April 17, 2008
The ultimate test of ethanol
By James Wilson
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Quote of the Day:

"Government's view of the  economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
-- Ronald Reagan

Subject: The ultimate test of ethanol

Our campaign against federal mandates and subsidies for ethanol provoked a huge response, both for and against. While thousands of DC Downsizers sent messages to Congress, an unusually large handful also wrote to us complaining that we were unfair to ethanol -- even though they agreed that federal mandates and subsidies should be repealed.

How were we unfair? Apparently, many of the problems associated with ethanol disappear when ethanol is produced and used directly on farms, using primarily farm waste in combination with passive solar power.

We have no quarrel with this assertion, and our campaign has nothing to do with that source and use of ethanol.

We would even agree that ethanol produced and used directly on farms could actually lower the price of food, in addition to having a beneficial impact on energy efficiency and CO2 emissions. But exactly the opposite is the case for industrial ethanol produced for use in the nation's cars. It's the latter phenomenon, driven by federal law and subsidy, that we oppose.

Still others wrote to argue with our assertion that ethanol made from cellulose rather than food crops is also uneconomic and energy inefficient. It's true that cellulose-ethanol has a great future potential, but technological improvements are still needed to make it viable. Even major proponents of cellulose-ethanol, such as the Rocky Mountain Institute, agree. 

Finally, a few wrote to quibble with our assertions about the environmental impact of mass-produced ethanol. With the exception of ethanol that's made and used directly on the farm, or the future but still unrealized potential of cellulose-ethanol, we stand by our claim. 

In addition to the sources we provided in our campaign, there's also a new survey of the scientific literature available at The evidence that current methods of mass producing ethanol are bad for the environment is simply overwhelming.

Here's the fundamental point. Mass-produced ethanol must meet the ultimate test, the market test. This is true even of cellulose-ethanol's potential environmental benefits. Plenty of consumers want products with a smaller carbon footprint, even when those products are uneconomical. The increasing number of hybrid cars is proof of this. When mass produced ethanol makes either economic and/or environmental sense, it will find its way to the market.

Politicians cannot speed this outcome. They can only delay it, through policies that distort prices and disrupt markets. And this is exactly what the politicians are doing in a host of ways.

One final point: many people wrote to say that federal subsidies for other forms of energy are also a problem. They're right.

Ethanol made from cellulose will make it to market much sooner if it doesn't have to compete with subsidized oil, as well as other forms of energy. Tell Congress that. Tell them you want to end the mandates and subsidies for ethanol, AND for all other forms of energy too. Make ALL forms of energy face the ultimate test, the market test. You can add the second point in your personal comments.

Send your message here.

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Thank you for being a part of the growing Downsize DC Army.

Jim Babka
President, Inc.
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