5. Industry Background
• Ethanol first used in 1908, Model-T
• Energy Tax Act 1978
• $45B industry and growing
• US capacity 7M gal./yr.
• 77 plants under construction or expanding
Source: e85.whipnet.net/ethanol.history; Inside F.E.R.C’s Gas Market Report
6. Industry Background
• US largest corn exporter
• US mandates
– 36B gal./yr. of ethanol by 2022
• 15B gal. from corn
– Currently 9B
Source: e85.whipnet.net/ethanol.history;
7. Why it made sense
• Renewable source of energy
• Grown locally
• Widely available
• Reduces CO2 emissions
• Positive energy balance - initially
reported
Source: www.ethanolrfa.org;
8. Why it is not the best now
• Not driven by a free market economy
• It takes away from the food supply
and has neg. environmental impacts
• It is not a substantial net-positive
energy source
9. Why it is not the best now
• Production doesn’t encourage a free market
economy
– Not consumer driven
– Stiff penalties for not meeting demand
– Corn growers receive $5B in Federal subsidies
10. Why it is not the best now
• It takes away from the food source and
destroys habitats
– Cornell study found $1B impact to beef
production
– Export countries greatly impacted
– Greater use of pesticides and fertilizer
Source: www.news.cornell.edu
11. Why it is not the best now
World food demand
Source: Iowa State Univ. Center for Agricultural & Rural Development
12. Why it is not the best now
Source: www.seattlepi.com
13. Why it is not the best now
• It is not a substantial net-positive
energy source
– It takes more energy to produce than it makes.
– CO2 emission reduction not as great as other
sources.
– Vehicles using ethanol get poorer mileage per
gal.
14. Why it is not the best now
Energy balance for various ethanol sources
Source: National Geographic
15. Why it is not the best now
CO2 Emissions for various ethanol sources
Source: National Geographic
16. Why it is not the best now
Source: Consumerreports.com
17. Conclusion
• Corn ethanol is not the most effective fuel
source
• Not driven by a free-market economy
• Greatly impacts an already stressed food
supply
• It’s all about balance
• Just think Rube!