The Oxen Report: A Special Investigation into the World of Alternative Fuels and Investing Opportunities, Part 3 - What Happened to Ethanol?

Thus far in the alternative fuel segments we have covered whiskey, water, fuel cells, and now ethanol. Ethanol…oh ethanol. It was supposed to be the key to all of our gasoline problems, but it has done very little to solve any problems whatsoever. The fuel produced by our abundant excess of our little yellow friend, corn, has been a disaster and failure. But why did ethanol fail and why was it ever thought to be an alternative to our fuel problems.

At its basis, ethanol is biofuel. It is created by the fermentation of corn, combined with gasoline, and used in a standard combustion engine. The product cannot, on its own, move a car, but it is able to be blended with gasoline to produce an efficient alternative to straight gasoline. Back at the end of the Bush campaign, when the talks of global warming and “green” energy became sexy and centerfold, ethanol appeared to be an answer with mixed reports.

At its current levels, the E85 (85% ethanol, 15% gasoline) has had mixed reviews. Overall, the consensus was that E85 produced no better results for ozone pollution or energy saved other than a reduction of oil used for car gasoline. The issue, however, was with the production of ethanol, which actually was proved to use more oil to produce energy to make ethanol than was saved at reduction at the pump. If alternative energy could be used to power the production of ethanol then E85 much like PEVs will have a very significant impact on our need for oil.

Dr. Dan Kammen, at UC Berkeley is in the camp that ethanol has positives. According to a Science Daily article covering an extensive UC Berkeley study, “Once these changes (adjustment for problems with other experiments) were made in the six studies, each yielded the same conclusion about energy: Producing ethanol from corn uses much less petroleum than producing gasoline. However, the UC Berkeley researchers point out that there is still great uncertainty about greenhouse gas emissions and that other environmental effects like soil erosion are not yet quantified. ’It is better to use various inputs to grow corn and make ethanol and use that in your cars than it is to use the gasoline and fossil fuels directly,’ said Kammen, who is co-director of the Berkeley Institute of the Environment and UC Berkeley’s Class of 1935 Distinguished Chair of Energy.”