More studies of the high cost of ethanol and biofuels. And now they are going bankrupt.
Se also my posts: World’s Scariest Words: ‘I’m an Environmentalist and I’m Here to Help’, Etanol – An Environmental Disaster, Avgasutsläppen från etanol är STÖRRE och VÄRRE än från bensinbilar!, The Really Inconvenient Truths, Food shortages, questionable benefits downplayed as Dr. McGuinty hits the gas pedal on ethanol, Biofuel Madness: Environmentalism exploited for political purposes, Brazil’s experience testifies to the downside of this energy revolution, Germany Scraps Plan to Raise Ethanol Content for Cars, The Clean Energy Scam – Eller Etanolbluffen!
Global Warming Hysterics – Get out of Africa Now! Or The curse of environmentalism, They are the worst sort of people to put in charge of anything – ignorant, arrogant, self-righteous, often hypocritical., THE ENVIRONMENTALIST CREED – Anti human, anti scientific, anti technology!, The REAL inconvenient truth: Zealotry over global warming could damage our Earth far more than climate change, Clearing out the environmental fog,
Posted on Feb. 04, 2009
By Robert Bryce
Ethanol Bankruptcies Continue, 14 Studies Have Exposed the High Cost of Ethanol and Biofuels
On its website, Wisconsin-based Renew Energy says it is the ”biofuels industry leader for innovation and efficiency.” It goes on, saying that its new 130 million gallon per year ethanol plant in Jefferson, Wisconsin is ”the largest dry mill corn fractionation facility in the world” which uses 35 percent less energy and 33 percent less water than similar ethanol plants.
That would be impressive but for one fact: Renew Energy just filed for bankruptcy. Renew, which had $184.2 million in revenue in 2008, filed Chapter 11 papers on January 30, just nine days after it posted an article on its website from Ethanol Producer Magazine which touted their new ethanol production process as one that ”adds up to higher profitability and sustainability.”
The failure of Renew occurred just two days after Oregon-based Cascade Grain Products filed for Chapter 11. Cascade began operating its 108 million gallon per year distillery in Clatskanie, Oregon last June. Another distiller, New York-based Northeast Biofuels, filed for bankruptcy on January 14. That company’s plant, a $200 million facility with 100 million gallons per year of capacity, began operating last August. In October, VeraSun Energy, the second-largest ethanol producer in the country, declared bankruptcy. Other recent failures in the sector include Greater Ohio Ethanol and Gateway Ethanol.
About 9 percent of all the ethanol plants in the US have now filed for bankruptcy and some analysts believe the numbers could reach as high as 20 percent.
It may be unkind to kick the industry while it is circling the drain, but little of this financial news is overly surprising. The corn ethanol industry has always depended on federal handouts for its existence. And now that the economy has hit the skids, the ethanol makers have been slammed by high corn costs and low gasoline prices.
Given the string of bankruptcies, it’s worth reviewing the many studies produced over the past two years that have shown the high costs of ethanol and biofuels. Here are 14 of them, with links to the original documents.
1. In May 2007, the Center for Agricultural and Rural Development at Iowa State University released a report saying the ethanol mandates have increased the food bill for every American by about $47 per year due to grain price increases for corn, soybeans, wheat, and others. The Iowa State researchers concluded that American consumers face a ”total cost of ethanol of about $14 billion.” And that figure does not include the cost of federal subsidies to corn growers or the $0.51 per gallon tax credit to ethanol producers.
2. In September 2007, Corinne Alexander and Chris Hurt, agricultural economists at Purdue University, found that ”about two-thirds of the increase” in food price increases from 2005 to 2007 was ”related to biofuels.” The report also says, ”Based on expected 2007 farm level crop prices, that additional food cost is estimated to be $22 billion for U.S. consumers compared to farm prices for the crops produced in 2005. A rough estimate is that about $15 billion of this increase is related to the recent surge in demand to use crops for fuel.”
3. October 2007, the International Monetary Fund said, ”Higher biofuel demand in the United States and the European Union (EU) has not only led to higher corn and soybean prices, it has also resulted in price increases on substitution crops and increased the cost of livestock feed by providing incentives to switch away from other crops.”
3. In March 2008, a report commissioned by the Coalition for Balanced Food and Fuel Policy (a coalition based in Washington, D.C. of eight meat, dairy, and egg producers’ associations), estimated that the biofuels mandates passed by Congress will cost the U.S. economy more than $100 billion from 2006 to 2009. The report declared that ”The policy favoring ethanol and other biofuels over food uses of grains and other crops acts as a regressive tax on the poor.” It went on to estimate that the total cost of the U.S. biofuels mandates will total some $32.8 billion this year, or about $108 for every American citizen.
4. An April 8 internal report by the World Bank found that grain prices increased by 140 percent between January 2002 and February 2008.
”This increase was caused by a confluence of factors but the most important was the large increase in biofuels production in the U.S. and E.U. Without the increase in biofuels, global wheat and maize [corn] stocks would not have declined appreciably and price increases due to other factors would have been moderate.” Robert Zoellick, president of the Bank, acknowledged those facts, saying that biofuels are ”no doubt a significant contributor” to high food costs. And he said that ”it is clearly the case that programs in Europe and the United States that have increased biofuel production have contributed to the added demand for food.”
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