Ethanol: of course it’s a mistake
The Economist points out what should be obvious:
SOMETIMES you do things simply because you know how to. People have known how to make ethanol since the dawn of civilisation, if not before. … So why is ethanol suddenly back in fashion? … The obvious answer is that, being derived from plants, ethanol is “green”. But although that is true, the real reason ethanol has become the preferred green substitute for petrol is that people know how to make it—that, and the subsidies now available to America’s maize farmers to produce the necessary feedstock. Yet such things do not stop ethanol from being a lousy fuel.
This comparison, extracted from a chart in Popular Mechanics (file in PDF) comparing various alternative fuels, shows why:
The Economist continues with an interesting list of possible alternatives, before getting to the point in the last paragraph:
Whether biofuels will ever be competitive with fossil fuels remains to be seen. That will depend on a mixture of economics and politics. But the political rush to back ethanol, just because it is green and people have heard of it, is a mistake. Let a thousand flowers bloom, and see which one wins…
Technology can undoubtedly solve a great many of the world’s problems, as it has done in the past. But when governments dictate the choice between competing technologies, directly through regulation or indirectly through subsidies and tariffs, you can be sure that the best technology is not the one that’ll win. Since ethanol is the current pet leech on government coffers, one can safely assume that it is, indeed, a mistake.
(Via: Limbic Nutrition)
You may be right that ethanol is a poorer fuel than fossil fuels. However, the question is: how long will fossil fuels last? Will technology have time to develope and market a viable alternative to fossil fuels before the world runs out? And … the country developing such an alternative will have the rest of us over a (non - oil) barrel.
I don’t share those fears. Fossil fuels will last as long as their price remains affordable.
Scarcity drives up prices, which first makes the search for harder-to-reach oil more feasible, while also reducing the risk and increasing the returns of investing in non-oil fuel research. I don’t buy the notion that we’ll “run out”, and even if we do, there will be plenty time for alternatives to catch on. At worst, we have the technology to go oil-free already. The question is merely when the considerable cost becomes worthwhile. The price of oil is sufficient to determine that point.
As for countries developing such alternatives having us “over a barrel”, surely those who develop such solutions deserve to profit from their investment? Besides, unlike oil, which can only be extracted from specific geographic locations, most alternatives could be manufactured anywhere and sold by anyone. I don’t see any reason to panic.
The steam age didn’t end for lack of steam. The iron age didn’t end for lack of iron. The oil age won’t end for lack of oil. It will end, yes. But there’s no reason for governments to force a particular choice upon the world. There’s no justification for favouring politicians’ pet industries at the cost of everyone else. That’s called protectionism, cronyism and corruption. Markets — i.e. free individuals acting on subjective cost-benefit judgements — are far better at making such choices.