Sunday, March 11, 2007

ETHANOL: Biofuels Boom Raises Tough Questions

Who are the direct beneficiaries in Philippines' biofuel industries?

By Rony V. Diaz
The false promise of ethanol

THE Biofuels Act that President Arroyo signed into law requires all oil companies to blend at least 5-percent ethanol with regular unleaded gasoline or be fined in amounts ranging from P50,000 to P100,000 a day.

The oil companies are not howling in pain which only means that their bottom lines will not be affected—possibly even enhanced.

To produce enough 5-percent ethanol, 15 plants will have to be set up. At the same time 120,000 hectares will have to be planted to sugar­cane, corn, cassava and sorghum for feedstock.

It’s not possible to do all this in 5 months so the oil companies would be allowed to import blended gasoline with tax incentives that are hard to refuse.

Once the distilleries are ready, they will enjoy a cap of 1 percent for 10 years on taxes imposed on all types of inputs, machinery, equipment, planting and breeding materials that are to be used in biofuel production, as certified by the Department of Agriculture. Biofuels will not also pay the value-added tax. The law directs the Development Bank of the Philippines and the Land Bank of the Philippines to put biofuel producers at the head of the queue.

Why the rush?

Two reasons are given. First, to reduce our dependence on imported crude and at the same time save dollars. Second, to protect the environment.

Neither reason makes sense. At 5 percent, the country “saves” 2 weeks of crude imports. Even at 20 percent—the technical limit of flexible fuel automobiles made in the Philippines—we save about a month’s worth of imported crude. Even at $70 a barrel, this is hardly worth the direct costs of new plants and the raft of subsidies that will be dispensed and the indirect costs of displaced food production—not to speak of the possible need to import food.

Ethanol is not exactly environment friendly. It’s an oxygenate and therefore emits nitrous oxides that cause smog. To make ethanol bunker fuel, coal, or natural gas are needed. To transport it either by ship or by truck diesel fuel is needed. All this adds to the CO2 that’s already in the atmosphere.

The net energy gain from ethanol is miniscule. A standard barrel (42 gallons) of ethanol is equivalent to 28 gallons of gasoline in terms of energy content. Ethanol is only 80,000 British thermal units (BTU) as against 119,000 BTU for regular gasoline. This means that you use more ethanol to drive the same distance as with gasoline. To produce a gallon of ethanol with its 80,000 BTU of energy, 36,000 BTU of natural gas or coal are needed.

Alexander E. Farrell in an article in Science in January 2006 said that the greenhouse benefit from ethanol is at best “ambiguous.” A gallon of gasoline when burned releases about 20 lbs of CO2, counting emissions from both the car and the refinery. Ethanol releases about the same amount.

Are these the biofuel proponent’s idea of clean and renewable energy?

This argument against ethanol made from food crops does not apply to ethanol from cellulose. The stalk of a corn plant or the leaves of sugarcane are composed of cellulose. So are most grasses, shrubs and organic agricultural waste. If ethanol can be made from cellulose, then it need not compete with food production.

But there is a catch. To separate the sugar from the lignin in cellulose, an enzyme that nobody has been able to make in quantity is needed. Scientists are at work on it but from the lab to the pump is still a long way off.

Whether crop-based or cellulosic, ethanol requires special handling. Ethanol is easily contaminated by water and cannot be shipped or piped in the same way as petroleum or gasoline. It’s also more corrosive than gasoline. National distribution will be a huge technical problem.

Our ethanol policy is badly thought out. It’s based not on science and economic logic but on fuzzy thinking.

Before it’s too late, let’s step back and think out this policy coolly and rationally.

We’re all for alternative fuels but they should be affordable, sustainable and above all not destructive of the environment. Manila Times

Related Links:
Bioethanol Philippines
The Philippines: Is Ethanol Really Feasible?
Green Car Congress

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