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DAVID KRUSE

By Staff | May 2, 2014

Here we go again. We have another damaging ethanol study to deal with, this one focused on greenhouse gas emission scores for cellulosic ethanol.

We do not have a good record of ethanol coming out well in energy and environmental studies despite what would appear to be obvious benefits of biofuel.

The first negative ethanol study was from Cornell University Ecologist David Pimentel’s net energy study, which concluded that ethanol required more energy to produce than it generated.

The study was horribly flawed, using low corn yields and low ethanol output assumptions, as well as the most disingenuous blatant mistake of not accounting for the distiller’s dried grain in the net energy equation.

DDG is an extremely high quality feed that represents more than a third of value in every aspect of the corn that goes into the ethanol process.

Pimentel left it out. That is like having a sprint race where they cut off the leg of one of the runners and then claim he scratched.

The study was purposefully written so that ethanol could not win. Corn and ethanol production have had tremendous productivity gains.

When the proper information was input into the equation with DDG credited its due, ethanol is a strong net energy producer and always was.

The next bogus study that had more physical impact on ethanol demand was the carbon score given corn ethanol by the California Air Resources Board.

The assumption that the board made to undermine ethanol this time was that increased corn demand from ethanol production would shift acres from soybeans to corn in the U.S. creating an indirect incentive, so that they would expand soybean acres in Brazil, thereby assuming an increase in land use change resulting in more rain forests being cleared.

It takes some creativity to superficially connect all those assumptions, none of which has any real evidence of having occurred in real life.

Amazon deforestation has declined significantly since the ethanol industry was created.

Corn acreage in the U.S. has almost no bearing on soybean acreage in Brazil. There are so many other factors ahead of U.S. acreage, primarily Chinese soy demand, in determining what Brazil plants, that the California standard penalizing ethanol’s carbon score for it is ridiculous.

U.S. farmers will plant record soybean acres this year. It just doesn’t work in the “if this happens that will happen” way the CARB staff assumed.

There is plenty of evidence that CARB was wrong and will need to adjust its corn ethanol carbon score accordingly.

The dark irony is that CARB scored Brazilian sugar ethanol so that it could be imported to meet California’s clean air needs. The U.S. ethanol industry has been exporting ethanol to Brazil instead of California.

All the California carbon board did was create indirect stupidity distorting trade. The corn-based ethanol industry has not only survived these bogus studies, but is thriving today without subsidies.

The only U.S. motor fuel being subsidized by the government today is gasoline through tax breaks for oil baked into the tax code.

Consumers do not subsidize ethanol, but they do subsidize oil. It amazes me how so many that were offended by ethanol subsidies show no such offense to oil subsidies that, because they are part of the tax code, never go away until tax law is reformed.

Where is all the indignation over the subsidies going to Big Oil? The radio ads claim “Invest in an oil well and get an 85 percent first year tax write off.”

The special tax benefits are estimated to total $6 billion annually for Big Oil.

The corn ethanol industry is what it is and we have now proven that we can supply enough corn to make ethanol and still leave a burdensome carryover to depress the corn market.

This should be where livestock industry opposition to ethanol leaves off. The rest of the renewable fuel standard is to be met with cellulosic ethanol, which should make no difference to the livestock sector. There is not great competition for corn stover.

The oil industry has tolerated E-10, but the equivalent loss of their market share if cellulosic ethanol production achieved the RFS target of 36 billion gallons in total, has made it crazy to find a means to kill it.

Corn ethanol has encountered and overcome negative studies that proved the ethanol industry arguments to be right when tested by time.

Now the cellulosic industry is being challenged by a USDA study scoring the greenhouse gas emissions of cellulosic ethanol compared to gasoline. No one ever said that replacing oil with ethanol would be easy.

We will look at the new study in a subsequent column.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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