New standards could cut tax breaks for corn-based ethanol

Reporting from Washington -- The Obama administration on Tuesday proposed renewable-fuel standards that could reduce the $3 billion a year in federal tax breaks given to producers of corn-based ethanol. The move sets the stage for a major battle between Midwest grain producers and environmentalists who say the gasoline additive actually worsens global warming.

For much of the last decade, federal officials have touted the potential of corn ethanol as a substitute for gasoline and a tool for reducing global warming and foreign oil dependence.

However, environmentalists and others have questioned the wisdom of that support.

A recent Congressional Budget Office study found that increased ethanol production was responsible for 10% to 15% of last year's increased U.S. food costs. And the rush to produce more corn for fuel has had a global environmental impact as forests and other vegetation have been cleared to make way for cropland.

The Environmental Protection Agency's climate-change rules are subject to public comment and revision before they become final. And exactly how big their impact will be on corn producers' tax breaks depends how corn ethanol is determined to affect the environment.

In particular, they point to the "indirect land-use" effects of pulling corn out of the world food supply, which could force farmers in developing nations to clear rain forests -- and release massive amounts of carbon dioxide in the process -- in order to plant corn .... The EPA rules proposed Tuesday include indirect land-use calculations in tallying emission. Many crops grown specifically for biofuels, such as switchgrass, pass the test easily. In many cases, corn and soy-based biodiesel do not.

U.S. corn exports in recent years have been running at all-time highs. We have not withdrawn supply from global markets. Instead, U.S. farmers have ramped up production to accommodate both record exports and, simultaneously, a dramatic increase in corn ethanol production. This can continue for some time. We are in the early stages of the genomics revolution and many knowledgeable observers anticipate that U.S. corn yields can virtually double over the next 20 years.

Despite this, the environmentalists assert that every acre of Amazonian rain forest that is cut, or any other loss of forest or rangeland in the Third World, should be charged against U.S. ethanol production on some cosmic environmental balance sheet. The underlying idea is that every bushel of U.S. corn used for ethanol would, absent ethanol, be dumped on world markets, suppressing Third World agriculture and inhibiting conversion of land to agricultural use. IOW, the U.S. agriculture production base is to be held hostage to global land use changes. I think this is bad policy. Your mileage may differ.

If you accept the environmentalists' logic here, there is no reason to draw the line at ethanol production. We could just as easily assign a carbon score for indirect land use changes in other parts of the world that modellers can link to any and all changes in cropping patterns -- and for that matter, for the withdrawal of land from agricultural production for development. For example, every suburban tract house, office park, or new commuter road that sits on what used to be cropland could be penalized because any withdrawal of land from U.S. agricultural production theoretically induces land conversion to agriculture somewhere else in the world.

The enviros don't propose that because they know they couldn't get away with it (yet), although comprehensive land use planning based on life-cycle carbon budgeting isn't a far stretch at all from where we are. The EPA already proposes to regulate the entire carbon cycle. If one adds indirect land use changes to the mix, every acre of ground anywhere is, in theory, subject to regulation as a potential carbon sink.

Or does anyone here think that comprehensive land use planning isn't part of the hidden agenda?

Never been a fan of this for fuel. But their may be a sweet spot and th tax break may not be needed.

Read this synopsis on Green Car Congress: http://www.greencarcongress.com/2009/04/ford-e85di-gasolinepfi-20090426.html

Do you homework and convert the 27 BMEP to psi and if that number doesn't stun you, solve for torque, that number is also a stunner for the engine size they note.

The firm touting this E85 injection system is claiming an effective Octane Rating of 150. That is up from 87. That is a huge marginal increase, and far more than ADI added to WWII fighter engines.

If this system truly works, Direct Injecting small amounts of it might to some incredible things, rather than buring it as a primary fuel. We have the plants, maybe utlizing this infrastructure may be a good thing at this point.

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