Biofuels Exec Says Government Help Is On Its Way

Just when it looked as though the tide might be turning against biofuels, an executive at a major industry group has given a candid interview in which he reveals that the sector expects to get almost everything that it had wanted from Congress and more.

Brent Erickson, an executive vice president at the Biotechnology Industry Organization (or BIO,) bragged to Biofuels Digest that a Republican takeover of Congress wouldn’t hurt the industry’s chances at gaining further concessions from lawmakers. “You can look at biofuels as an agriculture policy issue—or as green tech,” said Erickson. “The oil companies will have more of a voice if the Republicans take over…but the Ag lobby is pretty powerful.”

The industry has been concerned about the impending expiration of ethanol producer and blender’s tax credits, which have combined to pump $17 billion into the industry since 2005. While those credits will likely be reduced or possibly eliminated, Erickson says that much of the funding is likely to continue in other forms. “What we are finding is that there is a preference in the House for an Investment Tax Credit as opposed to a Production Tax Credit. We expect to see the Congress renew the ethanol tax credit, but probably scaling it back.”

But whatever funding the ethanol and biofuels industry loses in tax credit reductions could be made back in the next farm bill—which Erickson says may be years away but is likely to contain “a big bioenergy title.”

With a combination of investment credits and the Renewable Fuels Standard—a mandate that has long served as a legislative backbone for the industry—the biofuels lobby seems confident that its product is far from on its way out. And as for the EPA’s long-awaited decision on upping the maximum allowable ethanol blend in gasoline to 15 percent, Erickson says he “wouldn’t be surprised to see E15” soon.

New Study Touts Improved Ethanol Efficiency

Meanwhile, ethanol supporters who have long been dogged by criticisms over the low energy yield of the fuel may have something to celebrate. A new report from the USDA says that the net energy balance (a measure of the ratio of energy that is required to make ethanol to the energy that it provides) has increased by 30 percent since 2004. Where 1 BTU of energy used to yield an average of 1.76 BTUs of ethanol power, it now produces 2.3 BTUs.

Unfortunately, this news is complicated by the fact that only fossil fuels were counted in the survey. That means it’s unclear whether the process itself has become more efficient or if manufacturers have simply found ways to divert energy use to electricity. Some producers have been installing biomass processors on-site, allowing them to generate some of the heat and electricity need for production without oil or natural gas.

While this should result in less emissions and should be counted as a mildly positive step in cutting down on oil use, ethanol still has a much lower net energy yield than gasoline—which has a ratio of about 5:1. Drivers who want to cut down on their carbon footprint, would still be much better served improving the overall fuel economy of their cars—by buying a hybrid or ultra-efficient gas-powered car—than trading in for new flex fuel-capable SUV.

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  • Shines

    If they could produce enough and then sell ethanol for 25% less than gasoline you would only break even on the cost because of the lower energy content which translates into about a 25%lower fuel economy rating. What fun to be driving your flex fuel half ton knowing it would be getting 20 mpg on the highway but is only getting 15 mpg because you’re using E85…

  • JamesDavis

    With that low energy output, the pollution it creates, and the food it takes out of our mouths – why is the government still pouring tax payers money into a company that cannot, after many years, sustain itself? A successful company would not need tax payers money to keep crawling and plugging along. It sounds like they are never going to make a profit enough where they can stay in business without the people handing them welfare. Isn’t it time we quit pouring our money into worthless companies like this one?

  • Charles

    Let automotive ethanol die. Please. Do something more useful with our too-precious farmland.

  • Dom

    I don’t know about Ethanol, but I think Biodiesel from non-food sources is a great idea.

  • Not Left, Not Right, Just Free

    Why pose this false choice between driving a fuel-efficient vehicle and driving a flex-fuel vehicle? We plan to do both!

    We own a 2009 Prius and have been emailing Toyota asking them to offer a flex-fuel version.

    We are saving to buy a plug-in hybrid ford Escape, which will be avilable in 2012. The hybrid Escape can run on E85, and we expect that the PHEV Escape will have that flexibility too.

    And by the way, who exactly has the right to complain about the inefficiency of biofuels??? Not the tens of millions of Americans who needlessly, selfishly drive pickup trucks and SUVS.

    Every day I see hundreds of people driving SOLO in a big, heavy, internal-combustion-only gas-guzzling vehicle. Commuting solo, running errands solo.

    Many of these people don’t legitimately “need” vehicles that size because of a large family or equipment for a small business. So certainly those people can’t credibly complain “E15 [or E85] won’t get good mileage.” They’ve already proven they don’t care about fuel efficiency — and, by extension, they don’t care about polluting the air and enriching our enemies by buying oil.

    Ethanol of any blend is not “the problem” with our vehicles. The self-indulgent driving of unnecessarily large, heavy vehicles is a problem. Refusal to carpool or take available transit is a problem. The absence of high-speed rail is a problem. But biofuels are NOT the problem.

  • Shines

    Not Left Not Right,
    If the Ethanol industry was self sufficient you would be correct. I buy E10 gas because it is 10 cents a gallon cheaper – because it is govt subsidized – I just get a return on my taxes. If the govt didn’t give handouts to the big 3 (allowing them exceptions for meeting the cafe standards for making those big heavy pickups flex fuel )- even though the fuel is much less efficient – you would be correct again. But creating flex fuel vehicles mostly allows the big 3 to avoid the CAFE fuel economy standards and keep selling the big toys to (in your own words):
    “The self-indulgent driving of those who; don’t care about fuel efficiency — and, by extension, don’t care about polluting the air and enriching our enemies by buying oil.”

  • houghton

    Look guys, The argument is not about who’s btu’s are better. It is about doing business with American farmers and ending the trade for oil with the desert rats and south american dictators who hate us. Shouldn’t this be what we can agree on?