars.


Surely ethanol still produces greenhouse gases?

Great article though. The argument against converting maize into fuel seems to be popping up everywhere.

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## duncan drennan

> Great article though. The argument against converting maize into fuel seems to be popping up everywhere.


A little while ago I came across the R-Squared Energy Blog, which mainly covers topics around oil related energy issues. There is a post, "Cellulosic Ethanol Reality Check" if you are interested.

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## Graeme

Fascinating - clearly this is a biiiiig subject.  Know of any SA blogs about ethanol?  They are going ahead with at least one maize-ethanol plant near Bothaville that I am aware of.

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## duncan drennan

I don't know of any South African blogs on this (and couldn't find any with a quick search), but you can try searching around on Technorati

EDIT: Found this post

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## Dave A

Trader Vic on Fin24 has been scathing on the financial viability of biofuel production in South Africa. For a start, there are rather severe challenges in respect of available quantities and the price of the raw materials.

I'll see if I can scratch out past issues, but the term "white elephant" seems to apply so far.

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## Yvonne

There is an article about bio-diesel in Noseweek - 12th April. 
Please also search the internet on Monsanto and Eastern Cape. 
Yvonne

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## Dave A

Here's Trader Vic's latest contribution on the subject. If you follow the link, he also has something to say on financial criminals and interest rates.



> AFTER LAST MONTH'S FOUR-DAY bio-fuels conference, investigative journalism from Naboomspruit to Bothaville - and several admissions and denials by role players in the industry - there's now at least certainty for investors who risked their money on this new green wonder opportunity over the past year. 
> Bio-fuels - whether in the form of ethanol from maize or bio-diesel from one or other plant oil - can't currently be produced profitably in South Africa. 
> 
> As long as the price of crude oil is at around $70/barrel, ethanol can only be produced profitably from maize in SA if the latter's price is around R700/t. That won't happen soon, at least not in 2007 or 2008. 
> 
> Bothaville's Ethanol Africa's initial investment of around R24m, which they obtained from trustful farmers, has almost all been used up. The group is now seeking a new investor ready to lay R500m of venture capital on the table and a banker who'll advance another R500m. 
> 
> Until that happens building work at the Bothaville site will be rather quiet - as quiet as Ethanol Africa is about who the investor and banker will be. 
> 
> ...

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## Yvonne

Anyone "googled" on Monsanto and East London  (South Africa) yet?http://www.environment.co.za/topic.asp?TOPIC_ID=503

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## Graeme

About when the production of ethanol was last discused here, the point was made that it takes more energy to produce a litre of ethanol than the litre contains.

The other afternoon, in a fascinating programme on TV it was mentioned that the same applies to petrol - it takes more energy at the refinery to produce a litre of petrol or dieselene than the litre contains.

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## duncan drennan

> The other afternoon, in a fascinating programme on TV it was mentioned that the same applies to petrol - it takes more energy at the refinery to produce a litre of petrol or dieselene than the litre contains.


Interesting. Does it take more energy to produce than it contains, or more to produce than can be extracted from it? I remember that only about 40% of the energy in the fuel is actually converted to energy in a combustion engine.

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## Graeme

Duncan - the presenter was silent on that point - just said that it required more energy to produce it than it had in it, or something like that.

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